Urgent Question - How Much Does A Bridge Loan Cost? Kinda Urgent.

[jyl]

I hope one of our RE pros can answer this.

How much does it cost to get a bridge loan for 1 or 2 months, when a seller has to close escrow on his new house before he has sold his old house?

I'm asking because we're playing hardball w/ our seller who appears to be trying to get us to back out of the contract on this house we're buying, here in Portland. Originally he needed the escrow to close by month-end, which we could do, so we got the house over someone who bid higher but couldn't close in 20 days. I have a suspicion, however, that subsequently the seller may have arranged a bridge loan so that he could take the higher offer. Just a suspicion - because that's what I would have done. Hence he's refusing to credit any portion of a few thousand in repair costs that the inspection revealed. This is either his attempt to bluff me and save $2,000 at the risk of losing this sale, or his attempt to push me out of this deal so he can take the other offer.

I am trying to guess the odds of this scenario, which will influence whether I call his bluff or, alternatively, force him to stay in the deal.

Need any advice in the next few hours, if at all possible. Thanks.

[mede8er]

How do you think your contract can be invalidated.....

Sorry, to answer your question 6 month bridges are not unique animals...most lenders offer them at slightly highr than average rates.....

[RANDY P]

Nature of the defects?

email me directly at randyp AT seattleAOF.com

In summary, if it's not that big of a deal, as long as it's not major structural - have the appraised value worked "AS-IS", and either up the cash to close, or simply eat it if the appraised value is higher.

As long as the money is there, they have to honor the sale, they cannot unwind before the official closing date - doesn't matter what he said.

rjp

[jyl]

Well, I have until tommorrow to reject the deal based on the home inspection.

The only problems turned up by the inspection were appx $5,000 of repairs (I got bids, so I know the appx cost). Need some ridge vents on the roof, some parts of the chimney need repointing, a sewer line could be dug out and checked (that's the expensive bit, $2,500).

Everything else about the house is in very good condition - all electrical replaced, new elec panel, new hi-efficiency furnace/central air, all new ducting, new water heater, new roof, new windows, etc, etc.

So we're kind of down to haggling over splitting or not splitting $5K.

[RANDY P]

so this is the home inspection.

You can throw the inspection in the trash, and waive the inspection as far as the lender is concerned - but that doesn't solve the basic issue of how to make him pay for it.

Unfortunately, those items are easily disguised by a regular appraisal of value (URAR) - so the next buyer could very well be OK with it, and off you go. You can't make him pay so he performs the deal.

If you decide to eat it, make sure the appraiser doesn't note those "defects" on the appraisal - the appraiser won't look into the sewer lines unless it's noted on the purchase and sale agreement or its blatantly obvious something is defective.

usually, appraisers are concerned with what actually shows in the picture. Most will bend / not disclose minor defects as long as the pictures taken are clean.

rjp

[RANDY P]

If it's an issue for these repairs, and the seller wants to take care of it, but not "out of pocket" - assuming he'll do an extension simply have the cost of the work paid out of closing -

Find a friendly conractor and simply have them submit the cost of repairs to escrow for repayment. The contractor can be paid from the sellers proceeds at closing.

It will not interfere with a 1031 exchange if that's what the seller is up to.

[RANDY P]

Also - what probably happened is that the proceeds from the sale of the house you're buying is a downpayment on the new home.

If he said to hell with it and did zero down or lessened his downpayment by ordering up a 2nd mortgage then can be arranged immediately, assuming he has the qualification standards to do it.

For example, instead of 1 mortgage with 20% down, he does 5% down, does an 80/15 combo, and funds his new purchase that way.

His old house sells, and the 15% 2nd is paid off with proceeds. You can set those up same day..beware

rjp

[jyl]

I don't think it is a question of paying out of pocket, we offered to take a credit in escrow. I think it is him playing hardball with me after I played hardball with him earlier. I sent you details via email.

[turbo6bar]

What does the contract state with regards to repairs? Be careful with your bluffs.

[jyl]

Contract says I can terminate the deal if I don't like the repairs. But I think we're now in a situation where he would prefer that I terminate, and logically I'm not going to walk away over a lousy $2,500 (1/2 of $5,000) - another 3 weeks in this corporate apartment will cost me more than that.

So we're proceeding.

No big deal, its just business. I played some games earlier in the nego and now it is his turn.