Problem After Inspection But During Appraisal

**stantheman** · 07-23-2010, 04:40 PM

Here is my situation. I have a closing date for a home in FL. The home’s purchase price is a good deal for around 125K. I was able to negotiate -10K off the listed price and the negotiated price of the house is -12K under the appraised price of the home. The seller refused to pay closing costs.

Upon first visiting the home with the agent, the HVAC was not properly working. The handler was buzzing but that was all the action that was happening. No air flow. The rest of the house was up to par. We called the owner and he said that there was nothing wrong with the HVAC and the realtor said that if I was interested in the house that we could find out about the HVAC in the inspection process. So we bid on the house and after a few days the seller agreed to the price. Upon arriving for inspection, the AC was already running and was properly cooling the house. The inspector was a former AC repairman and he went over the unit with me for about 20min. He could find nothing wrong with its operation but stated that the outside unit was 15 years old and the inside handler was 25 years old.

We have to have two appraisers because the seller is an investor (and also a real estate agent) and did not live in the house. Without any mention to the appraiser about the HVAC, he attempted to turn on the HVAC when he was at the house and was not able to get the compressor to turn on. He stated this in his report and that he also checked all breakers. The house appraised for more than we are paying and I was told by the lender to not share the appraisal with the seller.

Upon receiving the appraisal report, the loan underwriter (FHA loan) stated the HVAC must be fixed for the FHA loan to go through. Upon hearing this, the seller said he inspected the HVAC and stated that the appraiser did not turn on the circuit breaker! The appraiser explicitly stated that he checked all breakers while trying to get the compressor started during his time in the house. The seller appears to be lying.

There will be a second appraisal of the house next week. The real estate agent seems to take every excuse for the intermittent problems of the HVAC that the seller comes up with. The agent is not the listing agent as was not representing the seller from the beginning. I am afraid that when the second appraiser comes to visit that the seller will have this HVAC temporarily working again. What should I do? Of course I do not want to be duped into buying the house with the HVAC problems! However, the house is priced right.

**shalon18** · 07-23-2010, 11:22 PM

i dont get your topic.I need advice related to real estate.

**stantheman** · 07-24-2010, 07:06 AM

Originally Posted by shalon18

i dont get your topic.I need advice related to real estate.

Well I don't blame for not wanting to read the whole thing, but the topic is related to real estate as any other. As a buyer, one might discover that the seller is trying to hide the intermittent failure of a major component such as the HVAC. What does one do when the problem gets passed the inspector, but comes up during the subsequent appraisal of the property? Not complicated, and definitely pertinent.

**TeamAguilar** · 07-24-2010, 08:26 AM

Ask for a home warranty from the seller or the agent who gets the commission.
It will save your money in case of any future repairs.

**stantheman** · 07-24-2010, 09:21 AM

Originally Posted by TeamAguilar

Ask for a home warranty from the seller or the agent who gets the commission.
It will save your money in case of any future repairs.

TeamAguilar, thanks for taking the time to read and comment! I have the warranty in place, however, my main concern is that the problem with HVAC is centered around the compressor. My suspicion is that the seller knows this is a replacement type situation or he would have simply disclosed. That is what I am guarded against. A compressor for an old unit = new HVAC! Warranty is not going to cover replacement.

**TeamAguilar** · 07-24-2010, 09:40 AM

Originally Posted by stantheman

TeamAguilar, thanks for taking the time to read and comment! I have the warranty in place, however, my main concern is that the problem with HVAC is centered around the compressor. My suspicion is that the seller knows this is a replacement type situation or he would have simply disclosed. That is what I am guarded against. A compressor for an old unit = new HVAC! Warranty is not going to cover replacement.

Yeah warranty won't cover replacement.If the inspector say uses a word like "The compressor is old and about to break" In that case can't you demand the seller for a new HVAC?

**stantheman** · 07-24-2010, 09:49 AM

Originally Posted by TeamAguilar

Yeah warranty won't cover replacement.If the inspector say uses a word like "The compressor is old and about to break" In that case can't you demand the seller for a new HVAC?

The seller had the AC working for the inspection, before we arrived! It was all the other times we visited the house that the AC was not working... get the picture. It wouldn't start for the appraiser either. Its intermittent. I might just have to bite the bullet on this one. However, I might be able to get the seller on disclosure after I move into the house. He is not supposed to hide the problem as you already know. So if I move in and the HVAC is indeed on the fritz, I may have to look into disclosure recourse. Let me know if you have any further ideas.... your thoughts are helping me work through this. One last thing, even if the seller were to replace the unit, he probably would go out and get the cheapest piece of equipment he can find, huh?

**TeamAguilar** · 07-24-2010, 10:08 AM

Originally Posted by stantheman

The seller had the AC working for the inspection, before we arrived! It was all the other times we visited the house that the AC was not working... get the picture. It wouldn't start for the appraiser either. Its intermittent. I might just have to bite the bullet on this one. However, I might be able to get the seller on disclosure after I move into the house. He is not supposed to hide the problem as you already know. So if I move in and the HVAC is indeed on the fritz, I may have to look into disclosure recourse. Let me know if you have any further ideas.... your thoughts are helping me work through this. One last thing, even if the seller were to replace the unit, he probably would go out and get the cheapest piece of equipment he can find, huh?

If he really wants to sell the house to you,he will have to have everyone meet at the home again with the appraiser to complete another inspection to determine how the AC is turned on. The good thing is that the appraiser noted the AC unit in the appraisal which your FHA loan is going to require that the issue is resolved. The thing you have to be careful with is that since your home value came in above the list price your seller may not want to do much to fix the AC since the seller knows the home is worth more then your contract price. He may look for any excuse to cancel the contract so he can sell to someone else for more money.

**stantheman** · 07-24-2010, 10:19 AM

Originally Posted by TeamAguilar

The thing you have to be careful with is that since your home value came in above the list price your seller may not want to do much to fix the AC since the seller knows the home is worth more then your contract price. He may look for any excuse to cancel the contract so he can sell to someone else for more money.

Thats what I needed to hear TA. If I really want this house, I may need to play ball before I scare this seller off. Many of the straight sales in the area do not want to deal with FHA loans for this reason. Point well made!

**TeamAguilar** · 07-24-2010, 10:53 PM

Originally Posted by stantheman

Thats what I needed to hear TA. If I really want this house, I may need to play ball before I scare this seller off. Many of the straight sales in the area do not want to deal with FHA loans for this reason. Point well made!

In addition to my last comment, even if the seller wants to try to sell to someone else for more money he has to find that other buyer which is not always easy. In addition, he has to start the escrow period over again which can take some time.

If I were you I would make it clear to the listing agent through your agent or if you are the agent just let the listing agent know that you are willing to agree to all terms of the original contract but you just want to make sure you have a working AC unit. Tell them you would like to get an additional AC contractor to take a look at the unit and make sure everything is working. Just talk to them and keep the lines of communication open. Perhaps he can provide his own warranty. You could get a Home Warranty to cover the AC unit by itself which would not cost the seller very much.