Real Estate Life

Sunday, April 19, 2009

Working through the kinks.

One of my clients had found a property he was interested in purchasing. We were able to attain an accepted offer. This property is bank owned and being sold as-is.

The buyer and I went to the home so he could do his own home inspection. He came prepared with a check list of items to check and confirm are in good working order. The buyer was to the point in his inspection where the water needed to be on throughout the home in order for him to check the pipes, faucets, water heater, and toilets.

I volunteered to craw under the steps and turn the main valve on to find a pipe leaking directly above my back. This really sucked since the temperature in the home was a nice 38 degrees and not much better outside. Needless to say I was pretty cold.

Normally I would highly suggest hiring a professional home inspector who is qualified in home inspections. But in this situation the buyer is purchasing a FHA loan which will require its own home inspection completed by the appraiser.

We passed this portion of the inspect since there wasn't any way to check the items listed since I turned the water of immediately following the unnecessary shower.

I suggested to the buyer we have a licensed plumber give the bank a quote to repair the plumbing problems. A plumber then when to the home to discover the entire plumbing system throughout the home had frozen and most of the pipes had been damaged. The total cost to repai was $5000.00. The bank refused to pay for the plumbing repairs so my buyer walked away.

We now have another accepted offer on a home that I believe is a better buy overall. This was a struggle since the seller (a bank) didn't want to sell the home to a buyer using a FHA loan. The reason I'm sure is that FHA loans can sometimes be very strict about the overall condition of the home and the seller (Bank) didn't want to chance putting a deal together with the buyer and having it fall apart due to the condition. Then the bank would lose that marketing time.

The buyer has decided to purchase the home using a FHA 203k loan. This is a program where the home is bought with a loan to purchase the home and an additional loan to repair or update items of a home.

For example: The home needs windows, or bathroom repairs. Also this loan can be used to make additions to the home like adding a family room. The way it works is the home has to appraise for what the impovement costs plus the purchase price. So say the buyer buys the home for $50,000 and has $25,000 in repairs and updates. this total is $75,000 the home has to appraise for atleast $75,000.

So thats where we stand.


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