hilltrix Posted January 29, 2009 Share Posted January 29, 2009 So we are negotiating a contract to close on a foreclosure. There are some minor issues (water damage/dicoloration) which seem to be just sheetrock/paint. Of course inspections should tell us more, but it seem like it's just from A/C/heating being off so long and condensation. The major issue (and honestly, not that bad, just scary to a lot of people) is that the shower upstairs has sunk down and is deforming the master ceiling. It looks like when it was built it was not supported correctly. The upstair bath is disgusting anyway and we'd gut it. BUT it seems that we cannot close unless the property is in "liveable" condition as determined by the bank's appraiser. What does this constitute-we'd live in it now, but are trying to avoid having to do the construction loan, double closing route as with the market tanked cash is premium. Any help would be much appreciated! Thanks! Link to comment Share on other sites More sharing options...
TheNiche Posted January 29, 2009 Share Posted January 29, 2009 So we are negotiating a contract to close on a foreclosure. There are some minor issues (water damage/dicoloration) which seem to be just sheetrock/paint. Of course inspections should tell us more, but it seem like it's just from A/C/heating being off so long and condensation. The major issue (and honestly, not that bad, just scary to a lot of people) is that the shower upstairs has sunk down and is deforming the master ceiling. It looks like when it was built it was not supported correctly. The upstair bath is disgusting anyway and we'd gut it. BUT it seems that we cannot close unless the property is in "liveable" condition as determined by the bank's appraiser. What does this constitute-we'd live in it now, but are trying to avoid having to do the construction loan, double closing route as with the market tanked cash is premium. Any help would be much appreciated! Thanks!In my experience, residential appraisers have rarely performed inspections of the interior and have said that they have driven by (although information shown in their report indicated to me that they either were lying or were DWI at the time).Simply don't disclose the problems to them. They really aren't inclined to ask questions because all they care about is that the bank's representative that hired them gets paid the commission from having closed the loan. If the appraiser blocks the loan then they may not get called on to do future work. So they want the deal to work. Link to comment Share on other sites More sharing options...
rbarz Posted January 29, 2009 Share Posted January 29, 2009 So we are negotiating a contract to close on a foreclosure. There are some minor issues (water damage/dicoloration) which seem to be just sheetrock/paint. Of course inspections should tell us more, but it seem like it's just from A/C/heating being off so long and condensation. The major issue (and honestly, not that bad, just scary to a lot of people) is that the shower upstairs has sunk down and is deforming the master ceiling. It looks like when it was built it was not supported correctly. The upstair bath is disgusting anyway and we'd gut it. BUT it seems that we cannot close unless the property is in "liveable" condition as determined by the bank's appraiser. What does this constitute-we'd live in it now, but are trying to avoid having to do the construction loan, double closing route as with the market tanked cash is premium. Any help would be much appreciated! Thanks!Bank appraisers go inside all the time now. Unfortunately, "liveable" means almost perfect now (at least with the financing I usually use). There can be no mold, not even discoloration, no sheet rock missing, no evidence of termites, etc. etc. The biggest problem is that most foreclosing banks won't let you go in and fix anything before closing so that your bank will loan on it. There are a few construction loans that are pretty good deals out there as long as you avoid hard money loans Link to comment Share on other sites More sharing options...
TheNiche Posted January 29, 2009 Share Posted January 29, 2009 Bank appraisers go inside all the time now.Huh, I guess I've just gotten randomly lucky in all of my acquisitions, then. Is that something that has changed in the last six months? Link to comment Share on other sites More sharing options...
hilltrix Posted January 29, 2009 Author Share Posted January 29, 2009 "There are a few construction loans that are pretty good deals out there as long as you avoid hard money loans "Do you have any suggestions on how to find these. First time buying a house and am a little lost. Link to comment Share on other sites More sharing options...
BryanS Posted January 29, 2009 Share Posted January 29, 2009 On both the homes I purchased, since 2005, the appraiser goes inside the home.Liveable... is all floor coverings, all working utilities. If the lights work, the toilets flush, and there is no bare concrete anywhere (inside the house)... that should pass. Should not matter how nasty the carpets are, the smell, discolored walls... should not matter, provided you are buying the house for cheap. They will state that the carpet needs to be replaced, etc... but all that goes into the appraised value of the home. So if homes go for 150K in "good condition" ... and you are buying this one for 100K... the report will list a debit for items that need improvement/repair. You'll also get a credit for things this home has vs. what other homes may not have.A lot may depend on when this house was built and the inspection report. You bigger problem with closing may be the insurability of the home - which the bank is going to require. For instance, with my insurance company, if the house is older than 50 years old, they will not insure it without seeing the inspection report. That report may indicate such things as "mold and some evidence of active water intrusion" or "active foundation movement" or any other big problems. Many insurance companies, including mine, will not insure any property with active water or active foundation problems. So... no insurance... no bank loan... no house for you.I yearn for the day when I will have enough money to buy whatever I want, when I want, cash. That way I can tell the bank, the insurance company, and appraiser, tell them all: screw you! Link to comment Share on other sites More sharing options...
Dan the Man Posted January 30, 2009 Share Posted January 30, 2009 There are a few construction loans that are pretty good deals out there as long as you avoid hard money loansWhat if you have an underwriter/co-signer? Could you get a hard money loan for an "unlivable" property? Link to comment Share on other sites More sharing options...
GREASER Posted January 30, 2009 Share Posted January 30, 2009 If you dont say anything all will be ok. I had an issue with another house...when asked if problems were ok, I said yes. They wanted to meet at the house and I gave them rediculous times due to work, and they just drove by...not sure if they even did that. It is their job though to put out an effort. Link to comment Share on other sites More sharing options...
longhornguy Posted January 30, 2009 Share Posted January 30, 2009 I closed on a foreclosed TH with similar stipulations from my lender. Inspection reports came out great (structurally, IMO only aesthetics were missing), but that wasn't enough. A few things were missing: 5 light fixtures, half bath sink, 3 bathroom mirrors, appliances (except cooktop) and a closet door. My lender wanted evidence of all of these things fixed prior to closing. They had an appraiser report that mentioned the walls needed repainting and the carpet was soiled, so they wanted that fixed as well. All in all, it took a weekend's worth of work to satisfy the Appraiser.We were forced to fix all these items prior to closing (with the Seller's approval), which meant that we took a big risk, but everything ended up working out.I honestly think it was a stall tactic by my lender (WAMU) because as soon as the merger was public, I was all of a sudden magically closing. I'm not sure the appraiser even came out to take evidence of the repairs, as my realtor (and the seller)never got another request for the lockbox code. Maybe the appraiser remembered the one they used before? Anyway, just my experience.Just curious, how do you plan on fixing that shower that is about to drop into the living room? You must be pretty handy, but that sounds like a serious fix to me... Link to comment Share on other sites More sharing options...
hilltrix Posted January 30, 2009 Author Share Posted January 30, 2009 It would be serious money wise, but we already have to gut the bathroom and redo the ceiling. It'll cost money but its basically new bathroom w/ structural support for shower, new sheetrock/insulation, float and paint, all done. Link to comment Share on other sites More sharing options...
rbarz Posted February 8, 2009 Share Posted February 8, 2009 Huh, I guess I've just gotten randomly lucky in all of my acquisitions, then. Is that something that has changed in the last six months?In the last year Link to comment Share on other sites More sharing options...
rbarz Posted February 8, 2009 Share Posted February 8, 2009 What if you have an underwriter/co-signer? Could you get a hard money loan for an "unlivable" property?Co-signers don't work for mortgages. The bank will take one guy with good credit before it takes two with bad or even one with good and one with bad credit. In other words, the bad credit person will just bring down the good credit person, so that only the good credit person will be on the mortgage. Hard money loans are pretty easy to get. You have to go through a special appraisal process with an appraiser like Brown's or the Hard Money company's guy coming out and looking at it themselves. They go through the house and determine how much it is to fix it and what the ARV (After Repaired Value) will be and they will lend you up to 70% of the ARV. That means that they will pay for the house and the fix up costs, but they normally charge around 4 or 5 points up front with 14 or 15% interest! I have even heard of hard money charging interest on your down payment that goes into the construction draw!The best construction loans are through banks with local branches, but you need sterling credit, a lot of cash flow, and plenty of liquidity. The banks are close to loaning money only to people who don't need it. The rates of 7% are incredible when compared to hard money and there are few if any upfront points. Link to comment Share on other sites More sharing options...
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