Should a Simple Repair Needed on a Property Kill a Deal?

No, small repairs shouldn't kill the deal. I've gotten permission before to do minor repairs in order to satisfy appraiser.

This most frustrating thing occuring in my area is that one appraiser will say condition X is a repair issues.. and in the next deal with the same issue, the appraiser does not raise the isse as a conern that needs repair.

Sometimes the players ad the banks just can't get out of their own way for their stupidity. That should be the case where someone recognizes the common sense needed and finds a way to get it done. Appraisers should also take a few minutes to read the contract and also read through to what is being done

Dear Gene,

You certinly presented a conplicate and frustrating issue. AND you got quite a few interesting comments - even some from other Mortgage folks - like George Suoto #7. 

Have a happy day -
Lynn

We can all tell stories about repairs creating problems with many transactions, it is just part of the process. Most turn out OK, but some become a killer. Great job with your post.

 With REO's an appraiser just needs to stay out of the way unless it is a health or safety issue.

For some reason it always come down to the minor details. Any more that is where the skill comes in just trying everything we can to keep the deal alive!

I've had a contractor go in and repair minor issues before.  Of course my buyer paid for it.                                                  

Gene,

You make some good points here.  Athough Buyer and Seller may have cetain argeements in the contract to make or pay for any repairs, when two parties are under contract, it becomes up to us as industry professioinals to educate them as to why it is in the best interests of each party to ultilmately close the transaction and the benefits of doing so. My gerneral rule of thumb is that I would never not let a deal close for under $1,500.  If we're that close, then between buyer...seller...both agents...escrow and the lender, there is $1,500 be to found to close the deal and ensure that all parties get paid.

How's the market in Joliet.  I'm a old time Chicagoan from the 90's and visited Joliet quite a bit during that time.  Go Cubbies and Da' Bears!

Cheers!

Gene... this is an issue that's been around for a long time. When I'm selling reo or short sale homes I warn my buyers in advance that this could be an issue and could kill the deal after they've invested a ton of time and money in it.

Gene, no it shouldn't kill a deal. Everyone involved should use some common sense to rectify the problem. A $150 repair is minute compared to the total cost of the property.

Gene, in that case, it sounds like the perfect opportunity for a renovation loan!

No, a simple repair should not kill a deal.  I can't believe the client would fuss over a $150-200 repair.  

One has to remember that the underlying cause of just about everything that comes up is the threat of being sued...It complicates things at times and it takes reasonable effort and competence to prevail..Whatever has to be done to do good business...lets get to it!

What's even worse Gene is that if the house goes back on the market, the REO's have no obligation to disclose the issue and therefore, some unwitting homebuyer pays for another home inspection and another appraisal and the issue comes up again and again until the property sells.

That would be absurd to let $150-$200 get in the way of a sale!

Aren't "blemishes" such as missing handrails, darkened or discolored drywall part of the deal when buying REO? The appraisers should look at these issues, and realize that it's going to be a "less than ideal" situation regardless because it's a foreclosure. If you're buying REO, expect to have to do some repairs right out of the gate.

Gene,

Each situation is different.  Certainly, there needs to be a way to resolve minor repairs, so that the buyers can go to closing.  Financially speaking, sellers need to be aware of the their costs associated with letting a deal go because of a minor repair.  Otherwise, the same situation could repeat itself later.

Andrew

Gene,

This is a very timely post. If a majority of those involved in the process would look at the "big picture", a lot of this nonsense would cease to exist. Like other "veterans", over the years I have had to "pony up" on numerous occasions to make the deal work. You're right, being head-strong or an unwillingness to compromise has killed many deals. I have found that engaging in serious conversation with both buyer and seller, explaining what is likely to happen, breaks down the "I am not paying" attitude. In dealing with a mortgage lender or a bank, if I hit a roadblock, I usually get resolution by speaking with a senior manager or supervisor. Recently I have experienced situations where my buyers had to deal with unqualified appraisers, (no shows - out of the area etc.) my solution, I contact my buyer and suggest they speak with their lender and request another appraiser. If the lender is uncooperative, my buyer is directed to find another mortgage lender. It's amazing how accommodating most mortgage lenders will become, once they realize a customer might "reject" them. I am still confused as to why a mortgage lender (seller) would let an outstanding minor repair find its way to an underwriters desk??? Where adversity abounds - opportunity knocks....   

I feel the answer to your question should be No but often times a closing does not occur when this situation happens.

Betty