Lender Required Repairs

[Benjamin K.]

Good evening fellow Biggerpocketeers. I currently have a REO property under contract (Conventional financing). The inspection report came back recommending a structuural inspection due to foundation issues. I got a contractor quote for approximately $6000 to repair the foundation. Submitted bid from contractor to bank asset manager to negotiate the sales price down due to this issue and they countered back stating they wanted a letter from the lender stating that the foundation repair would be a lender required repair. What should be my next move? Wait on appraisal and hope they bring up the same issues as the inspection report? Should I provide the inspection report to the mortgage underwriters now for documentation purposes? What to do?

[Ned Carey]

An appraiser is not an engineer. He may not notice the foundation.

Many if not most lenders will turn down a loan if the property has structural issues. If you bring it up to the lender they will probably say they want it repaired. Also in many states once a latent defect is know to the seller (the bank is now on notice) they have to disclose it to any other buyer. This could be a key negotiating point.