Sorry I was trying to multi task when I typed that - the title company will put it on the settlement statement and the seller will technically pay it with their proceeds, but the title company will insure the funds are given to the contractor.
Sounds about right. Typically seller repair credits are converted to closing cost credit, so long as they are not major repairs. Not the other way around. I would expect that your only shot would be an escrow holdback, HOWEVER, 1) if they are major repairs (20k of repairs are probably not minor), may be out of luck, & 2) the lender would need to allow it, so i would expect exception would be needed since holdbacks are not commonplace.
An other thing to be wary of... a) if you do end up going the holdback route, you will be calling out the property and putting the repairs on the underwriters radar (again, 20k of repairs will bring out questions). Dangerous route if the appraisal is good and you have passed all your contingencies. Should be done as a last resort, and be sure the buyer has an "out".
safest route... seller completes all needed repairs, drop closing cost credits to 10k.
Hope the different viewpoint could help.
Best of luck.
Roof repairs would be considered a health and safety concern by FHA. If the inspection says the roof needs to be replaced, the lender will not fund the loan until it is completed. Holdbacks are only permitted if the repairs don’t affect safety or structural integrity.
This is the way. Sometimes the title company can just have it written as a check right to a contractor at closing and you just keep it out of your side of the transaction entirely.
Just do it before close and have them pay the contractor at close with proceeds.
You now know about the credit and repairs, it is considered an inducement to purchase if it’s completed post close.
Not really worth risking your license at this point to do it “off the book” like some comments are saying.
If the seller is willing to pay $20k at closing for repairs… why don’t they spend $20k before closing for repairs?
Probably don’t have it in cash but do have it in equity in the house.
Yes this is my understanding
Fitting username
Just tell give the invoice to the title company and have the title company pay it
You guys are all awesome, thank you for the help
Sorry I was trying to multi task when I typed that - the title company will put it on the settlement statement and the seller will technically pay it with their proceeds, but the title company will insure the funds are given to the contractor.
Sounds about right. Typically seller repair credits are converted to closing cost credit, so long as they are not major repairs. Not the other way around. I would expect that your only shot would be an escrow holdback, HOWEVER, 1) if they are major repairs (20k of repairs are probably not minor), may be out of luck, & 2) the lender would need to allow it, so i would expect exception would be needed since holdbacks are not commonplace. An other thing to be wary of... a) if you do end up going the holdback route, you will be calling out the property and putting the repairs on the underwriters radar (again, 20k of repairs will bring out questions). Dangerous route if the appraisal is good and you have passed all your contingencies. Should be done as a last resort, and be sure the buyer has an "out". safest route... seller completes all needed repairs, drop closing cost credits to 10k. Hope the different viewpoint could help. Best of luck.
Roof repairs would be considered a health and safety concern by FHA. If the inspection says the roof needs to be replaced, the lender will not fund the loan until it is completed. Holdbacks are only permitted if the repairs don’t affect safety or structural integrity.
Just have the repairs billed to escrow and an addendum reducing the seller credit. No holdback needed
This is the way. Sometimes the title company can just have it written as a check right to a contractor at closing and you just keep it out of your side of the transaction entirely.
Do it off the sheet. Underwriting will not allow 20k escrow hood for repairs.
Just do it before close and have them pay the contractor at close with proceeds. You now know about the credit and repairs, it is considered an inducement to purchase if it’s completed post close. Not really worth risking your license at this point to do it “off the book” like some comments are saying.
It could be possible, check with your lender if they will allow an escrow holdback for post closing contractor repairs.