One of my clients asked me the other day about the AS-IS policy that most banks assert in their addendums following the initial buyer's offer on REO properties. The question stemmed from the inspection period and just what the bank is obligated to repair and what they can refuse to correct.
Let me start by saying three very important things to the buyer:
1) The bank WANTS to sell the property.
2) The bank understands that the preponderance of buyers are utilising FHA financing and thus , the home must comply with the FHA guidelines and thus must be at least habitable and not a danger to the buyer.
and most importantly -
3) The bank WANTS to sell the property!
I know, I know, 1 & 3 are the same but I wanted to make that point clearly. The bank is reasonable enough that if what the buyer is asking for in repairs are prudent and necessary, then if the bank refused to correct these items, they will only rear their ugliness on the next go-around. The problem should be solved while they have a ready and willing participant in the sale.
The Banks are not willing to repair aesthetic items. Many of these types of issues are numerous with REO's as well as the fact that these items have little to do with the actual functioning of the house as a whole. While it is possible that a buyer may coax a private seller to handle these types of repairs, banks simply offer their properties at prices that reflect the condition of the house.
I recently helped buyers close on a home where everything seemed very tidy and clean (yes, believe it or not - it was an REO property). However, their inspector discovered that the A/C was not functioning at all. In Arizona, this actually makes a good argument that the home is not habitable - especially when temps can reach 118d in the summer.
The bank was smart. They replaced the unit with a new one and thus sold the home to my clients.
Nuf said.
Hope this helps.
Joe
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