Been looking at property

[rainplace]

A few weeks ago hubby and I went and looked at some property that had a spring fed pond. The property was awesome, however it was a steep shady property and I wouldn't have been able to do the gardening I like to do and would want to do with a good size property.

Well today, our real estate agent calls and says she knows of this property nearby that is going to go on the market in about 2 weeks. She asked if we'd like to go look at it.

The house.. needs work... a lot.

But, there's a fantastic barn, a nice sized coop, a green house, sun and this:

It's a bit out of our price range... but just a bit.

 

[wombat]

If it's your dream property, get a GOOD home inspector that can help you list all the work the house is going to need, and what setting it right will cost.

Decide what you can pay, given the costs of the repairs. Don't back down, don't fall for a sob story. If the present owner has not maintained the home, that's their responsibility. You are not obligated to bail them out!

Take the extensive list of repairs and costs, and make an offer, indicating that it is based upon a professional estimate of the repair costs involving the house. Don't forget to take into consideration the state of the major appliances, plumbing, heating, how old the well pump is, the roof, etc. and budget for anything that's definately going to need to be replaced within the next five years. If someone else has been putting money in their pocket instead of maintaining, repairing, and replacing as needed, you're bailing them out with *your* wallet.

A good home inspector can give you replacement pricing for all those items I listed above ... figure out what you're likely in for over the next five years in repairs, over and above any cosmetic improvements that are needed.

If you can get your price, great. If they won't lower the price, keep looking. As nice as that barn is, you probably don't want to live in it!

Good luck, the photo looks beautiful!

 

[rainplace]

Thank you for the post!

It's owned by the bank it was at auction a little while back with no bids. I don't think we will want to make the asking price. We'll wait and see if it's lower than it was at auction. I really want it, but I can bide my time and see if it goes down in price.... I do have my fingers crossed though... I mean look at that POND!

 

[goosedragon]

Quote:
Most banks will insist that the place be appraised as well as inspected in order to get a loan. The inspector reports on the physical condition, the appraiser on the value. Pure cosmetic conditions are usually not covered by either of these people unless you request them. For example my house had some very odd paint colors but it was fairly new and didn't effect either the physical condition nor the real value of the house. The inspector told what it would cost to repaint but would not list it with the true physical defects. You can't expect a house to be in brand new condition unless it was just built.

 

[wombat]

No bids mean two things ...

1. It needs a lot of expensive work. Do your homework, be smart and very realistic about the costs of rehab on the house, plus all the new repairs that will come up. Homes that go into foreclosure can be VERY expensive to rehab. Furnace motors that haven't run in months will fail, rodents may have taken up residence, you name it. Don't forget to have the well water checked, and make certain the title is clear and the previous owner's financial problems have not left lingering liens on the property that were not cleared by the bank!

2. You have no competition. Once you've estimated all the costs, go in with a very low bid, backed by your (and a third-party inspector's) repair cost estimates. Expect years and a lot of costs in repairing the house, so don't get talked into raising your price beyond what you've decided is your maximum. Think about what you could do with every $10k before you give them any increase in offering price.

My wife and I looked at a "fixer upper" on about 10 acres several years ago. The seller would not drop the price, so we walked away. I started a new job a couple of years ago, and a guy just down the hall from me had bought that same house a year after we looked at it ... and he raises chickens! Anyway ... he got it for about $50k less than they were asking when we looked at it, but still about $25k more than I'd offered ... and he's spent five years working on it. It looks great, but it's set him back a lot of time and money, and it's still not done ...

The place we ended up buying needed far less work, and we were still kept busy for years ... otoh, I wish I had more acreage!

Good luck with your dream house hunt!

 

[wombat]

Most banks will insist that the place be appraised as well as inspected in order to get a loan. The inspector reports on the physical condition, the appraiser on the value. Pure cosmetic conditions are usually not covered by either of these people unless you request them. For example my house had some very odd paint colors but it was fairly new and didn't effect either the physical condition nor the real value of the house. The inspector told what it would cost to repaint but would not list it with the true physical defects. You can't expect a house to be in brand new condition unless it was just built.

Appraisers often go by square footage and "comps" in the area. They are only there to protect the interest of the bank loaning you the money, and as long as the property is worth more than the loan, the bank's happy ... (or was, back before the loan originators and appraisers got together and over-estimated property values to close loans and created this whole mess we have today ...) I would never go into a "fixer upper" situation with just an appraiser's estimate.

Anyway ... *you* hire an inspector, to look out for *your* interests. Don't settle for someone who is there only to make sure the bank has their

covered.

If you're sure you want the place, look at it closely, spend the money to get an inspector to go over it with you in minute detail, list everything that needs to be fixed, why, and for how much, and then go make an offer to the bank. A good inspector will cost you hundreds of dollars, but it beats missing some expensive repairs and buying a "money pit" house.

There's nothing that requires you to offer to pay what the bank is asking. There's nothing that prevents you from adding the costs to cover cosmetic repairs when you justify your offer. We got $10k thrown in for a carpeting and painting allowance at closing by a seller that wanted to close the deal on our first house. I have always had a lawyer review all closing documents. Cost me a few hundred $$s, saved me about four times that by questioning exhorbitant closing costs assessed by the closing attorney and the lendor. You get what you negotiate for. In this case, you might be able to cut a financing deal with this bank and cut your closing costs ... rules vary, and an attorney or real estate broker will know what is legal in your area. Where I am, the seller can pay up to 50% of closing costs and fees ... and if you can swing a loan through the bank holding this property, you might be able to get some things like points and loan origination fees reduced or eliminated up front.

In conventional sales, there's typically a seller's fee and a broker's fee. If you buy directly from the listing agent, they get both fees ... but legally, they represent the seller. If you hire a real estate broker, they get the broker commision, and the listing agent gets the seller's commision (usually 50/50 split of the total commission, varies by region). In this case, if you take a broker into the situation, you have someone legally obligated to protect your interests, but the bank will then have to fork over something around 3% to the broker in commissions. Since you found the property, you could either see if you can get a broker to represent you and prepare your offer for a negotiated flat fee, or hire a knowledgable attorney to assist you for a flat fee, either of which will be less than the percentage that would normally go to the broker. This might give you another bit to bargain with on price ... but check with someone who knows the laws in your jurisdiction!

Do your homework, make your offer, back it up with the extimated repair costs, and see if they want this place off their books badly enough to take your offer. Just know how much you are willing to raise your initial offer, and absolutely don't get talked into going over that. You're going to want some cash on hand if you get this place, so don't hand it to the bank instead.

Good luck.​

 

[goosedragon]

Quote:
Do NOT ASSUME you have no competition. I made that assumption on an "auction house" with no bids that had just been turned over to brokers to sell. I was first to view it in the morning and wanted to think it over. That afternoon I got a call from the broker that had an offer on the place and did I want to top the offer? I declined and the offer was accepted. It was a friend of mine! Turns out he knew the former owner and knew about the condition of the house. He got a great buy and I was still looking. Everytime I go by that place I kick myself because of my caution with a foreclosed home. On the other hand plenty of people have been burned on these deals also. Don't assume!

 

[wombat]

Yeah, that can happen. If it's a nice piece of property, there are probably others thinking about it ... but nobody bid at auction, so it was either priced too high, or nobody was willing to move on it ... meaning now is a great time to go in with a low-ball offer, especially a well-researched one that's got some repair costs to justify the offered price.

We made a low offer on the place we are in now. The listing agent kept saying that there was another offer pending, and asking if we wanted to re-submit. I said no, we'll stand by what we've offered. Go ahead and take that higher offer, I'll keep looking. The listing agent and seller screwed around so much on this one that our offer period expired. When they tried to claim that the "other offer" fell through and tried to get us to re-submit our bid, I told them I would if they could provide proof of the "other offer" ... and they could not. I lowered my offer by $5k and resubmitted it. Told them that the $5k was for their fish story about another offer and trying to play me. They howled about that, but they took it.

The broker I use has been in the business for over 30 years, and there are no end to his stories about crazy real estate deals. He was the one who suggested to me that the other offer might not really exist. He could have been wrong, but we went with his instinct.

 

[geosheets]

Quote:
Not sure how the real estate market is out there but here in Ohio, I have a friend that has been buying up bank owned properties at 75-80% of their appraised values. He tells me that the banks just have too many properties on their hands and are willing to let go of them at a loss. It surprised me to see some of the properties he has gotten as the real estate market has not been too terrible, at least not right around me.

 

[rainplace]

At auction someone has to have cash in hand... not many people have that kind of cash in hand... at least not these days. We sure the heck don't.