Home Buying in 89119>Question Details

Madge, Home Buyer in 89119

a bad condition foreclosed home i really like for 139,900 needs at least 50,000 in renovations the area is nice

Asked by Madge, 89119 Tue Jul 13, 2010

however everyroom needs repairs and probably ac plumbing and roof and who knows? would it be wrong to offer less than 100,000 given the extent of damage it has? also the bank is offering a renovation loan but unsure how that would work? please help? really want to make an offer but not out of my range of being able to fix it also have another home i will need to sell if i take on this morgage> what to do?

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This is an investment first (fix and repair) and a home second keep those two seperate. If you need to sell your primary home to purchase the investment then I say it is not the home for you. Investments and our homes are two different things. My advice is keep them seperate and move on to an investment you can afford without going homeless or sale your home and buy one in livable condition.
2 votes Thank Flag Link Wed Jul 14, 2010
Where is this house located? I have a forclosure and it was listed for $146900 and had a contract the first week for full price. There financing fell apart two days from closing and they reduced it to $139900. This home passed all inspection and was appraised over $147000. Yes this home need some carpet, paint and a window replaced. This home is well worth the $139900 but some will put low offer just because it is a forclosure. You need to consider the area and the condition of the home. It is rare that you find a nice forclosure that does not have holes in the walls, the ac working, etc. Do your inspections, get contractors to look at it and give estimates. I try to get estimates when I list a home .
1 vote Thank Flag Link Wed Jul 14, 2010
What you really need to determine are: (1) the ARV--after repair value--of the property, and (2) the cost of repairs.

You take the ARV and subtract the repair costs. That's the maximum you should pay for the house. Probably offer less. Your Realtor can advise you.

As the others note, your estimate of $50,000 in rehab costs may be too high. It probably is. True story: A while back, on a Sunday, I looked at an open house. The property needed work--probably about $20,000 worth. There was nothing terribly wrong with it, but it really didn't show well. Fixed up, it'd probably have been worth about $600,000. After looking at that house, I went to another open house in the community. About 5 minutes later, someone else visited the second open house. The agents started talking to the person who'd just come in, and the potential buyer mentioned she'd been looking at other nearby houses. She said she'd seen one a few blocks away, but really couldn't consider it since it needed at least $100,000 in repairs. As she described the house to the agents, I realized she was describing the home I'd just looked at. She was grossly overestimating the amount of repairs.

That sort of thing happens all the time.

So, you need solid numbers on the ARV and on the needed repairs. Then you make an offer. Don't worry what your offer would be. What would be "wrong" would be offering too much whether that amount, in your case, is $100,000 or $90,000 or $80,000 or $70,000.

Hope that helps.
1 vote Thank Flag Link Wed Jul 14, 2010
Don Tepper, Real Estate Pro in Burke, VA
Madge have your Realtor® run comparable sales in the area to establish value. I just had some clients close on a home that needed rehab and the comps for the area came back at a 90-95k value. They purchaased the home for 47k and it needed 21k in repairs. Some people over estimate the cost of repairs. My clients has the exterior painted with lead based paint mitigation, 15 new energy efficient windows, new kitchen with maple cabinets and a granite top, 2 new garage doors, and a bath remodel with a few extra things to small to mention.
Get a 203k contractor to do your home inspection so that you have a estimate of the needed repairs. Check with your lender to find who they already have vetted to do 203k repairs.
1 vote Thank Flag Link Wed Jul 14, 2010
Sounds like it might be a good deal? Be careful however, this type of property is not for the faint of heart or those with limited budgets. You can "estimate" the costs to renovate the property, but it seems like there are always hidden items needing repair that pop up during the project.
0 votes Thank Flag Link Thu Feb 26, 2015
There is an active "fix and flip" professional investor groups already established in Las Vegas. They have their own repair crews and the hard money financing to win any deal that makes sense. If you are not skilled at this level, you might win the battlre but lose the war

David Cooper Investing in Las Vegas since 1994
0 votes Thank Flag Link Wed Jul 10, 2013
City First Mortgage Services offers FHA 203k loans that allow you to finance your repairs through a licensed contractor and purchase the property with just one loan. Call me today and ask me how at 702-522-6745. Ask for Nathan. I look forward to speaking with you. Or, click the link below.


Nathan T. Kessler | Sr. Loan Officer
City First Mortgage Services
8871 W Flamingo Rd Suite 202
Las Vegas, NV 89147
(C) 702.683.3126 | (F) 702.974.0848 | (O) 702-522-6743
nathan.kessler@city1st.com http://www.city1stlasvegas.com
Company NMLS # 3117 | Branch NMLS # 819501
Individual NMLS # 377217 NV #46175
0 votes Thank Flag Link Tue Jul 9, 2013
With 35 years in the Las Vegas Investment Business, this house has been investigated by the 100's of active distressed property "flippers". Deals like this are ready made for the investors who already have
a construction crew on payroll, and are doing multiple repairs on distressed homes.

Doesn't pass the smell test!

David Cooper 702-499-7037
0 votes Thank Flag Link Wed Aug 22, 2012
Hi Madge,

Consider an FHA 203k loan to finance both the repairs and the mortgage. However, you'll need to make sure your contract includes a contingency to successfully sell your current home.
0 votes Thank Flag Link Wed Aug 22, 2012
My experience with forclosed homes that need repairs is 1. It will cost more than you estimate 2. You will find more problems than you first believed. 3. It will take longer to repair than you estimate.
There are so many underpriced houses that are less than 5 years old in perfect condition at the $100,000 price range, that would be a better choice.

DAVID COOPER Professional Investor with "Since 1917 Realty".Call +1-702-739-8820...35 Years Experience . For a Free List of Low Priced Bargain Homes in Good Areas. GO TO http://www.lasvegaswinner.org
0 votes Thank Flag Link Sun Nov 6, 2011
you familiar with mgm sig. and palms place?
Flag Sun Aug 2, 2015
if its in a good location its well worth it. location, location, location!!!
0 votes Thank Flag Link Tue Jul 20, 2010
Madge you can not base your offer on their asking price. you need to assess what the house is worth in its current condition so you know what todays market value is. base your offer on todays market value, not on any asking price as you do not know if their price is at market value, under market value already or way above market value,

please see my blog for more info on buying foreclsoures


Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Wed Jul 14, 2010

Do you feel the homes current list price shows no reflection of adjustment for fair market value on other homes sold in the neighborhood? Did you have an agent run comparable sales in the neighborhood to see what other homes have sold for and what their condition was in comparison to the subject property?

The Seller ultimately picks the price and some REO's are way out there on their pricing. Most listing agents are asked to give an opinion of pricing which is double checked against a Broker Price opinion of value from a completely different real estate brokerage. The banks have made it clear; they are looking for Fair Market Value on their homes.

There are renovation loans out there. The most common renovation loans out today are called the 203 or 203k Home Renovation loans. Don't quote me on this; I am not a licensed loan officer. I am told those loans are not allowed to exceed 25-30k.

In my opinion, 20k has been enough to get a home back into livable operating condition. It might not get you granite countertops with the repairs you are looking at with your subject property. But you can get new countertops.

I doubt the bank is offering the rehabilitation loan you were told about. The Loss Mitigation department is moving an asset and Loan Origination is probably on a completely different floor if not a different building. Chances are the loan is being offered to you by a loan officer who knows the listing agent.

The question becomes, does the home really need 50k in repairs? If some of those costs are looked at as esthetics, your offer could simply get ignored. Figure out what other sold for and figure out what Fair Market Value would be.

Let me know if you need a hand.

Mike Madsen
Marketing Director/ Realtor
Waugh and Associates
0 votes Thank Flag Link Wed Jul 14, 2010
You can submit any offer that you are comfortable with making,
however the bank may not accept your offer or someone else
may submit a higher offer.

I suggest you find out what the comparables in decent shape
are selling for and get estimates from contractors for the cost
of the needed repairs. Deduct the cost of the repairs from the
comparables and submit this offer.

Then submit the amount of the offer plus the cost of the repairs
to your lender to get a rehab loan. The lender will disburse funds
for the contractors as the repairs are completed.

I hope this helps. Should you need any assistance please don't
hesitate to call or email me.


Richard Fears, Realtor
Premier Realty Group
0 votes Thank Flag Link Tue Jul 13, 2010
You can make and offer and see what happens. The repair loan, based on my experience, will not allow you to make the repairs yourself. They may have to be by a licensed contractor. Make sure that the price paid + repairs doesn't price it out of the market value for the neighborhood. Hope this helps.
0 votes Thank Flag Link Tue Jul 13, 2010
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