A Tale of two chimneys, the home inspection process
Hooray! Natalie and I successfully negotiated the full $16,000 repair bill for our client’s two damaged chimneys. Parkstone Construction will be starting the work as soon as we close escrow.
Now the issue is with the details. Lenders “don’t like” big credits, they also “don’t like” cracked chimneys. The “fix” may be a withhold in escrow. Lenders often want to withhold 1½ times the cost of the work, in this instance $24,000. The bank/owner of the property contributes the $16,000 and the buyer contributes the $8,000. The money will remain in escrow until the work is completed and “signed off”. The lender who extends the loan to the buyer wants the work done quickly because they want to sell the loan (it is easier to sell a loan when the home’s chimneys aren’t cracked). The home buyer wants her $8,000 back.
Lenders are a little nervous now… so it will take awhile to work out these details. Ironic how they weren’t nervous lending money to buyers with NO down payments and bad credit, but our client with her 20% down payment and high FICO scores makes the bank a nervous wreck – all because she wants to get the chimneys repaired. The bank’s appraiser didn’t note the chimney damage, and even though the home is the bank’s collateral, they don’t require a copy of the buyer’s inspection report. We only informed the lender of the chimney issue due to the credit.
Why didn’t we ask for the price to be reduced? This was a bank foreclosure, lender owners prefer not to reduce the sales price or make concessions after the inspection. By having the bank issue a credit to the contractor the bank is convinced the damaged chimney weren’t a fabrication. I don't think we could have negotiated a $16,000 price reduction, so we asked for the contractor credit instead.
Categories: Lenders, A Seller's Perspective
Tags: buyers inspection fireplace inspection
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10/8/2008 7:08 AM
Los Angeles Real Estate Blog wrote:
The Fed reduced its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent. (let's see if this "trickles" down to home buyers - we have a client waiting for loan documents). October Real Estate Newsletter ... -
10/8/2008 7:58 AM
Los Angeles Real Estate Blog wrote:
The Fed reduced its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent. (let's see if this "trickles" down to home buyers - we have a client waiting for loan documents). October Real Estate NewsletterLearn about 2008 tax rates and the latest tax law changes at this Year End Tax Newsletter ... -
4/8/2009 9:28 AM
Los Angeles Real Estate Blog wrote:
Natalie is now dealing with another damaged chimney (discovered during the inspection) approximate fix $15,000. This seems to be the most common major defect we find inspecting Los Angeles area homes. Often home buyers have an inspection and then inspector specialists (such as chimney) come in for further evaluation.While Natalie, is busier than normal during what should be a quieter week, I am having a wonderful time. The treadmills have their own television! I had a pilates class yesterday, and George and I took a walk along the bike path. Then it was beach time most ... -
4/9/2009 5:49 AM
Los Angeles Real Estate Blog wrote:
Natalie is now dealing with another damaged chimney (discovered during the inspection) approximate fix $15,000. This seems to be the most common major defect we find inspecting Los Angeles area homes. Often home buyers have an inspection and then inspector specialists (such as chimney) come in for further evaluation.While Natalie is busier than normal during what should be a quieter week, I am having a wonderful time. The treadmills have their own television! I had a pilates class yesterday, and George and I took a walk along the bike path. Then it was beach time most ... -
4/9/2009 8:59 AM
Los Angeles Real Estate Blog wrote:
Natalie is now dealing with another damaged chimney (discovered during the inspection) approximate fix $15,000. This seems to be the most common major defect we find inspecting Los Angeles area homes. Often home buyers have an inspection and then inspector specialists (such as chimney) come in for further evaluation.While Natalie is busier than normal during what should be a quieter week, I am having a wonderful time. The treadmills have their own television! I had a pilates class yesterday, and George and I took a walk along the bike path. Then it was beach time most ...
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