All Forum Posts by: Lin Ding

No now the lender knows there is a code violation. Only way around that is to change lenders, not go FHA , pray a conventional new appraiser $$ doesn't mention the deck or lookup violation, as the FHA case number sticks on the address. Once you close, planning department will put notice on you personally and expect you either demolish the whole deck and have them inspect OR get new permit to put in new footings to meet set backs and height and railings to code. They can fine you. Maybe a carpenter can remove it, cut the legs to height and install new footings. Cost $3000- 7000 depending on size. With FHA loan you have to clear all health and safety code violations and this a safety one so you cannot close without fixing it. Seller already knew this from previous cancelled deal.

You cannot rent the place until you have the job card signed off and certificate of occupancy. You are at mercy of city/county guys picking about more things when they come and inspect. It takes time and we are heading to holidays, cold weather and their days off.

Seller incentives DO NOT reduce your down payment. They can pay up to 6% of sales price only. This can cover closing costs, points, attorney fees, title fees. Lender has to approve this. They may get appraisal update with the credit and appraiser may reduce the valuation which means more cash from you needed.

Why is your lender and agent not helping you? Get them on a conference call and record it. You are getting sloppy advice. 

My guess: if you ask them to pay the nonrefundable rate extensions or a flat fee the seller will say no. DO NOT spend more cash on this deal until the day you get to closing table. Throwing money at a rate lock or work on a property you don't own and might not close is burning hundred dollar bills. 

So you have $1400 into this transaction (appraisal and inspection). Maybe it's time to cancel?

If it was me I would tell the seller I want the appraisal and inspection fee as they ALREADY knew there was a code violation and the agents accepted a FHA offer which was never going to fly. I would consider that a lack of disclosure on seller and seller agent's part.

Find a lower priced place in little bit better location and call this part of your college without student loans. Learning is vital to this business.  One RULE I will share is NEVER throw good money after bad. You may need to wait eight years for value to be high enough to refinance out of this deal. Rates will dip but you will not have enough equity to get out of the 1.75 Mortgage Insurance and rate my guess 6.625????

Will your lender approve the loan if the deck work isn't completed? I'm in a similar situation with another client, seller's deck has rotting wood and lender won't approve unless it's resolved. If lender doesn't approve the loan unless deck issue resolved - that's typically onto the seller to complete. A workaround could be a lender being ok with approving loan as long as the buyer completes the work within a specified amount of time, but judging by the lender's reluctancy regarding the escrow holdback then it's unlikely they'll allow you to complete the purchase and repair the deck post-closing. 

Hey @Lin Ding - once contracts are signed, inspection is completed, and everything else seems to be moving at the pace you expect it to - there really isn't much negotiation left to do. I would have said to try and get another credit for the open permit work, but you've already agreed to seller putting money into escrow until issue is resolved. Are you also the broker on this transaction? I'd be curious to know what your broker says since they would have likely advised you something similar. 

FYI I'm an investor & a realtor, and I think it's off-putting to the other party if you try to negotiate again once that window has closed - it's just odd, unless there's something substantial and new that you learnt while in underwriting... but that's why you have the due diligence period etc. 

Your agent doesn't act like your agent, made huge mistakes.

Seller required ONLY to do what you wrote and both signed in the contract. Seller can close without permits bringing subject to code and his agent told him not to worry. Once you close it is your obligation to re-file the certificate of occupancy, get Bureau of housing inspection to pass, and maybe do more retrofitting and repairs.

Who is proposed to hold the escrow money? 

The closing attorney does not have any obligation to negotiate for you, that is agent's job. 

A property with low budget handyman HVAC and plumbing means you have future expenses and repairs. Deck to me seems not so important as you can visibly see if it has dry rot, wobbly, no legal railings...

If you are doing a loan the lender has to approve any escrow hold back and will likely not accept what seller's agent set up. 

Lender will have limits and rules on hold backs and ask for more than the cost of completion if the product allows.

The seller can tell you to pound sand or make a deal, we cannot know what conversations and what your contract says. Your agent is not good. I'm guessing there are non permitted additions and county made them tear out rinky dink short cuts. At the point you realized this was a construction loan not a close in twenty days was the time to ask for a per dium allowance- with that sale price something line $400 a day. Your agent overlooked the negotiation opportunity at day ten and allowed seller to put this on the slow back burner and not execute.

@Lin Ding

If you’ve already gotten past your inspection contingency, you are probably done negotiating.  Unless there is something that the seller needs, you don’t really have the leverage to negotiate further.

The best you can probably do at this point is to check your financing contingency if that is still in play. If you specified a specific interest rate that you were willing to accept and that rate has gone higher now due to a longer than expected escrow, you may have one last opportunity to try and negotiate. Likely, they would only help you buy down the rate at that point. If that’s already gone, then you are likely stuck with your current price and concessions. If you did your evaluation on rents previously, you should still be in a good position. Rents don’t just dramatically drop because rates go higher.

"The seller has to work on something at the house that had an open permit because not up to code" - This feels like a red flag, no?... it's been nearly 2 months and the issue(s) still haven't been repaired?