Home Buying in 95834>Question Details

Tony, Home Buyer in

will I get financed if I put an offer on a bank owned home that does not have any appliances and no condenser?

Asked by Tony, Mon Oct 27, 2008

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5
Tony,

This is a question for your Mortgage Lender.

Best of Luck to you,

Stew Keene
Ph (480) 220-7491
Fax (866) 711 8573
StewKeene@yahoo.com
Keller Williams - Scottsdale, AZ
2008-2009 Master of Real Estate award recipient
ABR, GRI, ePro, CNE, MRE, AHWD
0 votes Thank Flag Link Tue Oct 28, 2008
Most homes are currently FHA backed loans. In those cases you are playing two strong positions in negotiating the deal; the bank who wants to sell it 'as is', and the FHA lender who wants a home that is in livable condition.

This is why an experienced agent is important in this market. They can help negotiate to get you in to contract, and to address the FHA requirements that are bound to come after you are in contract.

First, in your initial offering you can most likely negotiate anything related to 'health and safety' to be paid for by the seller. These include the HVAC, and possibly the lighting fixtures or appliances. But remember, the seller is looking at the net proceeds that they are to receive from your offer vs. other offers submitted. You may have to increase your price to address these extra expenses.

After you're in contract, and items come up that the FHA wants repaired. You can request those repairs. The seller can agree to fix or they can refuse. If they refuse, we have been successful in increasing the purchase price to cover the repairs, and then having the seller fix them prior to escrow.

It's a real balancing act, being that most bank owned properties try to have you commit to a close of escrow date, or incur penalties-- and the FHA lender throws contingencies at the last minute. So you may have to rediscuss whether penalties will be incurred as delays come up from the FHA requests.

In your circumstances, it's worth a discussion between the listing agent and your buyer's agent to see how best to approach it. A seller is looking for the easiest close at the highest price. You are trying to get a good price on a home that meets your needs, but also addressing requirements of your lender.

Have patience and find a good negotiator. Good luck!
Web Reference: http://www.suearcher.com
0 votes Thank Flag Link Mon Oct 27, 2008
I've worked on a lot of bank-owned properties and I can unequivocally assure you that conventional lenders are now looking at the same guidelines as FHA and VA. You will need a stove, for example, or the lender won't close. You don't need A/C. You do need heat. You don't need a refrigerator or dishwasher.

Align yourself with a good mortgage broker / lender and real estate agent who handles a lot of REO / bank-owned sales, and you won't have to ask these questions. You will already know the answer.

Having said that, I will also say that banks are becoming more reasonable lately. Just because a home is listed "as is" doesn't mean you can't ask the bank to pay for certain repairs -- especially if your agent sites health and safety issues -- and get them paid for. You need a strong negotiator in your corner, one who knows how to deal with the banks and get the banks to cooperate.

I happen to know Erin Attardi -- she works at the Sierra office of Lyon Real Estate -- I work in the Midtown office. She's a great agent, too!
0 votes Thank Flag Link Mon Oct 27, 2008
Possibly. What type of loan program are you going to be using? FHA and VA lending programs have certain requirements regarding the condition of the property being purchased, and just in a nutshell without knowing any specifics - those items will be noted in the appraisal report by the appraiser, and they will likely throw up red flags to the underwriter, who may require those items to be fixed / remedied prior to funding the loan.

Conventional loans are a bit more relaxed in their requirements, however again, depending on what the appraiser notes in the appraisal report, the underwriter may require certain repairs be made prior to funding your loan.

FYI, I have sold bank-owned property in the past, and negotiated the types of repairs you mention. Many banks will consider installing a new air conditioning system if the existing one was vandalized or stolen. You should strategize your approach regarding negotiating repairs on bank owned property with your agent. If you know of certain issues (such as those you mention) when you write your offer, you might ask for these repairs from the begining when you write your offer? An alternative might be to layer a special program, such as the Energy Efficient Mortgage (EEM), with your loan to make repairs/improvements after the close of escrow. There are many ways to work with this scenario.

Good luck with the purchase of your home!

Erin
Web Reference: http://www.sacreblog.com
0 votes Thank Flag Link Mon Oct 27, 2008
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
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I am not a mortgage broker but I can tell you that my client is in the process of purchasing a home which was acquired by current owner from the bank. The seller is deciding whether to put appliances in or give my client credit at close of escrow for the appliances. My client's lender (Bank of America) said that they will not loan unless the house is livable, and thus the appliances will need to be in there before they will loan her the money.

Sylvia Barry
Marin Realtor
Frank Howard Allen Realtors
0 votes Thank Flag Link Mon Oct 27, 2008
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
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