When to get home inspection on Short Sale?

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Submitted by sdsubie on June 22, 2011 - 9:13am

Quick recap of my last post, we had an offer in on a short sale and waited for short sale approval before ordering a home inspection. The home inspection brought up some rather large repairs that needed to be done, that weren't apparent from a walkthrough.

urbanrealtor had noted that if he was my agent, he wouldn't have let me get to that stage in the process before getting a home inspection done.

My question is, if waiting for short sale approval is too late, when IS the time get the home inspected? Of course in an idea world, you would have every home inspected before you make an offer, but at 300-500 bucks an inspection, thats really not fiscally sound.

Thoughts from the piggs?

Submitted by scaredyclassic on June 22, 2011 - 10:11pm.

why bother getting it inspected prior to acceptance?

Submitted by sdsubie on June 22, 2011 - 10:28pm.

That's what I thought, but general consensus is that the short sale lender will not make any repairs for issues that are found during the home inspection. Does one simply hedge this issue by lowering their bid to anticipate repairs, and lessen your chance of short sale approval in the first place?

Submitted by sdrealtor on June 22, 2011 - 11:47pm.

Tough question and I have done close to 100 so I have a pretty large body of evidence to draw from In general my advice would not to waste money doing one before approval. I would also not write an offer and try to buy one that was a fixer and not in good to very good condition knowing i wasnt going to get repairs. Condos work well as short sale buys as do newer homes. Older homes with lots of issues dont work so well unless they have fallen out due to a previous buyer walking over issues uncovered during an inspection.

Submitted by moneymaker on June 23, 2011 - 7:33am.

I think you did the right thing. Now you have a bargaining chip and better knowledge of what you are getting into. We had a friend do our home inspection and he didn't even crawl under the house. He knew how much my wife wanted the house so I don't think he really wanted to find any major issues like deteriorating cast iron pipe or recently fixed foundation (I think everyone knows what that means). All in all though I will admit that we would have bought our house anyway because it was not house A versus house B for us @ the time but more of house or no house @ the time. I think all inspectors find lots of issues but it is the big ones that you really want to know about. A personal peeve of mine is that the big ones are probably known to the seller/realtor and I've yet to hear them pointed out by them.

Submitted by scaredyclassic on June 23, 2011 - 8:13am.

My short sale lender did about 7500 in repairs found during post acceptance inspection

Submitted by sdsubie on June 23, 2011 - 8:38am.

Thanks all, great information as always from this board.

sdr: thanks for the info, it's actually a newer house, and the repairs are not terribly extensive. I just ask out of general curiosity in how these transactions work, and my general cheapness.

walter: That's great to hear, gives me some hope when I ask for repair costs.

Submitted by sdsubie on June 23, 2011 - 8:43am.

[quote]Submitted by threadkiller on June 23, 2011 - 7:33am.
A personal peeve of mine is that the big ones are probably known to the seller/realtor and I've yet to hear them pointed out by them.[quote]

Agreed threadkiller. One of things that came up in the home inspection was that the pool heater doesn't turn on, and probably hadn't for some time judging from the big rodent nest that currently resides in it. When the seller was asked about this, he casually stated "oh yes, that's right, it hasn't worked for a couple years now I think"

Submitted by ocrenter on June 24, 2011 - 4:12am.

a relative recently purchased a short sale in OC. the former owners ended up leaving the place in an absolute mess with the pool turned green. nothing structural, just bunch of left over trash and badly stained carpet that was going to get removed anyway.

is this common with short sales? I thought ppl only did this type of stuff with foreclosures.

Submitted by scaredyclassic on June 24, 2011 - 8:14am.

A green pool is no biggie. Go to troublefreepool.com. Clear it up licketysplit

Submitted by montana on June 24, 2011 - 9:04am.

We purchased our home last December and performed the inspection after approval. There were a number of reasons why I was comfortable that the inspector would find little to no issues with the home. (1) The home was built in 2006, (2) the original owner never occupied the home, (3) the renters had already moved and left the place spotless, (4) our next door neighbor who just closed on their short sale found zero material items in their inspection, and (5) my realtor and I went through the home twice top to bottom (we both are fairly handy) and found four or five immaterial issues. After the inspection, the report listed our six or seven immaterial issues, of which he caught all of the items we found. I didn't ask for anything and fixed the items myself, probably totaling $250.

Submitted by sdrealtor on June 24, 2011 - 1:37pm.

Some people are angry when they short sale and leave places in poor condition. That has not been my experience as I dont work with a$%^holes. I only work with people I like on short sales who I think need and deserve some help.

Submitted by paramount on June 24, 2011 - 6:40pm.

A little OT, but how many (%) short sales ever complete anyway?

Submitted by ocrenter on June 25, 2011 - 4:44pm.

sdrealtor wrote:
Some people are angry when they short sale and leave places in poor condition. That has not been my experience as I dont work with a$%^holes. I only work with people I like on short sales who I think need and deserve some help.

so you never represent buyers of short sales? what can you do if a short sale property purchased by a buyer is trashed?

Submitted by SD Realtor on June 26, 2011 - 6:37pm.

ocr you still have the contingency period to back out if you want. Also if the property has sustained substantially more damage then when your client submitted the original offer then you have valid recourse to submit an addendum to lower the price, get credit for repairs, or simply walk. If these damages happened without your knowledge then you cannot be expected to eat the cost. The short sale lender may not see it that way but the listing agent would either relist at a reduced price or try to sell it at the same price with little or no luck. So the listing agent would probably try to explain the situation to the negotiator. Whether the negotiator could convince the investors to accept the reduced price is the real question.

Submitted by zzz on January 23, 2013 - 10:38am.

We waited until the short sale lender accepted before scheduling an inspection. I dont think its worth paying for one until an acceptance happens, but the inspector missed a lot of things and hes a general contractor, not that it says much but he was highly recommended by several people.

If you're serious about the home, if I had to do this over again, prior to a short sale acceptance, I would also have a roofer, electrician and plumber come out. They will all do this for free, so as long as the owner agrees, schedule all of them for the same day. The roofer is really important if you have a tile roof because the only way to really look at a tile roof is to have a roofer walk it, and an inspector typically don't do this.

Also in an older home, particularly with ones where you see visual damage or deferred maintenance, budget 10-20k in fixes. There are bound to be things that need fixing that won't be uncovered. But you might find out a month, 2 or six into living in the home.

Finally, if you are looking at a house on a slope, do some homework on what to look for. Are there any major cracks in the house, stuck doors or windows, obvious signs of drywall /stucco repair from cracking? Talk to the neighbors, does anyone have any soil settlement, or slope failure issues? If the house is on a steep slope, what type of soil is typically in the area? Are there any retaining walls? If so, are any of them bulging or slipping? Is water/ drainage in place at the home? IE gutters, drains, etc. Basically you dont' want water going down a slope, you want it out to the street to prevent erosion. If you think theres problems, call a soil engineer prior to buying the home. ask them to come out to look at a slope and give you a visual interpretation. If there are suspected issues, you'll need a soil study which is thousands of dollars, and then potentially 10s of thousands to fix it.

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