Attention Home Buyers... NEVER, EVER, EVER.... do repairs on a house BEFORE you close!

I received a call from the agent of a buyer for a house I have listed for sale. They are currently under contract to purchase this home and are due to settle very soon. The agent asked if they could move settlement to about 2 weeks later because the buyer needs time to make repairs before moving in. I had to ask again, they want to settle later to make repairs. I would never, ever, ever recommend that a buyer spend their own money or time repairing a house that they do not yet own. WHY on earth would ANYONE do this? Putting your own money into someone elses property gives you no guarantee that the owner will sell you the property, and you could lose your investment.

The agent said that the buyer needs to be in by month end at the latest, but needs these repairs done first for his family, before closing. He just kept insisting that the buyer wanted these things done before he closed on the property (the property is selling as-is).

I had to call him back when I thought more about this call to clarify what he meant once more. The agent finally fessed-up that the buyer doesn't have the funds yet to close on his 100% LTV mortgage. I guess he is hoping that 2 more weeks pay will help with that. (The seller is contributing 3% towards closing costs).

In the meantime, title is done, survey, home inspection, wood boring insect inspection, mortgage..... etc., etc., etc. I even got the preliminary HUD-1. All these companies have spent time and money, and the buyer does not have the funds to close.... yet. Something is wrong with this picture.

By the way, my seller's property is still being marketed and shown because we were awaiting the earnest money deposit on the agreement until last week, and we still have not received the mortgage commitment letter that was contractually due 12 days ago. I have to think that there is one, although we have not seen it and I've asked for it many times now. I don't know if this is because of sloppiness on the agents part or the mortgage companies'???? My seller is content to keep showing their property, since the agreement is not being adhered to on the buyers part I need to look out for their interests. Fortunately this is not a primary residence with other closing contingent on this sale.

I hope that this works out for all... I will have to wait and see.

Posted Monday Nov 12

(11/12/07 06:20PM) — Florida Future Realty Inc. (239) 340-1384 Scott Slocum

Diane - Are you kidding me??? Something just sounds totally wrong with that customer...

On another note I know that for one of my buyers this year he had to complete some work to the property prior to moving in to secure the mortgage. The homes kitchen was destroyed by a water leak and had no cabinets or appliances. He had to install cabinets, countertops, and appliances for the lender to approve the loan otherwise according to the lender the property wasn't considered inhabitable at the time of closing...

(11/12/07 06:24PM) — Diane Testa

Thanks Scott,

I did pose that question to the agent. He said that was not the issue. The buyer wanted the house READY to move into before closing????

(11/12/07 06:25PM) — Anthony Stokes-Pereira

Hi Diane,

I do not understand what agent would advice his buyer to do repairs before closing.

Anthony

(11/12/07 06:28PM) — Lenn Harley

Clearly the buyer isn't able to close. What a mess. Sounds like the thing is falling apart. No way the buyer should get access to the property to do anything. He could tear the house apart starting repairs and then leave the reparis half done.

What does the buyers loan officer say???

My experience is, if you have to ask for a loan commitment and you don't get it by the date in the contract, the lender can't get the loan approved. Someone needs to be telling you what's happening. Your seller is making mortgage payments on the property??? He is surely paying insurance and taxes on it even if he doesn't have a mortgage.

Time to send a NOTICE that the contract is null and void and sell the house.

Good luck.

(11/12/07 06:28PM) — Diane Testa

Thanks Anthony,

I even said that to the agent. That I would never recommend to a buyer to spend money on a house they don't yet own.

(11/12/07 06:32PM) — Diane Testa

I agree Lenn, I have to wait to talk to my seller tomorrow. They are out of state until late tonight. Unfortunately the loan officer is the wife of the agent, so they are litterally "in bed together" and I feel like they are being deceptive at this point. That is why I called them back to pin him to the wall. I was sure it was a money issue, he just kept insisting it was because of the repairs at first. It is a mess!!!

(11/12/07 06:55PM) — Danilo Bogdanovic-Real Estate Consultant -Loudoun and Fairfax County

That's why an offer without an EMD and lender letter is not an offer. If the EMD and/or lender letter is not included, I kindly call or email the agent and say that the offer is incomplete and that I will gladly submit the offer once I have received the EMD and/or lender letter.

It they don't submit one or both of those, they're not serious nor able buyers.

(11/12/07 07:14PM) — Diane Testa

Danillo, I did get an approval letter from the lender with the offer. It has been slow going when it comes to getting any money out of the buyer (earnest deposit, closing costs, etc.).

(11/13/07 08:08AM) — Lenn Harley

Unless repairs are a part of the contract, that isn't an issue.

Lenn "Follow the Contract" Harley

(11/14/07 10:32AM) — Danilo Bogdanovic-Real Estate Consultant -Loudoun and Fairfax County

Diane - It's good that you received a lender letter with the offer, but it seems that the EMD was not a part of the offer making it incomplete (IMHO). Although advising your clients against taking a shaky offer is tough in the short term, it saves you headaches and stress down the road, as you are experiencing now.

I'm not the only one that feels this way in the area I'm in (Northern Virginia). If I were to submit an offer without both, the lender letter and EMD, it would not be considered by 99% of agents/sellers in this area. And this is case regardless of how slow our market is.

I hope that this works out for you and your clients (I'm sure it will in the end).

(11/14/07 10:56AM) — Diane Testa

Thanks Danilo,

I do finally have the commitment in hand, and I think we are getting it together on the other end. It is tough for these first time home buyers to get financing sometimes, and my seller is aware of that. We have been through this many times now. It's never quite the same set of circumstances, most problems are because the agent on the other side is not communicating well enough. My seller knows me well and trusts me to take good care of his interests.

Thanks for all your help and suggestions! :)

(11/14/07 11:01AM) — Danilo Bogdanovic-Real Estate Consultant -Loudoun and Fairfax County

Glad things worked out for you and your clients!