Would your lender let you put the money for the roof repairs into an escrow account and then lend? It would be worth asking.

Maybe the seller doesn't have $3500. Even though the economy is getting better there are many people who have been dipping into savings for years and are just tapped out.

Try to look at the $3500 within the grand scheme of things. Is it a drop in the bucket or a significant financial hardship for you? Say you own the house for 10 years. Will it be worth it to you to pay an extra $30 per month for the house?

I know it's frustrating to keep jumping through hoops and feel like you are being taken advantage of. Is the house worth one more jump?

"Would your lender let you put the money for the roof repairs into an escrow account and then lend?"

Most lenders sell off the notes immediately.

this type of thing would make the note non-conforming and not eligible for sale into the secondary market.

Only a lender planing on holding the note could do this.

There are some FHA programs that allow improvements after closing, but they have their own complications and special rules.

This post was edited by brickeyee on Fri, Jun 14, 13 at 11:36

If she doesn't want to contribute half, then I think you have to determine whether the house is worth risking $7000 or whether you should walk away (you can always tell her to call you if/when she runs into this issue again).

You could always "lend" her the 7k and forgive the debt if the closing goes through. That way, if you didn't close on the house, you would have a claim against her for the 7k. Keep in mind that it may well not be worth it to pursue the seller if she walks away with your cash (or improvements), so you need to be comfortable with the risk. If she has an existing lender (or two), I suspect it wouldn't be all that easy to get a lien on the property to secure the debt.

I bought a house once years ago that shared a well with the neighbors. The house had been moved to this lot that was part of the previous owner's relative's property; that is why they shared the well. The house was being sold with the provision that the sellers would have a new well dug. When we closed on the house a certain amount of money was put into an escrow account that was to be used to dig the new well. The well was dug after we took possession and moved in. We had no problems getting a mortgage for the house. No problems with any of that. Maybe you could do that. Then the seller wouldn't really look at it as having to put up "her" money since it would be "your" money that you were purchasing the house with.

" We had no problems getting a mortgage for the house. "

As long as it HAD an attached well, the rest of the agreement does not matter to a lender.

The house HAS water and is habitable.

A smaller local bank may be wiling to hold the note until the condition is removed.

The big banks will NOT be interested.
They make there money on volume of mortgages written, and anything out of the ordinary gums up their processes.

This post was edited by brickeyee on Sat, Jun 15, 13 at 17:41

Yes. The lender intends to sell the mortgage. I phoned the seller yesterday. Highly inappropriate. She needs money. She is willing to pay half if it is put In escrow but she doesn't want to wait three or four weeks for a permit. That is crazy because the City has been alerted to the situation by four different people. We are a small town and it will bite us if we do it anyway. The house is zoned historical.

I would not ask a licensed contractor to jeapordize their license for the unpermitted job.

We are leaving for a week today. Going to a remote cabin with no cell service. Nothing is happening while we are gone. I won't be surprised to hear the seller walked. She needs a cash buyer and feels they are out there.

Since it is an investment property, small banks aren't interested. Times have changed in California. Our hands are tied. The carriage house is deemed a Health and Safety issue. No lender will loan on it. I don't have $300,000. Laying around to cash her out. 25% down was our offer. We need a loan.

We have been approved for the loan. The carriage house is messing it up. Sad but resolved. Won't move forward without a permit.

Try another lender or get it in writing from couple of other lenders to let her know if she wants to sell she has to do something to sell. Another lender will NOT lend without a roof.

Should you walk away, well it depends how bad you want the house and problems (money pit in old houses) but it seems your passion. If you walk away others will come and she will realize she has no choice but to fix the roof and someone will get it cheaper. It happens that way.

Good luck

One way this could work, if the lender will cooperate, is one my sister and BIL have used when a seller was too broke to fix things:

She signs a binding offer to sell to you (to prevent shenanigans with upping the price once the repair is done).

You "loan" her the money to fix it, with 60 or 90 days no-interest and then the usual terms. The money goes in an escrow fund for the repairs, with your signature required to take money out. Any excess reverts to you, and if the repairs are not completed within "X" days, the whole fund reverts back to you.

She pulls the permits, helps with the city process, you supervise the repairs.

Closing continues, and the "loan" is repaid out of her walk-away money.

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And ask the city to expedite the permits, pointing out that it's in their best interest to get it done quickly.

I bought an investment property last winter and put $11,000 into escrow with the bank for foundation and roof repairs. The bank was Arvest...not small, not huge, does a lot of business in Oklahoma and Arkansas. Do not give up. If you want the place, perhaps approach another bank. Holding in escrow is really the cleanest approach. The seller was very, very difficult in that situation, too, but I am happy to say that I prevailed. After three months of hard work, the property is beautiful. I hope this works out for you.

Well, sadly we had to walk away. Seller is going to have to find cash buyers or a mortgage company who will hold back money in escrow until it is repaired. She wouldn't give us another month to repair the carriage house in a legal fashion.

The realtor said this is the third time this property has fallen out of escrow. Somehow, the Universe didn't want us to buy it. Lol.