buying from bank in as is condition. Buyer responsible to get Certificate Occupancy.What are the risks?

Asked by Margarita, New Jersey Sat Jun 28, 2008

I am putting a bid on a house owned by the bank. I need to get the C.O. What problems could I encounter. What liabilities

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Laura Gianno…, Agent, Manahawkin, NJ
Sun Jun 29, 2008
These are all good answers. In addition, during your inspection period I would pay for a municipal CO inspection. From that inspection you'll get a punch list of repairs necessary to meet the town's requirements for you to move in or rent. In most towns it will also show any open permits. Be aware thatt some NJ municpalities only require smoke and carbon monoxide detectors and a fire extinguisher for a CO .
2 votes
Jeremy S. Hi…, , Cherry Hill, NJ
Sat Jun 28, 2008
Risk is that the township you are purchasing in will require numerous repairs prior to giving a CO. Previous homeowners could of done some remodeling without pulling the proper permits. Every township is different. Some are lenient while others will have you fix cracks in sidewalks, do exterior painting and anything else they deem necessary to issue the CO. Find out what the township requirements are including fees. That being said the bank usually sells homes as is. They will say that they will not give credit for repairs but this will vary depending on the situation. I've represented Buyers who purchased bank owned properties and still got credit for repairs. Sometimes there are some conditions with the home that the bank is unaware of. Each transaction is unique.--- What you want to be sure of is that you are protected. You can purchase the home as is but you should negoiate a celing on the dollar amount if repairs are needed to obtain the CO. Sounds like you are not an investor otherwise you would know that this is a calculated risk. Be sure to have an attorney review your contract if you decide to proceed and explain your concerns.

Best Regards,

Jeremy S. Hill, Realtor
Keller Williams Realty
1814 Route 70 East
Cherry Hill, NJ 08003
Office: 856.685.1651
Fax: 856.321.1414
Direct: 609.876.5817
"Your Interest 1st Always!"
2 votes
Christine Ma…, Agent, Reseda, CA
Sun Jun 29, 2008

Hopefully you are using an agent for this process of purchasing a "bank owned" property. If not, you must be aware that if financing the property, the lender may not give the money for a conventional or regular FHA loan unless the Certificate of Occupancy (CO) is granted by the town. If you cannot afford to pay cash for the property, you are going to want to discuss renovation financing with your lender. Wells Fargo is a lender with an entire division focused on renovation loans. There is one progam in particular that my clients have used before when buying bank owned properties - the FHA 203K Streamline Renovation Loan. This will allow you to close on a property while factoring in renovation expenses into your mortgage and which allows you to obtain just a Temporary Certificate of Occupancy in order to close (before the necessary repairs are taken to bring the home up to code). A lender can explain in more detail how the program works - but buying AS IS regardless is a risk.

As many have mentioned, you'll have the option to get a home inspection done within an allotted time to get a better understanding on areas of concern throughout the property. Also if you pay the application fee to get a CO done, the town inspector will point out all areas that need to be addressed before they can issue a Certificate and allow anyone to occupy the home. If you haven't put your offer in yet or are interested in learning more about purchasing "bank owned" properties, feel free to contact me. My office handles hundreds of foreclosure properties and we frequently assist both clients - from investors to first time homebuyers - along every step of the process. I'd be glad to help you take advantage in investing in this type of property.

Christine Markow
ERA Statewide Realty
Office: (908) 874-7797, ext 519
0 votes
Kimberly "KI…, Agent, Little Egg Harbor, NJ
Sun Jun 29, 2008
Good morning Margarita,

Are you buying through a real estate agent or yourself direct from the bank? What I suggest is check with the municipality for the requirements of the Certificate of Occupancy in the town you are purchasing, see the cost involved bringing the property up to code., then make you decision. Is the home well and septice? If so, you will have to make sure the water test comes in good, and some towns require a septic certification for the CO. Depending on the purchase price and the cost of the items to bring the home up to code are the things you must consider. If you are getting the property for a good $$ and the cost for getting the CO are nominal or within reason to you, by all means go for it, but do your homework.

Good Luck with your pruchase!
0 votes
Barbra Curti…, Agent, Cumming, GA
Sat Jun 28, 2008
Hello Margarita,

Buying bank owned homes can be a great opportunity for significant savings. Most bank owned assets are sold as is but you usually have a 7-10 day inspection period from your binding agreement date. You hire your own qualified Inspector and based on their findings if you do not feel comfortable with the condition of the property then you can cancel with a full refund of your deposit. I would suggest you contact an agent in your area that specializes in Bank Owned REO Properties and they can guide you through the requirements needed in your state if it is a property that requires a Certificate of Occupancy. Please Feel free to call me if you would like a name of an NRBA REO Specialist in your area.

Best regards,

Barbra Curtiss
NRBA Member (National REO Brokers Association)
0 votes
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