Damage to REO close to closing ...Should I get a credit?

Question

I am close to buying an REO property that is close to closing. I did a recent walk through and discovered that someone removed the dishwasher and damaged the cover of an in wall A/C unit. It didn't appear to be a forced entry , but who knows who has access. Do banks typically change the locks on the properties once homeowner loses it? I doubt it right?

Everything else seemed ok, property has been on the market for a long time 5months or so, but this theft was recent.

Is the bank required to give a credit for the dishwasher and damage? Property is sold "as is" of course (it is a Freddie Mac property) but it was not in THIS condition when I made the offer.

I am assuming banks have insurance on these properties, but I do not know what this insurance covers.

I told agent about this and she said shes going to look into it, she said a guy found a dead body in one of their REOs recently.

Have other people had similar things happen?

Jon Holdman · Answer

Yep, I had a chain link fence partially stolen a few days before closing.  I closed anyway.  You can certainly ask for a credit.  The bank might give it.  You will likely end up doing a new contract and the closing date will change.

In this case they probably will not give a credit.  If you look at your contract, it likely says personal property, such as appliances, are not included.  So, the fact they're gone doesn't change the deal, as far as they're concerned.

Account Closed · Answer

(shrug) a new dishwasher is a couple hundred bucks and you can get a window AC for $125.

I don't fuss over peanuts, figuring I'm going to have to do repairs, anyway. My offers are always low enough to cover a few unexpected damages.

However, if you want to ask the bank and see what they do about it, not much to lose, as long as the bank doesn't use your rejection of the condition as an excuse to back out of the deal. If they had a hard time selling the house, that isn't likely.

Mitch Kronowit · Answer

Like others have said, you can always ask. The worse the bank can do is say, "No!". But ya never know, they may help out.

When I was viewing an REO (that we ended up buying) last year, I noticed the water heater was leaking. I knew I was going to put in an offer on the house anyway, but I didn't want the water leak to cause any more damage, so I told my Realtor I was going to shut it down (after all, nobody was living there). He called the listing agent, mentioned I was putting an offer in, told them about the leak, and informed them I was shutting it down to prevent any further damage. Note, I wasn't asking them to fix it, just leave the thing off.

Lo and behold, the listing agent called back and said they would replace the water heater with a new one. Wow! Saved me a few hundred bucks! (I should have also told them the roof was dusty!)  ;-)

Ibrahim Hughes · Answer

Here in NJ a standard contract will contain a clause (can't remember the term) that states that the bank is not responsible for any damage done to the property between the signing of the contracts and the closing. Thus, we usually secure the property pretty well AND change the locks.

I wouldn't make an issue of it at all and would instead secure the property so that no more damage is done. Your job is to establish a relationship with the listing agent so that you can do more deals. You don't want to be  a pain in the a$$ over what you see as "principle" and the bank sees as a minor issue being overblown.

Anson Young · Answer

They absolutely change the locksets once they come into posession of the property.  It might have been the banks vendor, or someone else w/ access to the lockbox.  Or if its a common code, its pretty easy to walk up to a REO and one of 5 codes will work (at least here in CO).

Try and see if they will give a credit or price reduction on it.

We have one where the property was hail damaged the day BEFORE closing, needs new roof, 3 new windows, shutters and a new AC unit.  VA (the bank) is refusing to do any work, obviously the buyer didnt put an offer on a beat to hell hail damaged property...  crazy stuff.  If it closed the day before, it would be on the buyers insurance...

Jon Holdman · Answer

What does the contract say?  The contract will override what it says in the listing.

Did the thing work anyway?  In my experience, dishwashers in REOs never work or are so nasty you wouldn't put anything in it.  After setting for months and months without being used, they're useless.

Edwin Brown · Answer

This has happened to us several times and we always ask for a credit. Sometimes we get one, sometimes we don't. But if you don't ask, you won't. I've found that sending up photos along with a contractor's estimate usually helps.

Jerry R. · Answer

I've got a similar concern.  I put an offer in today on a REO that had some very nice appliances (stainless refrig/stove and new washer/dryer) as well as a new A/C unit. My offer price was based on the property having these nicer appliances and new A/C.

It's VERY common in this area for the A/C units to get stolen and not at all uncommon for the appliances to be stolen as well.

Before even accepting my initial offer, the listing agent told me I need to sign the addendum which states what Ibrahim said. It also says they will not offer credit or replacement of any such items if deemed missing, damaged or non-operational at time of closing.

If something did happen before closing, I could back out of the deal, but would surely lose my earnest deposit.

What I did was strike-out "missing" and "non-operational" from the addendum, but my agent doubts they will accept my offer like this.

I could try lowering my bid, but would not expect them to take the offer at much of a lower price due to heavy competition.

Jaime Vasquez · Answer

My first concern would be securing the house after I bought it.  Replacing materials, tools, or staging furniture can be very expensive.

Joseph M. · Answer

Yeah you are right probably was pretty nasty. I guess I just can't get my mind around the idea of someone going into a place and removing a used dishwasher , I guess I am just thinking about the principle of the thing , I guess we'll see if there is any credit given. I doubt they listed it in the contract...all the documentation was literally like 100 or more pages! Insane when everything is basically "AS IS ..we are not responsible for ANYTHING!"  Thanks

Damage to REO close to closing ...Should I get a credit?

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