Ideas? Berm home w/o "recent" appraisal comps (that are berms), Oregon, owners are desperate to sell, we have money, but no one will

Asked by Avmhome, Grant County, OR Fri Mar 19, 2010

finance! Berm = part of home covered by earth. The appraisal came in $40k higher than the selling price of $182k, but there are no recent Berm home sales in the area within the past year. Everyone loves berms, they stay in them for life! There are at least 3 others in this area alone. I have tried everything I can think of and researched every type of loan hoping for a break. We have good credit scores, 5% down payment at least, it's just the comps that no one will accept, even though the owners are desperate to sell. This home is not a huge risk, so why do people turn it down? It's on great land, with a -great- view, located in a prime area of town, with barn, greenhouse, shop, etc. The owners spent a lot of time and money renovating it over the years, and it has a new roof and windows. They wouldn't be selling if not for medical necessity. We want to start a vineyard there, looking at part-time farm loans possibly? ANY ideas or suggestions would help at this point, we are trying everything.

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Jbdonzi, Home Buyer, Saint Augustine, FL
Sun Jul 19, 2015
We purchased a berm home about 13 years ago and had the same problem. The home is on riverfront property that is in a perfect location. We ended up getting financing through a local bank. Franchised bank branches all use Fanny and Freddie so avoid these. Private local banks may work with you. The big draw back on that was the interest rate. We ended up paying 7 percent interest in order to get the loan.
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Dirk Knudsen…, Agent, Hillsboro, OR
Wed Mar 12, 2014
Try Calling FarmCredit Services. I work with the Pendleton office! They are really great!
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30% down payment is the only problem ...
Flag Wed Mar 25, 2015
Thank you so much for getting back to us. We ended up having to give up on trying to purchase the house back in 2010. Someone else came in (unknown buyer) with cash for the full amount and bought it outright. So it goes!
Flag Mon Mar 24, 2014
D, , Oregon
Mon Apr 12, 2010

As a lender I can tell you if there are no comparables, lenders won't finance it. This market is very sensitive to any risk what so ever. It sounds like a great property but once again, if it's too unique then it's too risky.

On a personal note, I have a client in this situation. Through a lot of hard work (I mean a lot), she was able to get an SBA loan because she was going to have an income producing property. It may not work for you but it's possible the vineyard might be your key. You won't know until you try. I do offer SBA loans so you would want to call around asking for those who offer this type of loan and see if it might work for you.

Best Wishes!
Crystal Beard - Lending throughout the State of Oregon
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Avmhome, Home Buyer, Grant County, OR
Fri Mar 19, 2010
To answer some of you asking more about my question: the issue here is that most of the financial institutions that we've talked to want comparable BERM homes. Our appraiser was able to find one that sold in 2007, and then searched for unique or non-traditional construction in the area and found 4 that ranged from this year and older. The lenders won't even consider the other 4 as comps because they aren't 'exactly' like the home in question, even though in some cases the adjustment rate was under 15%.

We talked to the owners two nights ago and they said they absolutely couldn't do owner financing. My husband suggested giving them some time to think about it and we will, but the search continues.

Knudsen mentioned a Warp Around contract, is that the same thing? I've never heard of that term.

And Lana, we are searching for anything right now, and have the appraisal for the home out to as many people as we can to find financing. If it was hard money at a higher interest rate, we would still consider it. It wouldn't be any worse than 5 years ago anyway.
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Lana Lavenba…, Agent, Grants Pass, OR
Fri Mar 19, 2010
How did the appraisal come in $40K above the selling price if there are no Berm homes for the appraiser to comp it to? I understand this is a different type of home- again, any way for the owner to carry the note secured by a trust deed? That might work if they dont owe more than the cash you can give them to payoff their existing loan. It is a very tough market - the only other thing you can do is find hard money at higher interest rates~
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Dirk Knudsen…, Agent, Hillsboro, OR
Fri Mar 19, 2010
Owner contract and Wrap around contract will work... this sounds like a tough situation. In this market without comps I just do not see how you will be able to work things out for a home like this. Too tough to comp.

Will they carry a note?

Thanks very much for the great question and I hope things can work out.


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