Is Mold going to stop deal?

Question

We (me and the bank) have an accepted offer for a house. The house has been inspected and is in great condition except the basement has a good amount of mold on the cinder blocks.

The house has been vacant for 3 years and the back gutter has been ripped off, causing runoff near the foundation causing mold on the back wall.

I am getting conventional financing - is this mold going to kill the deal? What are my options - I would hate to spend 2K to fix the basement before I even own the house.

What to do

Sam W. · Answer

Thanks for the clarification Mark  Ferguson

Mark Ferguson · Answer

Also, HUD won't let you fix anything before closing even if you pay for it.

Mark Ferguson · Answer

You can only use the HUD repair escrow if it is an FHA loan.  If it is conventional, cash or any other type loan the escrow can't be used. The only option with HUD is to take it as is or cancel.

Sam W. · Answer

I think it will affect the loan.  The appraiser will be obliged to note the mold because it is a health issue.

I believe you can establish an escrow holdback that will allow you to get the loan and close and then the money will be taken out of escrow to pay for the repairs.

Adam Craig · Answer

I guess I should have been more clear.

I was aware of the mold problem from the start and the offer was made accordingly. My contractor was through the entire house and I know how much I need to repair everything. I am asking strictly about getting approved for the loan. This is a HUD

Sam W. · Answer

Adam Craig,

I think the mold may well likely hold up financing until it is taken care of.

Is this an REO or other 'as is' purchase?  If it is not "as-is", would certainly go back to seller and negotiate remediation.

If it is as-is or REO, you can still go back and negotiate.  Most banks won't make repairs but might reduce price or put a portion of proceeds into an escrow holdback for repairs.  This would allow you to get financing and close.

Donald Hendricks · Answer

Are you asking from a mold perspective or a financing perspective ?

James Hiddle · Answer

It depends on how much it's going to cost you. Have you gotten a quote on how much it will cost to get rid of it?

Brian K. · Answer

Did you know mold was there before? If your offer is low enough to cover unforseen repairs shouldn't be trouble, mold is fixable.

Just my two cents.