Starting Rehab before closing on purchase

9 Replies

Anyone ever start rehab prior to closing? I'm looking to do this on a HUD home I'm buying and I'd like to hear anyone's experience with doing so.

It's a bad idea. Not only do you not control the property (and may therefore be trespassing), if the deal fails to close for any reason you're just screwed for whatever you've put into the house.

You can't do any rehab to a HUD house prior to closing. HUD can cancel the contract and keep your earnest money. HUD views this very seriously.

@Derek Carroll Bad idea on a HUD. They will cancel your contract and potentially prosecute for damaging federal property. Information is spelled out in the addendums you signed

Sounds like this is a particularly bad idea for HUD properties, but to be honest, I don't see ANY scenario where this would ever make sense. What is the possible motivation that makes you consider it? Simply to get a head start so reno time is reduced? Never worth the risk in my opinion.

@Derek Carroll  

One thing you can do if you feel particularly good about the closing would be to go ahead and order surveys, start plans, etc.... but bear always in mind that your money may be wasted if you don't close.

I've had to go in and do minor stuff like put receptacle covers on and wash mildew off of walls so the bank would not reject the loan, but I would absolutely not start a rehab before closing. I may be misremembering, but I think there is even wording in the contract that says you are not allowed to do any work to the home before closing. 

Thanks everyone.  Yea basically just looking to get a jump on rehab and try to sell before  year end.  I knew it was likely a bad idea and risky at the very least, just thought that someone on here might have tried this before.  

Guess i just need to speed everyone along and wait out the closing.  

Other things you can do if you really, REALLY feel confident about the closing...

1) Start shopping for fixtures so you have them in advance
2) Plan out your schedule and material drops to the house
3) Start lining up contractors with bids and schedules to start

All with the caveat that if you don't close, you'll look like a fool and will lose respect in the eyes of the people you've scheduled.

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