All Forum Posts by: Marc Macialek

@Cherie Orellana, thanks for the ideas on alternate ways to keep the money in my pocket. The closing costs seem like a great idea.

Also, thanks for the time you’re taking to respond here.

My realtor is explaining that the repair money is on the HUD paperwork for the seller, and not mine. He also reviewed that structure with the lending agent, who said it was fine.

I'm not sure what HUD paperwork is, since I'm doing a conventional loan.

This all seems like a trial by fire for a first home purchase. But it’ll be that much better for me on the next time around.

I left messages with both title companies you gave me. We’ll see what I can learn from them.

@Cherie Orellana, I really appreciate the leads. I just talked to my realtor about the repair escrow, and he is dead set on paying the contractors at closing. I need to work on this more.

@Cherie Orellana, thanks for the info.

I saw you’re in Salt Lake. I’m in Orem. Do you know what title company you used? Do you recall their fees?

@Louis Jeffries, thanks for the idea. I didn’t know that the escrow company would require releases. It sounds very similar to the documentation for mechanics liens on a commercial construction project.

@Jeff Dellitt, thanks for the heads up. I definitely don’t want to commit fraud. My realtor said he talked to the lending agent, and he said the arrangement is ok.

I find it odd that banks are against it. It would seems like a win/win for me and the bank if the appraisal and agreement allows for updates to the property that increase its value.

I’ll be making lots of calls today to sort this out and make sure I stay on the right side of things.

@Steve Morris, thanks for the time you are taking to answer my questions.

Do you mean that the seller has to approve any payments made out of the escrow account?

What if change orders occur during the contractor’s work? Do the sellers need to approve them?

And after the contractor’s work is complete, how do we handle releasing the remaining funds to me?

Will a written agreement stating that the sellers are ok with the release of the money be sufficient?

There is already an addendum on the contract where we all agree to the $20k going into an escrow account to cover the repairs.

And I guess another question is if the lender will be involved with what happens with the repair money. There will be less than $3500 after the contractor’s work that I want to use for the other updating.

@John Warren, the few articles I found on the topic did say that unused money often goes back to the seller.

But there is a lot of work I will be self performing.

If all parties agree that the money in the account is to be used for deferred maintenance, can I use the remaining money for material purchases for the home?

There will be about $3500 left after the payments are made to the contractors.

@Steve Morris, as part of our initial offer, the seller accepted giving $20k back at closing for the deferred maintenance.

I sent it up that way, because I don’t have the funds to complete all the repairs. The credit reduces the purchase price, but it doesn’t offset the immediate costs of the work.

And I want to complete the repairs after closing, so I have control of who does the work and scheduling it.

@John Warren, thanks for the input.

I’m in Utah, and I think we’re a title close state.

Are there additional fees to create and administer the escrow? Can I just call the title company and ask them? To this point, I’ve been allowing my realtor to handle the communication and it’s the title company.

Is there a away for me to get the remaining money not given to the contractors?

I'm under contract on a home (primary residence) that needs major work to building systems and updating. Part of my realtor's recommendation was to offer asking price plus $20k to be given back to us for the work. The sellers have agreed, and the appraisal came back high enough to support it.

I have acceptable bids for the work I will not be self performing. The $20k will cover the work on the major systems plus a little left over to help with the updating costs.

My realtor says the money needs to be paid to the contractors at closing. Being a construction professional, I NEVER prepay for construction work. I'll make progress payments or pay at completion, but NEVER, EVER prepay the full amount upfront.

I'm looking for another option to keep the money in my control. I can understand the bank not allowing me to get a lump sum (but they trust contractors?).

I've done some reading on repair escrows. It sounds like the title company holds the money and issues the payments as the work is completed. I'd be fine with that. Once the contractors are paid for their work, can the account be set up to release the remaining funds to me, or reimburse me for expenses if I provide receipts?

Does anyone have experience on this? Can I get some tips?