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  1. #1

    Can we use our net profits from escrow to pay for needed repairs?

    My husband and I are relocating from Southern CA to Phoenix AZ. We are currently living in a house built in 1993 that needs some repairs before we can place it on the market. Right now we are short on money, but our realtor suggested we hire people and pay them out of our net profits from escrow. Is this legal? Will all tradesmen accept such payment?

    We need to have our house painted inside and out, front and back yard landscaping redone, flooring replaced, and a badly damaged patio cover (full of wood rot) removed.

    Thank you in advance for your kind assistance!



  2. #2
    How can you guarantee the tradesmen will be paid if for some reason you don't sell?
    I have worked with guys who take payment at closing for repairs when the house is under contract, but that means they are more confident of being paid within a couple of weeks.



  3. #3
    How much will all this cost and how much more do you expect to get for doing it?
    Spending $50,000 to maybe get $60,000 is rarely a wise choice.
    Even to maybe get $100,000... can be a tough call.

    But doing the work sure makes the marketing easier which is why the RE agents will push for it.

    Of note is that all of this work is pretty basic stuff that most new homeowners would
    expect or even in many instances plan to do regardless of the current condition.
    Maybe not all right off the bat but there are still a lot of buyers who seek a 'handyman special'
    or "the worst house in the best neighborhood"



  4. #4
    In my market, there are many trades that will accept payment at closing. However, the work contracts will state that payment is due within X days, so if the house is not sold, they still get paid.



  5. #5
    In the case of painting.....the paint is fading and peeling on the outside and one room is full of holes on the wall from my husband's dark room that need to be spackled and painted.

    Flooring - carpet is badly worn in high traffic areas

    Patio Cover - Full of dry rot and leaning slightly

    Landscaping - No grass in front or back yard due to CA drought plus have two dead trees

    Guesstimating it would cost around $10K to make this house model home ready and have better curb appeal. We can either pay for the costs out of our net profit and still make $160K profit or sell "as is" and make around $125K profit




 

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