Buying a Foreclosed Home Can the bank keep my earnest money?
If I made a offer on a foreclosured home and have it contigent on a home inspection can the bank keep my earnest money? I knew upfront the home would need work there was no doubt about it but the work I believe needed was minor. I knew it would need a furnace for sure and carpet, paint and few other minor stuff. These repairs I would have to pay for myself. I signed a addenum with my realtor and I told her I accept the house as is with the furnace to be repaired but to make it contigent on the seller paying for any plumbing/water leaks. She says the bank will do not any work and that they said they are going to keep my money if I don’t go through with the apprasial and everything because the house is being sold as is and I knew that upfront and because they are already losing out on so much money for selling it so cheaply. Can they legaly keep my earnest money eventhough I said I don’t want a home with major plumbing problems on the addenum?? I was just told there was a water leak 2 days ago but the water wasnt turned on during inspection ( month ago) and still isnt turned on because the furnace isnt working. This is a FHA loan and the apprasier wont approve the home if the furnace isnt working or if there is water problems unless I was to take it as is or at least that is what my realtor tells me.
Tagged with: Much Money • Plumbing Water • Realtor
Filed under: Renting & Real Estate
Like this post? Subscribe to my RSS feed and get loads more!
Where was/is you lawyer? If you do not have one, then shame on you. Hold the inspector liable because he/she did not turn on the water. If you have a lawyer he would win on that point alone. Most of the time Greed Blinds people and that seems to be what happened here.
I don’t believe they can do that if you specified the conditions on the addendum! We are in the process of buying a foreclosed home with an FHA loan as well. However, the selling bank did all the necessary repair for us to pass the appraisal, because they should realise that if they don’t fix it now the next person who is going to do the inspection and the appraisal will bump into the same problems and who knows how many people will walk away from it because of the same problem. And with so many houses in the market and such low demand for them they are really not in the position to choose.
It strictly depends on what was in your original contract. Addendums are meaningless unless both parties (you and the bank) agree to the addendum. If your original offer stated that the purchase was contingent on a satisfactory inspection, and the bank accepted your offer including that contingency, and you in good faith were not satisfied with the inspection, then you have a good argument for return of your money.
If your offer had no such clause to begin with, then you are out of luck.
“If I made a offer on a foreclosured home and have it contigent on a home inspection can the bank keep my earnest money?”
If the inspection was not satisfactory, and your offer did contain this contingency clause – then they absolutely can *not* keep your earnest check if you back out. However… THIS STATEMENT has me very concerned…
“She says the bank will do not any work and that they said they are going to keep my money if I don’t go through with the apprasial and everything because the house is being sold as is and I knew that upfront and because they are already losing out on so much money for selling it so cheaply.”
YOUR realtor is the one who wrote your offer, so if she wrote an offer with an inspection contingency then she should not be saying this. Something here sounds VERY fishy!!! Either your realtor made a mistake when writing your contract or they are trying to get you to go ahead with the purchase because they want their commission check. FHA wants a home in habitable condition before you move in… your realtor would have known this. This whole situation makes very little sense to me.
Does your real estate agent/ realtor work for an agency? If so, I would suggest calling her broker/ supervisor and asking this person to review your case. If they are not helpful, and you don’t understand the language in your contract offer, you may have to go to a real estate attorney.
Also.. for future reference – you can always have an inspector turn on utilities. In fact, you always SHOULD have an inspector turn utilities on. When buying a foreclosure, this is at your expense (de-winterizing and re-winterizing) – but, it will be well worth it in the long run!! How else would you know about something like an electrical or plumbing problem before buying the house? The bank doesn’t *have* to tell you.. they don’t even need to provide a disclosure form in most cases because they’re selling “as is.”
Lastly, if your realtor made a huge mistake and did not include the inspection contingency (or had you sign some crazy addendum that negated your inspection contingency), they should have at LEAST included a financing contingency. In other words, your offer is subject to available financing. FHA probably won’t approve the loan for the house in its current state so that should give you valid reason for backing out of the sale and getting your earnest money returned. You will however lose the money you paid for the inspector. I hope this works out for you… best of luck.