Hopefully you are working with a lender who is knowledgeable on the various products that would work best for YOUR situation. The lending world is not a 'one-size-fits-all' especially in these shaky times. MANY of the properties that are closing each day are properties with these sorts of issues, and the program of choice seems to be the FHA 203(k). This is a special rehab loan, which allows you to borrow the funds to rehab the house as necessary. While this program might not work for everyone (you would need to qualify for the total amount of the loan) it's a good way to get into a property that needs work.
I suggest that you speak to your lender about the program--hopefully they're familiar with the many different loan products available. Not all of the foreclosure properties need such extensive work, but many do, and if you're not afraid to put the work into a property, the FHA 203(k) streamline is program might work well for your needs..
Here's a list of eligible improvements under both traditional And streamline 203(k) Programs:
* Repair/Replacement of roofs, gutters and downspouts
* Repair/Replacement/upgrade of existing HVAC systems
* Repair/Replacement/upgrade of plumbing and electrical systems
* Repair/Replacement of flooring, tiling and carpeting
* Remodeling, such as kitchens and bathrooms
* Weatherization, including storm windows and doors, insulation, weather stripping
* Purchase and installation of appliances, including free standing ranges, refrigerators, washer/dryers, dishwashers and microwave ovens
* Repair/replace/add exterior decks, patios, porches
* Window and door replacements and exterior wall re-siding
* Basement finishing and remodeling
* Basement waterproofing
* Septic System and/or well repair or replacement
* Lead-based paint stabilization
* Accessibility improvements for persons with disabilities
Additional Eligible Improvements Under The Traditional 203(k) Program Only
* Major rehabilitation/Repair, such as relocation of loan-bearing walls
* Room additions
* Repair of structural damage
* Repairs requiring detailed drawings or architectural exhibits
* Landscaping or similar site improvements including: terraces, correction of grading and drainage problems, tree removal if the tree is a safety hazard, repair of existing walks and driveways if a safety hazard, fencing, new walks and driveways and general landscaping work
HUD has a lender list here: http://www.hud.gov/ll/code/llslcrit.cfm
See if your current lender is on the list--you want to work with somebody who has put one of these loans through in the last few months (rules and regs change rapidly in today's lending world...)
There are still cash buying investors out there looking for opportunities just like this one. They will use the "broken pipe" and hopeless to sell sinerio as leverage to obtain a good property at a very low price.
Cash is still KING....................
Not sure what program you are going to use for financing but there is a product out there called the 203K. It is designed for exactly this kind of home. It allows you to finance not only the cost of the home but the cost of repair. I have access to lenders who are expert in this arena. If you want more info just email me at mary.lyons @century21.com.
Best of luck to you.
You made a good point. A few months ago i was representing the buyer on a reo property and the sewer was not connect to the city line. The lender was not going forward till the issue was resolved. My client really wanted the house and the house was priced really low so they foot the bill to have it reconnected ( around 2K). Lenders will not lend on a series of issues, if the home is not in "liveable" condition they will just deny the loan. Sometimes the seller ( bank ) will fix an issue that makes a sale not to go forward. Sometimes they wont. Good luck.
Not sure what the hold back from the lender means. What does your Realtor say?
Please make sure you are dealing with a Realtor...not just an agent...there is a differnece!
I think that it's important to shop around for a good lender who isn't afraid to roll up their sleeves and do this type of loan.
There are some agents who may not be familiar with those types of loans or may even feel intimidated by the process. Some loans are easier to do than others.
And, it is also very possible that your agent is trying to avoid causing you frustration and anxiety because these homes often can be very difficult to finance. You can let your agent know that you understand these types of purchases don't always go through, but that you are willing to give it a try.
Also, there are specific government websites that offer direct bank owned properties and it can be helpful to have a professional real estate agent guide you through that process. Sometimes these properties require a pre-approval with a specific lender but that doesn't mean you have to use that lender as far as I know.
http://www.hudhomestore.com or http://www.homepathcom.
The other thing to note is that even in a multiple offer situation, the first accepted offer can fall out of contract (and often does), so it's a good idea to get an offer in, even if you think you will get outbid.
Once a property falls out of contract, it can be a good moment to get your offer accepted by default. I guess what I'm saying is that if at first you don't succeed, try and try again, but also nothing ventured nothing gained.
Work with an agent and a lender who doesn't mind doing the more challenging work that is sometimes involved in these types of properties.
I hope that helps!
All the best..!!
I am curious... when you say the " Seller " to whom are you referring? Most bank owned's I do would never dare make any such representations. The condition of the property and accepting it as-is is purely the responsibility of the buyer. One of the challenges ( and hence the opportunity ) of bank owneds.