I found a property and the seller is asking 70,000, it needs work so can I offer like 100,000.00 and get the difference back at closing for repairs?

Asked by A New Beginning 2013, 60484 Wed Apr 11, 2012

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Suzanne Hami…, Agent, Orland Park, IL
Thu Apr 12, 2012
If you are getting a loan, probably not. What you want is a 203k loan. Mortgage companies and banks usually allow a few thousand dollars for closing costs to come back and be wrapped in the mortgage, but usually not this kind of money.

Depending on the kind of work that needs to be done, you may not even qualify for a regular loan if the bank or FHA minimum standards for occupancy can not be met. The 203k streamline loan is a loan that allows people to get up to 35k over the price of the mortgage for repairs and/or upgrades.

Also, many communities in this area require inspections to ensure minimum standards are met to occupy. So, many or all of these changes may need to be made prior to occupancy.

One more thing, if you are not aware Park Forest and Chicago Heights have an incentive right now through a state grant that you can get 10k for purchasing a vacant home.

I work in this area and I would be happy to help you find something and/or help you with a home. There are a lot of homes out there that have been rehabbed already and are in move in condition at this price point.

Please feel free to contact me for assistance and information.

Suzanne Hamilton
RE Marketing Consultants
888-788-9544
suzanne@remarketingconsultants.com
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My NC Homes…, Agent, Chapel Hill, NC
Thu Apr 12, 2012
Anthony Cavalea below is absolutely correct. The only way you can get the money you need to both purchase and renovate the home is with an FHA 203K loan. Bear in mind these loans cost a little more in terms of interest and additionally unless you are a licensed contractor or have demonstrable experience doing renovation type work, you will not be permitted to do the work yourself but will be required to use contractors approved in your area by FHA.

If you are a first time home-buyer you really may want to think long an hard about this. It may make better sense to simply go find a $100,000 home that's in good condition and would not require almost 50% of the purchase price in additional improvements to make it liveable. I would suggest you proceed with caution.

Many first time buyers seem drawn to foreclosures believing them to be "great deals" As someone who has been a full time Broker for over twenty years and has been buying and working on homes for over 35 years I assure you this isn't the case. I've attached a link below to a Blog I posted here on Trulia that you may find interesting.

I wish you all the best.
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Anthony Cava…, Agent, Joliet, IL
Thu Apr 12, 2012
Sounds like you are borrowing the money and you are trying to find a way to pay for the repairs after you purchase. A lender is unlikely to allow this. Usually, the most you are allowed to get back is 3%. But there are loan programs that can allow for repairs by putting the repair money in escrow, as long as the property value will be worth it when repairs are all compete. Check into an FHA 203K loan. It can be cumbersome to get all the bids in place, but it will accomplish what you are trying to do.
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