I'm looking for help answering some concerns I have about a duplex. We are in the final stages of closing on a duplex and I discovered mold in the property recently. I had an inspector come look at it and was given an outrageous quote of $20,000. I asked my realtor if there was any chance of the bank renegotiating and she told me no. I told her I would walk away and she told me she would check with the banks realtor to doublecheck. She called me back and again told me there was no way to renegotiate the price and that the bank realtor would not even attempt it. The reasoning given is because it is a short sale and short sales work differently than normal sales. They also don't have an inspection contingency in the contract. I realize that I could jeopardize my earnest money because of this if the bank decides not to renegotiate, but I feel like I'm being lied to concerning whether or not there is a possibility for negotiation. My question is, on an "as is" short sale near the final stages, is it possible for the bank to renegotiate if a major issue is found with the house?
Robert, your agent is correct in saying that the bank will not renegotiate as any short sale is "as is". When putting an offer on a short sale it is imperative to get your inspection done after the contract is binding between the seller and buyer, before the bank agrees to the short sale offer. If the inspection was done any repairs that were needed could have been sent via pictures with the offer to the bank so the bank would know what condition the house is in and would base their decision on the repairs. In a normal sale, non short sale or foreclosure, it is still an "as is" sale (in Texas) but there is an option period where the buyer can do their inspection and as for repairs or money off but the seller still has the right to say no. The outrageous cost is for mold remediation when is normally expensive. Mold remediation is usually done when there is a large area of mold found, otherwise bleach and water could kill a small spot.
I think a lot depends on your sales contract. Is your attorney involved in this?
I think the bank would renegotiate if they wanted to. Because now there is a major defect discovered, they are supposed to disclose that if this property goes back on the mls. Therefore affecting their selling price.
If your EM is not that much, it may be wise to walk away. However, an inspector will usually OVER estimate the repair charges. Get different opinions and SOW from other contractors.
Almost every "offer to purchase" or Real Estate Purchase Agreement (RPA) has a due diligence provision that starts for a period of days "once the contract is accepted" by both parties in writing. To that end, the buyer normally has the opportunity to do a professional inspection of the property by licensed contractors. There is a "Federal"" document commonality referred to as "For your Protection" get a home inspection. Read your contract. Many times some of the grinders (companies on the take) try to make the earnest money deposit non-refundable PRIOR to the inspections. If you see that... my advise is RUN, don't walk AWAY from it as fast as you can. I sold hundreds of bank owned REO's and every one of them had the right of inspection. BEST LUCK!
Thanks to all of you for the information. It helps a out a lot.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.