I chose to write this blog because of an issue that has come up in one of my escrows. I really didn't give this any thought, until I heard another agent in our office having the same issue. As it appears that this is not a isolated incident, I felt it was worth discussing in my REO Blog.
My clients found the home of their dreams, a REO property in Big Bear City, and after some negotiations with the bank, got an agreement and we went to escrow. As with so many REO's this house needed some repair work. We really didn't know the extent of the work needed until after the home inspection. The repair list wasn't to bad and my clients are still moving towards the close.
Unbeknown to me, the lender asked my client to send them a copy of the home inspection, and it was then that things got a little more complicated. As I mentioned, the home needed some work, work that my clients planned to do once the escrow closed. The lender had other plans. They told me that because this was an REO property, they wanted certain things taken care of through escrow. Knowing that we can't do any work on the property until escrow closes, the lender has asked for bids from licensed contractors to make repairs. They plan on having my client bring in to escrow 1.5 times the amount of these bids. Once escrow closes, they will be asking the contractors to go in and complete the repairs within 30 days. Once the work is complete, any extra funds will be refunded to the buyer.
I understand their thought process in dealing with an REO property, but this is going to cause some other issues. The biggest problem we are going to have to work through is that the cabin needs a roof. Normally, that's not a big issue. You call the roofer and he comes out and replaces the roof. But, when you live in Big Bear, you have to watch the weather reports, especially once we hit October 1st. So, the escrow is set to close on October 10th and the roofer is going to have 30 days to tear the old roof off and install a new one. Roofers don't work when it snows and anytime after October 1st, we can have snow.
The second issue that this has caused is this. My clients knew that the REO that they are buying is going to need work. This is work that they plan to do once the escrow closed and before they move into it. The work that needs to be done is work that my client says he can do. So, why should he have to pay a contractor to do the work that he is qualified to do.
It doesn't matter if you are a buyers agent or a buyer. I think this is something that you need to know and consider when you buy a REO property. Not all lenders are the same and they might not all be asking for money to be held in escrow for repairs. But again, please keep it in mind when you are ready to purchase a REOproperty and be prepared for it.
As your Big Bear REO Specialist, I can assist you with the purchase of any REO home in Big Bear. For more information on REO properties in Big Bear, please give me a call at 909 229-5326 or send me an email is tony@tonycard.com.
