Ask Phyllis: a blog series of frequently asked real estate questions.
Buying a fixer
Dear Phyllis,
My niece and her husband are in escrow to purchase their dream home. It’s a 1920s Spanish home that, while charming, needs a lot of work. There are a variety of minor problems. Additionally, the chimney needs to be rebuilt, and the foundation requires cripple walls. After their down payment, my niece won’t have the money to make the repairs. Although the seller agrees that the repairs are necessary, they don’t have the funds to make the repairs. Both parties just don’t know how to make this work. I thought I would ask our local real estate expert for her advice.
Donna
Dear Donna,
Thank you for the compliment!
In situations like your niece’s, an alternative still exists. If the lender does not permit a withhold account, escrow can handle payments differently. Instead, escrow can issue checks directly from the seller’s proceeds to the chosen vendors. This approach simplifies the process. Afterward, your niece and her husband can confirm the work is complete and meets expectations. Then they can approve the final payment to the vendors. Therefore, this method keeps the transaction moving forward. At the same time, it avoids the need for lender involvement in a withhold structure.
