Hello Darryl. I have read the other answers and it appears to me that they don't really take into consideration that this is not yet a bank owned property as they talk about REOs and "owned." I think the fact that this is a short sale is an important factor.

Since this property is a short sale, the property is technically still owned by the borrower, not the bank, but the borrower most likely does not have any money to fix anything, which means that any further concessions would have to come out of the proceeds from the sale and the seller can't agree to that without getting approval from the bank. Since you say that you got the house for $305,000 with 2% closing cost credit, I want to conclude that the bank has already approved the sale price of $305,000 and the 2% buyer credit. I don't know how long it took this particular bank to approve this short sale, but I venture to say that it was probably not quick. The approval that you have right now is based on the bank getting a certain amount at the close of escrow as specified in the HUD-1 (estimated closing statement) that was part of the short sale package that was submitted to the bank for approval. Any changes to the HUD-1 would have to be again approved by the bank and the title/escrow company cannot just take money and use it for repairs. Since your question is whether you should pursue this matter with the title company, the answer is no.

If you have a loan lined up for the purchase of this home, you may not want to tie this transaction up because you have to wait for the seller's lender to make a decision on a request for repairs. Interest rates are going up and having to wait for the bank's decision may also end up costing you over the long run because of a higher interest rate on your loan (whether you purchase this property or any other property).

Most short sales are strictly "as is" because the seller does not have any money to fix anything or to give any credits and unless specific repair items were mentioned in the contract that was submitted to the lender for approval, repairs could not be part of the approval because the lender did not know about needed repairs at the time of the approval. Unless someone is willing to make repairs and get paid out of escrow, any repairs would have be done after the close of escrow (the seller has no money and the lender does not have money yet because the ecrow has not yet closed). I think, even if the lender were to approve further credits because of the needed repairs, anything labeled repair credit could raise a red flag for the lender that will give you the loan to purchase this property as they will want to know about the needed repairs and they may require as a funding condition that the repairs be done prior to closing. Obviously, this will not be an issue if you pay all cash but since you are getting a 2% closing cost credit, I figured that most of that will be for loan related closing costs.

As you can see, your chances of getting any further concessions at this time are slim and attempting to get them anyway may have other undesirable consequences (red flag for your lender and potentially higher interest rate on your loan).

I think the main question is whether you still want to go through with the purchase and based on what you said in your post, it sounds like you'd be willing to take on the repairs because you feel you are getting the house for a good price. Since you don't seem to want to cancel the contract unless you get the repairs taken care, I won't address any cancellation related issues.

I would like to point out that the bank most likely would not consider that they'll inherit the problem if they take the house back in a foreclosure. In my experience, lenders don't seem to be moved by these seemingly logical thoughts. If this property were already bank owned, I would suggest to you that you just submit your request for repairs to the bank and see what happens as the banks usually don't take that long to respond when they already own the property. I'd be really curious to know what you'll end up doing and what the outcome is. Keep us posted.

Good luck to you
Ute Ferdig

Sun Jun 22 2008, 09:17

Good Morning. The ladies have made excellent points. Now that this is a "disclosable" item, the bank will most likely work to resolve the issue instead of going back on the market. I had a similar situation with a buyer where the water had been turned off on the property. We asked that it be turned back on for the inspections. Come to find out the water heater started leaking badly. At that point the REO agent contacted the bank and they repair the water heater.

It never hurts to ask for something and you may be pleasantly surprised.

Let us know what happens.

Sun Jun 22 2008, 07:25

Hi Darryl,

If you have removed your property condition/inspection contingency and you have found out that the cost of repair is too much you may not go through the sale. The consequence is that you will not get your deposit back. Most likely the bank will not go any farther and if the damage is extensive you may try to demand your deposit. You probably get it back.

Once you disclose to the bank your findings the bank is obligated to present these disclosures to the next buyer. So it is in their benefit to work with you and pay for the repairs. I would send a copy of your inspection report along with the estimated cost of repair and a request for repair to the bank. Title company is not where you need to make these demands. As is means they want to sell it without repairing it but they are still responsible for the condition of the house. For example termite inspection is done by most lenders on the bankown homes and they will pay for repairs if the buyer request it. So I just ask the lender to repair or give you credit.

Good luck,

Homa

Sat Jun 21 2008, 22:27

Darryl,

I am not clear from your summary whether or not you had any physical contingencies as a part of your contract. It is also not clear if your contract was written as an "AS IS " sale.

The best chance (if there is one at all) in getting the repairs completed by the lender is to have not released the physical contingency and to not have written an "AS IS" contract. Even if these are the circumstances there is nothing that says you can not ask for repairs. But if they say no, it will be more complicated to walk away if you have released physical contingencies and wrote an "AS IS" contract.

Most foreclosure contracts are "AS IS". It sounds as if you may have made a good deal based on the price to list numbers. It may very well come down to how much you want the house realizing the repairs needed verses the options available to you to walk away.

Either way, I am not sure this is a matter for the title company. The agent's involved should be able to help review the options and assist you in the proper paper work to make a request. Submit the complete report with photos with a request for repairs and see what the bank says. Now that the information is public knowledge (a disclose-able item) and the bank may or may not see the advantage in resolving this issues with the current contract verses going back on the market.

Good luck,
CJ

Sat Jun 21 2008, 20:46