House Buying Problems-Good Thoughts Needed

[elnant]

Found the cutest house -- we're four days away from closing.
Today -- we had a sewer scope on the recommendation of the house inspector. He found two major separations in the sewer pipe. The house has been vacant for a while and he says once ''paper'' starts flowing through the pipes again it's likely going to catch in these areas and block up the pipes. He estimates it will cost $3,000 to fix -- and it doesn't sound like the seller is willing to fix it!
I'm still waiting to hear back from my realtor -- and trying not to worry about it ---- but I love this house --- and I'm so upset this may be a problem ..especially so late in the deal!
Just wanted to vent a little.
Send your good thoughts please!!!!

[mbrogier]

I feel your pain. When I bought a house, the inspection revealed the whole electrical system wasn't grounded. :eek: It turned out that the electrician went home one night and caught his wife in bed with someone else. He was arrested the next day while finishing up the electrical upgrade on our house. (so said the seller) :eek:

He did pay the $2k required to fix the system. We were worried that he wouldn't pay, but he was really wanting to sell the house.

Oh, and a week after we moved in, our toilet backed up. Someone had flushed a toothbrush with protective cap down the toilet. :rolleyes: We had to pay for the plumber, but his snake pulled up the toothbrush so we didn't need extra work.

[Debralynn]

The question is, do you love the house enuogh to start pumping (hehehe) money into it the day you sign? If its a great house that you have to have, then yes put the money into it. As you know, it's not easy find a great house that you LOVE, so go for it and fix the sewer, and be happy. :) Good Luck, it could have been worse, your inspection may not have turned up the problem and after you move in, there goes the sewer line. Now that the inspection has turned up the problem NOW, this is a great OUT for you IF you were looking for one or were having second thoughts.
Things happen for a reason, make a decision and live with it. :) Debbie

[HejazSunKat]

If you love it that much and this is the only thing wrong with it then, really, in the grand scheme of things $3,000 is not a giant home repair. I'd still want my realtor to see if she could pressure the seller a bit to either cover it or give you an allowance.

[lindrusso]

If you love it that much and this is the only thing wrong with it then, really, in the grand scheme of things $3,000 is not a giant home repair. I'd still want my realtor to see if she could pressure the seller a bit to either cover it or give you an allowance.

I agree. Maybe they will go in for half the repair? I would think that most homeowners wouldn't let a deal go sour for $1500-$3000, especially if they have motivation to get the house sold quickly - and if the house has been vacant for a while, I would think they'd be very, very eager to close a deal.............

That said, make sure you know exactly what's involved in repairing this to try to make sure there are no surprises and that it doesn't end up costing you more than you anticipated. Will they have to dig up your yard? If so, you need to figure in landscaping repairs too - grading, seeding, etc.

Good luck! These kinds of things are always stressful, even when they go well! :)

[sharhamm]

It's a buyer's market right now. Houses are not moving and since it has been on the market a long time I would bring this to the table before closing. There may be other repairs needed that weren't found by the inspector and if you don't have a lot of cash packed away you may feel you have a "money pit". At least this repair you know of and it is a major one......can't live without your sewer line!!!! I bet the seller will work with you on this.

[ChristyMarie]

I'm thinking the seller doesn't want to lose you anymore than you want to lose the house. Hopefully they will agree to pay for the repairs.

Good luck!

[Beth]

The seller may HAVE to repair. That kind of sounds like an inspection problem that could hang up your final approval of the mortgage and insurance. If they won't close, then you can't go forward and will have to have them satisfied -- either with a repair done or an escrowed amount dedicated to the repair.

If it is a seller's market, your realtor should be able to point out that even with another contract in hand today, they are going to pay another month mortgage, insurance and taxes. They are better off repairing and selling -- even if they don''t want to. At least here, that inspection report and need for repair would have to be disclosed to any other potential buyer once the seller knows about it, so it's not like another buyer would be any more likely to buy without a repair or taking that into account somehow. Good luck.

[RebelsLGB]

I'm a Realtor, and a real estate paralegal for an attorney, so I just thought I'd chime in here.

The major problem I see here, is that you are only 4 days from closing. You will need to look at your contract to see what the amount of time you were given to bring up inspection issues. I know I usually give my clients 10 days from the Time Attorney Review is over to have inspections done, and then 5 days from the time they get the report, to have their attorney bring up any inspection issues with the seller, that they want fixed.

I don't know what state you live in, and don't know if it is common to use attorney's where you are (it is not common in many states).

Also, keep in mind that you are buying a used house, and no used house is perfect. It never hurts to ask the seller to give you a credit at closing, but you will need to have a real estimate drawn up in these next 4 days. But as long as the seller was able to get the C/O and other certificates from the town or county or whatever is needed to have someone else move into the house, they are not required to fix anything. I hope that the seller is willing to work with you on this, but be prepared for them not to.

If you really love the house, then $3,000 is a small price to pay to have something like that fixed. just think of how happy you will be in your new home.

Good Luck! And congrats on finding a house you love! :)

Kristen

ETA - it really is important for you to read your contract if you are thinking of backing out of this deal, if the seller won't pay the $3,000. If you are passed the allowed time to bring up Home Inspection issues and you back out, you will be in breach of contract, and the seller will have every right to keep your deposit monies.

[Beth]

Keep in mind that laws and real estate practice vary from state to state. What was said above is not all correct in the states where I've bought homes -- but you should look at your contract. Generally, at least here, the mortgage committment is the last thing and comes afetr all inspection and valuation issues have resolved. That can be the day before closing, and it's generally the last contingecy for the earnest money.

Check your situation -- read the contract yourself and talk to your realtor. If you are locked in, the mortgage committment is final, the insurance is locked in (usually a requirement for the mortgage), and you would lose the earnest money, then you are probably in a position where it is better to repair yourself and get the house you love.

One otehr thing, your realtor should have figures on the last sale of the house, an idea of what is still owed on the mortgage and the appraisal. plus you know the house has been vacant. It could be in a relocation situation too. The seller may be facing a buyout at a better price than your are offering with therepair. He may be willing to sit and wait. If not a relocation scenario, if the market has fallen, you may have a seller who can't afford to give any more. Look at all the facts and make your best read of the situation as well as the rights and responsibilities.

[Grace]

The seller may HAVE to repair. That kind of sounds like an inspection problem that could hang up your final approval of the mortgage and insurance. If they won't close, then you can't go forward and will have to have them satisfied -- either with a repair done or an escrowed amount dedicated to the repair.



This is just inaccurate. The bank never looks at inspection reports. Ever (unless it's an FHA deal, but even those rules are changing now). They look at the appraisal. An appraisal is solely to determine the value of a property, and no appraiser will certify that they are an inspector and they don't look at those kinds of issues. They only surface look at a general condition of a property. The bank would never know about any kind of inspection issue and would never hold up funding because of one.

The only exception is with new construction. The appraiser has to take interior photos of a newly constructed property, and they won't authorize funding unless they see that it's finished. But it doesn't need to be finished with no problems. If the work is shoddy, the lender knows nothing about that. An appraiser has to certify the appliances are in and operational, the toilets flush, faucets work, etc., meaning it's livable. In Chicago, you need a certificate of occupancy that states that someone from the City has inspected the building and it's up to code and inhabitable. But as far as an issue like the OP found, they wouldn't know about that either and wouldn't care.

Heck, any person who buys can waive an inspection and buy a house totally as-is, and the bank wouldn't stop them.

As RebelsLGB says, they may not be able to get out of the contract due to the inspection issue if the agreed upon date has passed, and then they can still get out, but they would lose their earnest money, so I have to think that that's at least $3000 as well (maybe more), so they'd stand to lose even more than the cost of the repair and have nothing to show for it. If that's the case, then the seller also knows it and will likely not make an effort to offer up any help with the cost of the repair.

[blazedog]

My good friend is a realtor and just sold a house with problems revealed after inspection -- Really it is a negotiation as most sellers don't want to lose the sale at this point although many people become "stuck" because they don't want to back down -- In my friend's case, the parties met in the middle in terms of the estimated cost of repairing and each realtor also put in a certain amount -- more of a psychological move to make everyone feel that no one had lost face.

I am not a real estate professional but at least in California most people will NOT litigate if someone backs out prior to escrow and will generally return the escrow money. This is because the property can't be effectively sold during the period since it is subject to the litigation which must be disclosed. In the scheme of things, it doesn't make sense.

Obviously law and customs differ markedly in each area -- and of course who can predict what anyone will do -- But when I was selling my parent's condo and the "buyer" decided to back out on spurious grounds, I was advised by my friends who are real estate professionals to just return the guy's money and move on rather than to waste time, money, aggrevation etc. attempting to keep the "earnest money."

[Beth]

Grace, I don't know anymore than you probably do what the current underwriting standards are for both lending and insuring in the state of Florida. You know what you've seen and done, and I know what my experiences are. In the south coastal areaas ad on slab foundations, you get some different issues. With floods and hurricanes, you go through cycles in underwriting too. I don't know what all the current situations are on this contract or Flroida real estate either -- but I do know what I've seen and been told in past situations in a state with more in common with Florida than Illinois.

For every home I have bought or sold, except one new construction, it was the lender required a pest inspection to include termites and wood rot. Either that inspection or the structural/mechanical could flag water issues that could hold things up --even if the inspeection was not a required one. Water is a big issue in the south, and sewer is a habitability issue anywhere. Four of five years ago, you couldn't get new insurance on a house in Texas with a history of any water damage or issues or even hail damage to the roof -- even if the damage had been fully repaired or the roof had been replaced. And you couldn't get a mortgage without insurance. That particular situation has eased, but you still have some sensitivities. I've seen water issues of different types lead to closing issues.

[lindrusso]

Heck, any person who buys can waive an inspection and buy a house totally as-is, and the bank wouldn't stop them.

That was certainly true in Indiana when we sold our first house. The buyers waived the inspection. Lucky us. :)

[Beth]

I agree. My point is that's it's different to waive inspection than to have an inspection problem.

[Grace]

I do write loans in Florida, actually, and we have 80 lenders that we are signed up with, very few of them being Illinois lenders - they are all over the US and write loans in all states (people across the country have loans with Countrywide, as an example) - they all follow Fannie Mae/Freddie Mac guidelines. There is nothing in the guidelines for a clogged or broken pipe.

Termite inspection and flood plains and hurricane areas are completely different issues from any kind of pipe problems or electrical problems or furnace problems, or anything like that. One could argue inhabitability on all kinds of things. If the furnace doesn't work, the pipes could freeze and could burst. If the electrical box or wiring in the house has been messed with by a non-professional (some do-it-yourselfer), the house could burn down (that would be unihabitable!). Someone could install a furnace humidifier on a property and have it set too high causing condensation and mold. Uninhabitable. The foundation could be cracked and radon could be seeping in. Unhihabitable. Someone could remove a weight bearing wall in a house during a remodeling project making the house completely unsafe. I'm telling you the bank does NOT look at these things. It is up to the buyer to make sure they get an inspection to protect themselves. I think it's foolish to ever buy a home without an inspection, but people do it all the time, and no bank requires it. Not including termite inspections, or flood plain checks.

You are speaking from what you've read in the paper, seen on the news, and experienced with a couple of your own home transactions. I am speaking from what I do for a living each and every day, and DH and I also own our own Real Estate Appraisal business. We went to school on this subject - both of us (I had to go to school for my mortgage broker license, as well as for the appraisal business). So I think I do know a little bit about it.

[Gilgamesh37]

Grace, I know you're extremely knowledgeable about mortgage lending, but unless I'm mistaken, both Beth and Blazedog are attorneys, so they spent 3 years going to school about it, as well as passing the bar exam. For that matter, so did I---and because I don't practice in real estate, I wouldn't presume to give a definitive answer, other than to say talk to a real estate attorney in your jurisdiction right now to figure out your best course of action. But I found your tone extremely condescending for no real reason.

[Grace]

Sorry if I sounded condescending, but it's completely annoying to be told I'm wrong about something I know quite a bit about, and to see completely false information being presented as fact. And being an attorney has nothing to do with it - real estate attorney or otherwise. Attorneys are not versed in underwriting, since banks either follow Fannie Mae and Freddie Mac guidelines (if they want to sell the loans on the open market), or they make up their own underwriting rules (if they're lending their own money). There are no laws about how a bank chooses to lend its money except for things like discrimination. We live in a free market society. The government does not dictate whether a bank can make a loan on a dilapidated building or on a perfect building. If I want to lend money to the buyer of that building I can. I get to choose what standards I use to lend my money, not the government. Lawyers know the law, not bank underwriting guidelines. I know bank underwriting guidelines, not the law.

And I never disupted anything Blazedog said, so I'm not sure why she was brought into it. All I'm saying is that the bank doesn't know or care about the sewer pipe in the house, so the funding on the loan is not going to be held up because of it.

I am not talking about the terms of the contract here. I am not an attorney, and I am not making any claims on what the OP's options are in regard to the contract. Beth claimed that the funding from the bank could be held up due to the pipe problem, and I am saying definitively that it will not. Period. I know this to be true. I don't just think it or believe it.

[RebelsLGB]

in NJ - inspection is not required and Lenders could care less about it. Some times a pest inspection/termite might be required, but other than that, they don't care.

It does vary greatly by state.

I was just trying to give some advise as a realtor. I certainly would hope that she has gotten her Mortgage Commitment by now, since she is only 4 days from closing. If she hasn't got her mortgage commitment yet, she probably has a really upset seller, since she is most likely well past her mortgage contingency date, and already in breach of contract.

It's really important to read your contract, and get in touch with your realtor and/or attorney if you have one.

But I have to say, $3,000 really isn't that much money when you are looking at the big picture. Even if the seller had to re-list and disclose the sewer problem, spring market is here, and there is a good chance that if this current buyer loves this house, there is another buyer out there who will love it, and the seller could get a better price for it, since it is spring market, and houses just sell for more money this time of year. If she is closing in March, she probably went under contract some time in January, which was the middle of the winter market which is slower (again this varies by state).

Plus, since it is a buyers market, the house was probably sold for less than asking price, which makes negotiating for inspection issues harder, because the seller already feels they've lowered their price, and that should cover the $3,000 for the sewer.

With all of that said...Most sellers are willing to make things fair. I hope it works out :)

Kristen

[elnant]

Just wanted to post an update --- sorry it's been so long...I've been busy MOVING!

Needless to say --- we bought the house! Got a ''second opinion'' on the sewer and it turns out it wasn't as big of a problem as first thought. We got it all worked out with the seller. I thought about all your comments and realized $3000 isn't really so much --- so I was all ready to shell out that much that if it came to it...but thankfully it didn't!!!

Thanks, everyone for your great comments and advice!!!
Ellen

[Jezebelly]

Congratulations!

[Beth]

Gald it worked out. Things usually do on fairly small amounts -- unless the deal is stretched to the limits or someone doesn't really want it to go through. Glad you got a better report too. Enjoy your new home.

[Kay Henderson]

Glad it worked out -- Enjoy your new house!

Kay