My partner and I found a local REO that is in need of some repair, however the price was attractive. We offered the asking price of 119,900 on an 1800 sf cape, built in 1991, residing in a quiet neighborhood right near the school. Apparently there we're multiple offers, but ours was accepted.

After signing the P&S we were given just over a month to close on the deal.. Yet the bank still took 3 weeks to dewinterize the house and fix a couple broken pipes.. When we were finally able to inspect the house, the report came back indicating that there is a major mold issue on the underside sheathing of the roof that most likely wont pass on the appraisal. So understanding that this would affect our financing, we went and got multiple estimates on the cost of replacing the moldy roof.

The estimates ranged between $7000 and $10000 so we sent them along with an addendum asking the seller to make the repairs.. They refused. We then asked them to lower the sales price 7000 so we could finance the difference and make repairs through our mortgage company.. again they refuse to budge on the price.

Despite all this I went forward with the appraisal anyways, hoping the house would appraise for more or less than the sales price, so that I could either negotiate the sale or finance the repairs through my bank.. however I believe it will appraise too close to the sales price to do either. The appraisor is unaware of the mold and wont likely find it since the attic entry is completely hidden and almost impossible to enter.. So the house will very likely pass the appraisal, for the mold issue anyways.

I wont know what the appraisal is until next week and my earnest deposit timeframe expires in two days.. So now I am left with the choice to go forward with the purchase and spend 1/3 of my savings on the repairs myself, or walk away. This seems like the only house of this caliber that I could ever afford in this area and I dont want to pass up a good deal.

Advice would be so much appreciated.

That sequence doesn't sound like any Financing Contingency I've ever seen . . . . and the Standard New Hampshire REALTORŪ P&S is quite similar to the Vermont Contract.

Who drafted the P&S with dates like that? The Bank?

Do you have an Agent working for you? Or an Attorney?

Who's interpreting the P&S for you?

Because of the delays, you need a Contract Extension/Amendment PRONTO !

The multiple offer scenario is what's biting you. Also,just because the appraisal comes in low doesn't mean the seller will drop the price. I list a ton of these and quite frankly, once I'm into a multiple offer scenario the wiggle room a buyer has is minimal. Walk away and there's a line behind you waiting. Perhaps next time, they'll jack up their offer since they lost out last once. If you want it take it, if not walk away. If 7K makes the deal that close, rethink sticking around, but think fast, the earnest money clock is still ticking. 7K is about 20 bucks a month.

Thanks for your input guys.

The contract stated that we have 10 days after inspection to back out with our deposit and we are on day 8.. I signed an addendum to push back closing another 2 weeks but I dont think that changes the 10 inspection period so I need to make a decision..

How crazy would it be to try one more time and ask the seller to pay just a couple thousand more towards closing costs? That at least would leave me with some money for repairs. Is it bad form to counter rejected offers more than twice? All they can do is either reject again or cancel the contract, in wich case we get our earnest money back anyways...right?

It's just scary, I have never taken on something of this magnitude. I'm 23 and this is my first time buying a property so I am still pretty nervous about the whole thing.

Your new mortgage will probably be denied once the new Lender learns of the mold issue.

Remember none of the other competing bidders knew of the mold issue, and you were out-bidding them . . . . what would they have offered had they known of the mold issue.

Now that it is known, the Bank will have to disclose it in soliciting future offers.

I think you're too emotionally involved in this property and ought back off and look at it objectively. In doing so, I think you'll walk . . . . or get a major concession to deal with the mold issue BEFORE Closing.

I think you left the following questions outstanding:Mold mitigation can get very expensive . . . . and no one can give you an accurate quote of what it'll be until they actually start the job and see how far it has progressed. Many will give you a bid (couched in terms that allow for escalation depending on their discoveries) because they want the work.

If you're not in a rush, I'd back out and watch from the sidelines; see if the Bank mediates the mold or discloses it; and possibly come in later with a new Offer after the dust has settled.

Don't allow them to hold you hostage to your emotions . . . . and don't participate in withholding information about the mold from your own Lender . . . . they won't forgive you, and you won't forgive yourself.

This may be after the dact seeing today is 7/2/11 but if this was the case in California and I was the buyer's agent I would make an addendum for the bank to remedy prior to close with a response in 24 hours or I would advise my clients to cancel. If cancelling I would send the cancellation with the inspection report attached.

Then I would re-submit a new offer at same price but asking for mold issue to be dealt with prior to COE. In California and I would hope the same is true back there, once the seller is aware of a major problem they must disclose to the next buyer, that could be you or someone else. If they didn't disclose they would be in a major law suit and they know it. So that puts you back in the position of power either in this escrow or the next one on the same property.

the lender/titleholder MUST disclose the mold issue to the appraiser, and the appraiser MUST account for this in the appraisal. it is a known, material fact that has a large effect on value.