Problems at final walkthrough?

[Bienes Raices]

I just put in an offer on a house that should be a good deal, but it's in a so-so neighborhood. One of the front windows has already been broken either by a kid's ball or someone trying to break in.

With an REO, if I get to the day before closing & do final walkthrough, and find the place has broken into and messed up, squatters, etc., is it possible to back out and get my EMD back, or else get a credit from the bank? Or are they inflexible?

[J Scott]

Depends on a number of things, including the bank, the extent of damage, the mood of the asset manager that day, etc.

In general, expect that unless the damage is major, the bank won't be willing to concede much, if anything. If the damage is major, the bank may be willing to discount the purchase price or provide a contractor credit at closing (I've had each if these things happen in the past), but there is also the possibility that the bank won't budge and you'll have to decide if you're willing to risk your earnest money by not closing as scheduled.

Btw, if you don't close, the holder of the earnest money is on the hook to interpret the contract and either award the EM to one party or send it to arbitration. I've never had that happen so I really don't know what your chances might be in that situation.