Investor · Tarpon Springs, FL · Member since 2015 · 15 posts · 1 vote
I'm selling a house and the buyer's loan docs are in underwriting. However, FHA appraisal now requires sidings of the house be repaired before closing. Sale price is $180,000. FHA appraisal is $185,500. On contract I agreed to pay up to $7000 of buyer's closing. Repair costs is approx $2750, and I agreed to split it with the buyer. 1) I need to find a contractor for the job in an area I'm not familiar with that will accept pmt at closing and 2) figure how to get my half back at closing. 3) Would amending the contract delay underwriting and closing? Experienced investors, please help.
There are several avenues available. If working with an agent, they usually know contractors who will do the work quickly and agree to payment at closing. Or make some phone calls as there are many businesses used to working with payment at closing. Or ask the buyer or their agent if they have contacts. As a buyer's agent, I'm happy to obtain estimates on repair if the seller allows it as the buyer may be more comfortable choosing contractors who will do the work on their new purchase. I recently obtained 3 HVAC replacement estimates using contractors my buyer preferred, then forwarded them to the seller, who chose one of those and paid them out of their proceeds at closing. Or the lender may agree to escrow the funds (usually 1.5 x the estimate) and hold them until repairs are completed after closing, then return any leftover funds however it is set up, to you or buyer, once a re-inspection is complete. Your closing attorney or settlement company will handle the proper allocation of funds once they have a signed addendum on how buyer and seller have agreed to handle it. Your contract may already have a clause stating seller agrees to pay x% of purchase price towards costs of repairs if required to complete sale (termite damage, lender required repairs, etc.), and what happens if cost of repairs goes over that %, unless you've cancelled that out, so you may want to check that first before going forward.