High EMD and can't inspect property

9 Replies

Working with a REO listing agent directly. Received the addendum and although the language in the addendum allows for a 10 day inspection period, it is negated later on with the words "AS IS NO INSPECTION"... Confirmed with the listing agent that the bank wants it to be signed as is and with no inspection period whatsoever, truly as is.

The other scary piece is how the Earnest money deposit is ($5K). I am using private financing and have provided a POF letter. So this addendum (confirmed by my attorney) has no outs.

I've had an inspector buddy walk the property and things seem fine. I am a very serious buyer so it wouldn't be a huge deal if the property wasn't winterized... so I can't inspect properly until it has been de-winterized.

What options do I really have? Is this listing agent talking making some of these rules up or do I have some negotiating power? I would be ok with the new inspection clause of the EMD was 1%. Or, I would accept the $3K EMD if there was an inspection period.

Reos are not inspection contingent properties. A. They arent fixing anything B. The property is sold as-is, know what youre looking at, or walk

Generally that is what to expect from an REO. I fact most investor type deals I assume there is no contingency for inspection. I certainly don't offer one when I sell. Inspect all you want before you put in an offer. 

You make sure your offer is low enough to cover unforeseen expenses.

It would help to know who the seller is. HUD allows inspection, but no refund of EM if you walk. Most others, not in an auction, allow an inspection period in which you can get your EM back.

@Aref Shehadeh C'mon son! You're not a young couple buying their first house with and FHA loan. You're a REI. Step up to the plate for not.

Seriously though, REOs can be very profitable because of the tough buying conditions.  Just part of the game.

Originally posted by @Wayne Brooks :

It would help to know who the seller is. HUD allows inspection, but no refund of EM if you walk. Most others, not in an auction, allow an inspection period in which you can get your EM back.

It's through homepath / Fannie mae

Originally posted by @Dana Whicker :

@Aref Shehadeh C'mon son! You're not a young couple buying their first house with and FHA loan. You're a REI. Step up to the plate for not.

Seriously though, REOs can be very profitable because of the tough buying conditions.  Just part of the game.

Hah. I'm with you. This place has been vacant for 2 years. Had a licensed inspector do a walk through... he was sketched out by a few things. Just impossible to know the extent without de-winterizing. I get it, as is, but ive heard many contradicting things about the inspection contingency. Lawyer says it's our state law. Listing agent says doesn't matter if I agree to waive it.

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@Aref Shehadeh

You know the saying.. if you can't stand the heat - get out of the kitchen. The reason you're likely getting a deal is because, as others have said, you're buying unknowns. 

A licensed inspector is as good as a licensed driver. There are plenty of bad ones. You need to know what you're looking at. What's the heating system? How old is the structure? How is it constructed? Just because it's been vacant for 2 years doesn't mean much. I find lots of REO properties simply need to get "turned on" and the price goes up $15K. Just helped someone flip a property and basically half the reason no one wanted the place was because everything was off and it seemed "scary" to take on the unknowns. A call to the power company, a turn of a few valves, and presto the property is running again.

Broken pipes are easy to fix. Cut out the section, pop in a new piece. Is it a hot air heat? Typically those last 20-30+ years and have less moving parts than a wet heating system. I find wet heating systems last longer, but have more moving parts to repair. 

Feel free to send me some photos and I'll take a look. Best of luck. 

@Aref Shehadeh I am in the same boat. I am buying a twin 2 bed 1 bath 1404 sq ft for $20k cash. From walk through looks like it will need $5k-$8k provided all systems are ok. I will find out if that is the case after I close on November 6th. My advice base your offer on worse case scenario.

Good luck!