Bank owned foreclosure, missing toilets & light fixtures with FHA loan

Asked by Merideth Wilkins, Atlanta, GA Mon Apr 20, 2009

I found the home of my dreams - 3 acres, open sunny backyard with lots of room for veggie garden, plenty of space inside, and in a safe area of town. The house has been on the market for 2 years, and is now a bank owned foreclosure.

I saw the inside of the house this morning and learned that all of the toilets had been removed, as well as the light fixtures. The carpet was taken out of one of the rooms for unknown reasons, and other carpets probably need cleaning. Also, since the house has been sitting unused so long, there is a small patch (maybe 2 square feet) of what looks like black mold inside the water heater closet. No sign of leakage or other drainage problems were seen.

So - I have my heart set on this house.. I've been approved by the underwriter for the full value, but I am on a "880 FHA 30 year fixed" loan. I submitted an initial offer below asking price, just to start dialog. How can I make this happen?

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Lee Taylor’s answer
Lee Taylor, Agent, Decatur, GA
Tue Apr 21, 2009
Merideth,

3 acres is fantastic - generally speaking, without giving away the specific address of your dreamhome to ravenous real estate agents,where is this property located, and would you mind telling us the asking price/

So, 203K may work, but it may not. A good Realtor and a good Mortgage lender will be able to establish expectations and mitigate your risks.

Just remember, price is only one part of your offer and you need to be packaged as the right FHA funded buyer for right now. Their only choice. A no brainer - too good to pass up.

Also, remember cash is king, so if a cash buyer with the right offer came along, your leveraged funding may not be so attractive.

Is this a cash buyer's dream home right now too?

Did you make the right offer?

Banks are overwhelmed, so be very precise and work with precise people on your side.

Good luck.
1 vote
Dana Schuster, Agent, Slidell, LA
Mon Apr 20, 2009
have you checked into an FHA 203 loan? This incorporates funds for renovation into your FHA loan. in the present condition of this house,it will not be approved for a straight FHA as the house is not in liveable condition.Banks are not willing to do repairs on foreclosures in the majority of cases. i just had a contract fall apart over the repair issue & it was a cash sale.
1 vote
Shar Rundio, Agent, Mesa, AZ
Mon Apr 20, 2009
Merideth, congrats on finding a home that you love.

As mentioned below you can look at a 203k loan. They do what's called a "streamline" for repairs/remodeling under $35,000.

I've had 2 buyers in the last month that fell in love with houses missing toilets. Who takes toilets, seriously? Anyway, on one of them we were able to get the bank to understand that if they would replace the toilet during escrow their odds of selling at a better price were increased. It took some doing but the bank did make the repairs. Another one was missing the vanity and the buyer just placed an old one in the bathroom before the FHA appraiser inspected the house and we were able to forgo the 203k loan and go with a normal FHA loan.

Best of luck with it!
0 votes
Denise Tower, Agent, Maryland Heights, MO
Mon Apr 20, 2009
If all you are really talking about is toilets, light fixtures and mold mitigation why not see if you can get a 203b with escrows? Not as complicated or expensive as a 203k but if you don't need MAJOR rehab, a great way to go. Talk to your lender and always have a private building inspection - if it's been vacant for awhile who knows what eslse is going on...
0 votes
Russ Garmon, Other Pro, Norcross, GA
Mon Apr 20, 2009
Most of the bank owned properties are being sold as-is but you should always take advantage of a due diligence period to have the home inspected to know the condition of the house it is important.
0 votes
Scott Askew, Agent, Atlanta, GA
Mon Apr 20, 2009
A majority of foreclosed properties have been abused by their former owners or have been vandalized. An FHA rehab loan as identified by Ms. Schuster in Louisiana is a good option. Talk with your loan officer for the particulars.
0 votes
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