Home Inspections

cajelidiOctober 29, 2012

I don't even know where to begin with my questions! My husband and I made an accepted offer on a foreclosure of a home outside Baton Rouge. After some back/forth calls, the home was finally de-winterized so that an inspection would take place. It was discovered in the inspection that 1) hot water heater needed replaced 2) gas cooktop was not working 3) mechanical sewer system needs pumping and aerator replaced and 4) gas furnace needs repaired or replaced. We are planning on doing a VA loan and know that with these "mechanical systems" issues that VA will not approve the loan...nor would FHA for that matter. When our realtor tries to discuss this with the listing agent, all she keeps saying is "as is". We realized that it is a "as is" home, but how does Fannie Mae expect to sell it if it can't pass any of VA/FHA guidelines! And I must add that outside of these "big" issues, the home is in relatively good condition. Are we wrong in our "thinking" here, that these issues would need to be corrected for ANYONE to finance/buy it? I'd appreciate any thoughts, suggestions, advice that anyone could give!

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1) Why was it leaking? Or just not heating up?
2) Were all the burners not working?
3) Do you mean the Septic Tank? That should not be a big deal or cost.
4) Again why? Did it not come on at all?

Ok sorry, but I need to ask since it's all gas appliances he says are working:

You said the house was de-winterized but did the gas company come back out and turn the gas on? They are usually very reluctant to do so when there is a past due balance (which is usually the case on a foreclosure). Did the bank bring the account current?

Could you smell gas at the cooktop but they would not light?

Is there a valve somewhere turned off?

    Bookmark   October 29, 2012 at 4:08PM
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Also you said his was Fannie Mae.

Is it eligible for the Homepath Financing?

    Bookmark   October 29, 2012 at 4:10PM
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1) hot water heater - not heating up
2) stove top not working at all... (my husband thinks could just be clogged burners, but..)
3) yes, septic tank
4) furnace - not coming on.

The gas was turned back on without any issues. Have no knowledge if previous owners left a balance. I guess my biggest question is do they not have to have these issues fixed due to be able to have the home in "liveable" conditions? We are financing thru VA (no down pymt) and I know that Homepath would require 3% down...not even sure if eligible for Homepath. I'm just not understanding their refusal to budge on these items.
And you're right, the majority of these issues could be easily fixed and quite possibly my husband could do them...the problem is getting the VA to approve loan! :(

    Bookmark   October 29, 2012 at 4:32PM
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You can check to see if the house is listed on the homepath website.

Banks frequently do this because they hope eventually a cash buyer (or maybe a Homepath buyer) will come along and not worry about it.

I watch the MLS listings in our area (as we will be selling in the spring) and I see this frequently on foreclosure listings.

    Bookmark   October 29, 2012 at 5:06PM
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Tell your agent that you demand that the listing agent contact the seller and let them know that if they repair only the items needed to pass the VA appraisal(inspection) then you will go to close. Otherwise, you walk. In my experience, banks have come around quite a bit over the last 5 years in regards to repairing items needed for financing. Especially if it is a house in a price range where it is doubtful that an all cash buyer will come along. You have to make sure it gets conveyed to the lender, and you may request to have the email response back from the lender sent to your agent, to be sure the listing agent is conveying this info for you.

    Bookmark   October 29, 2012 at 5:48PM
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Before you can do some of these things, you MAY need permits. Go to the building dept and check this out. Only the owner can obtain these and the house may be required brought up to code per loan docs.

    Bookmark   October 29, 2012 at 6:04PM
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To answer your last question re:financing..
It may be a house that can only be bought as a cash sale--no financing.

But, I'd try nc's recommendation if I were you. Doesn't sound like you have a lot of cash to take care of these things yourself and buying it out-right isn't doable.

    Bookmark   October 29, 2012 at 11:28PM
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Even if you do have cash to repair these items, NEVER repair something before you close! It is not even close to being your home. The seller needs to do this.

    Bookmark   October 30, 2012 at 7:40AM
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As is means the seller (bank?) is not willing to do ANY fixes. "As is" is a common foreclosure situation. Did your your agent not know that this listing was an "as is" foreclosure that would be an issue with the VA loan?

    Bookmark   November 1, 2012 at 6:06PM
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FannieMae and other GSMs choose AS-IS to avoid liability. This is a big racket as they don't have resources or funds to rehabilitate homes which they bought improperly in the past. So, now they try to flip it to unknowing buyers and if you surface defects with the home - they will simply take it off the market for 60-90 days and relist it with a different agent AS-IS.
I would request a significant reduction in cost and provide report of what you find? They will respond with disclosures advising you are aware of possible issues which THEY alerted you of in the process. If you can't find financing they will record it as unqualified buyer.
It is a very sick process and I haven't found the government official I can write about this but when foreclosures return to the market it will be another round of bad quality homes entering the market place to new home buyers looking for a deal which may end up in foreclosure again.

    Bookmark   November 3, 2012 at 5:58PM
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