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Good morning, everyone. I am a first time homebuyer and I'm just looking for opinions in this situation. My fiancé and I just got approved for a home loan. We are interested in this 4/2 home built in 2000. It's a Fannie Mae bank owned home being listed for $99k. Our lease is up June 1, so we need to get moving quickly. I went to see the house yesterday with my realtor and on the surface the home looks pretty good to be 15 years old. However, I found a few things wrong with it.
It is listed as being move in ready. Well, it's not. At least not to me. The fridge had water in it and was still dripping inside. The stove is digital, but it wasn't plugged in or is broken, I couldn't tell which. I didn't bother opening the dishwasher. The toilets need to be replaced, either the entire toilet with the tank or just the covers. The fixtures in both bathrooms are completely rusted, and the tubs in both bathrooms need refinishing. The master bathroom tub is jetted but I wouldn't dare use it in it's condition and the shower head is disconnected. Well, the shower head is one with a cord but it doesn't hang anymore. My realtor suggested I make an offer to include closing costs and the toilets being replaced, tubs refinished, and appliances being replaced. Other than these things, the home is great. Oh, and in the laundry room there is a very old washer and dryer set that I am pretty sure wasn't made when the home was. It's very rusted. I'm not sure what to do with those since I have my own set. Theres no holes in the wall, all the electricity works, the AC works, the plumbing works, it's just those things. What would be a fair offer with those items included? I just want to make sure we are making the right decision as first timers since the house is already 15 years old and since we are looking to go the 15 year route, it will be 30 years old when we're done with it. TIA!
Your realtor should be able to give you comps for the neighborhood. All the things you listed are actually pretty minor for foreclosed homes. Note that appliances you are listing should be replaced by you anyway. A lot of homes are sold without fridge or washer and dryer. For your offer, you can request them to be removed so that it doesn't cost you money down the road when you replace them. There are rebate program from state/utilities company when you recycle.
Once you agent gives you comps of the neighborhood, you can come up with a good offer below market value. Is the home listed as "FirstLook"? If the house is priced properly, FM is not going to do much. Your home inspector will be able to give you an estimate of replacement cost of items of concern.
I agree to the above, the house may already be priced with these items in mind. From your description, it doesn't sound that bad for a foreclosure, other than maybe the rusted bathtubs, these are minor things.
If you already have a washer and dryer, I'd bring those and get rid of the ones already there. Toilets aren't that expensive to replace, you can get sets to replace the tank, bowl, lid and maybe even the wax ring together. They aren't that hard to replace either, if I remember correctly.
As long as the house is decently built, 15 years old is nothing! Neither is 30.
I'd be happy with a 2000 year house, I have trouble finding houses in my price range that are newer, it seems around here more than half of all houses were built in the 70s! And to some people, even that is new. LOL
So many first time home buyer thoughts! Lets separate them out and see if we can't get you comfortable.
The first thing I see is your title... Fannie Mae is simply a gov back REO, but Homepath is their in-house loan service and it's Really not a good deal (I bought a Fannie Mae property 11 months ago). Sometimes Homepath is also mentioned when buyers try to roll in "home improvement" costs, but there's a hiccup there too in that you MUST use Fannie Mae approved contractors, and in my experience (rural georgia), the few I had to choose from were multiples of months out from being able to do work AND cost anywhere 2 to 5 times as much as local contractors.
Next up is to separate Important things from surface things. When considering a house, the important stuff is the structure. No settling, no cracks, walls are plumb, no Significant water damage, roof has at least 5 years of life left, HVAC has at least 5 years of life left (but NOT the same number of years as the roof), electrical service is up to par... Basically, all the things that are Horribly expensive to correct... so long as these are good, it really doesn't matter the age. For instance, my home is a 1930 built and structurally is better than most everything I've seen (for under $500k) built from 1990 till 2014. Actually, I've noticed that since buying my first home nearly a decade ago that home build quality drops substantially (in that lower price point) starting in the late 1980's. But a good Structure will last a century or more, don't worry about it being 15 years old, it means nothing in the large picture.
You absolutely need to have a Qualified home inspector go through the property to get a good report of the above. They will also test the appliances, fixtures for function/leaks, switches, outlets, etc... Basically, they give you a structural and operational report for the house. Best $300 you'll ever spend, saved me from a $10k+ repair job that was hidden (rotten/water damaged floor joists that needed to be replaced, completely covered up/hidden by a "remodel").
The surface things, toilets ($200 and an hour of labor from a plumber if you need to hire it out... or just a $40 seat and 10 minutes of your time), faucets/fixtures (all under $100 each and easy to change), etc.... are things that you can take on yourself, AKA 'Sweat Equity". Do them all at once, one room at a time as the budget allows, whatever. These things will Always be "as is, where is", you will almost certainly never get ANY movement from a bank or personal seller. Doesn't hurt to ask, but don't expect anything. They are cosmetic (outside of something being broken/nonfunctional) and it's good to be able to recognize when things are cosmetic/personal preference.
As for the washer/dryer, I've never lived anywhere that didn't have an appliance donation program where a non-profit will come in and haul away anything you don't want.
When it comes down to price, only your real estate agent can really help you. They know what's selling and for how much. Ask them to show you comps (comparable properties that have sold in the last 6~9 months plus those on the market today) so you can get a good idea of what things are worth where you're living.
I can tell you that Fannie Mae does about a 10% price reduction every 5~6 weeks, and they want the property off their books within 3 months. They also play a LOT of games, "give us your highest and best offer" multiples of times (we went up a total of $1000 from our initial offer, which was roughly 10% under the price that had listed as the home was approaching 90 days on the market, it only took 5 friggin rounds to get them to finally settle). The whole process, from initial offer to closing, took 3 months. They blew through 4 closings and we told them that we would walk if they missed another... it wasn't a legal closing (they "finished" the following business day but signed everything over on closing). Something to watch for since you're 2.5 months out from the end of a lease... you may want to inquire Now if you can go month-to-month starting June 1.
Good luck. I hope you don't fall into the stereotypical first time buyer tap of becoming emotionally invested in a property as it really clouds judgement. If you're moving in and making changes in your mind, it may already be too late. Best to remain as detached as possible for as Long as possible so you can make clear and rational decisions else you'll be spending more money than is absolutely necessary (and possibly WAY more money, as in tens of thousands more money on a $100k sale).
So many first time home buyer thoughts! Lets separate them out and see if we can't get you comfortable.
The first thing I see is your title... Fannie Mae is simply a gov back REO, but Homepath is their in-house loan service and it's Really not a good deal (I bought a Fannie Mae property 11 months ago). Sometimes Homepath is also mentioned when buyers try to roll in "home improvement" costs, but there's a hiccup there too in that you MUST use Fannie Mae approved contractors, and in my experience (rural georgia), the few I had to choose from were multiples of months out from being able to do work AND cost anywhere 2 to 5 times as much as local contractors.
Next up is to separate Important things from surface things. When considering a house, the important stuff is the structure. No settling, no cracks, walls are plumb, no Significant water damage, roof has at least 5 years of life left, HVAC has at least 5 years of life left (but NOT the same number of years as the roof), electrical service is up to par... Basically, all the things that are Horribly expensive to correct... so long as these are good, it really doesn't matter the age. For instance, my home is a 1930 built and structurally is better than most everything I've seen (for under $500k) built from 1990 till 2014. Actually, I've noticed that since buying my first home nearly a decade ago that home build quality drops substantially (in that lower price point) starting in the late 1980's. But a good Structure will last a century or more, don't worry about it being 15 years old, it means nothing in the large picture.
You absolutely need to have a Qualified home inspector go through the property to get a good report of the above. They will also test the appliances, fixtures for function/leaks, switches, outlets, etc... Basically, they give you a structural and operational report for the house. Best $300 you'll ever spend, saved me from a $10k+ repair job that was hidden (rotten/water damaged floor joists that needed to be replaced, completely covered up/hidden by a "remodel").
The surface things, toilets ($200 and an hour of labor from a plumber if you need to hire it out... or just a $40 seat and 10 minutes of your time), faucets/fixtures (all under $100 each and easy to change), etc.... are things that you can take on yourself, AKA 'Sweat Equity". Do them all at once, one room at a time as the budget allows, whatever. These things will Always be "as is, where is", you will almost certainly never get ANY movement from a bank or personal seller. Doesn't hurt to ask, but don't expect anything. They are cosmetic (outside of something being broken/nonfunctional) and it's good to be able to recognize when things are cosmetic/personal preference.
As for the washer/dryer, I've never lived anywhere that didn't have an appliance donation program where a non-profit will come in and haul away anything you don't want.
When it comes down to price, only your real estate agent can really help you. They know what's selling and for how much. Ask them to show you comps (comparable properties that have sold in the last 6~9 months plus those on the market today) so you can get a good idea of what things are worth where you're living.
I can tell you that Fannie Mae does about a 10% price reduction every 5~6 weeks, and they want the property off their books within 3 months. They also play a LOT of games, "give us your highest and best offer" multiples of times (we went up a total of $1000 from our initial offer, which was roughly 10% under the price that had listed as the home was approaching 90 days on the market, it only took 5 friggin rounds to get them to finally settle). The whole process, from initial offer to closing, took 3 months. They blew through 4 closings and we told them that we would walk if they missed another... it wasn't a legal closing (they "finished" the following business day but signed everything over on closing). Something to watch for since you're 2.5 months out from the end of a lease... you may want to inquire Now if you can go month-to-month starting June 1.
Good luck. I hope you don't fall into the stereotypical first time buyer tap of becoming emotionally invested in a property as it really clouds judgement. If you're moving in and making changes in your mind, it may already be too late. Best to remain as detached as possible for as Long as possible so you can make clear and rational decisions else you'll be spending more money than is absolutely necessary (and possibly WAY more money, as in tens of thousands more money on a $100k sale).
Thanks for the reply! How can I find out about the roof and the HVAC? My realtor didn't know. That will make or break the deal.
Your realtor should be able to give you comps for the neighborhood. All the things you listed are actually pretty minor for foreclosed homes. Note that appliances you are listing should be replaced by you anyway. A lot of homes are sold without fridge or washer and dryer. For your offer, you can request them to be removed so that it doesn't cost you money down the road when you replace them. There are rebate program from state/utilities company when you recycle.
Once you agent gives you comps of the neighborhood, you can come up with a good offer below market value. Is the home listed as "FirstLook"? If the house is priced properly, FM is not going to do much. Your home inspector will be able to give you an estimate of replacement cost of items of concern.
Good Luck.
If I replace the appliances then, isn't it reasonable for me to deduct that from the offer? They would have to remove them before I move in the fridge is not usable.
If I replace the appliances then, isn't it reasonable for me to deduct that from the offer? They would have to remove them before I move in the fridge is not usable.
It is reasonable only if the asking price is higher than the comparable. If you don't want to deal with removing a non working fridge, you can ask for it to be removed in your contract. RE purchasing contract may include things like removing non working appliances, rubbish, etc..
You need a home inspector. Don't trust the opinions of your agent in telling you if the roof or HVAC is good. That's not their profession. You can give FM a solid offer and have the inspection contingency. You could also ask for repair/replacement/removal of appliances after the inspection. The first step is to come up with an offer.
As the previous poster stated. Don't fall in love with the house. All your concerns so far can be easily fixed with a small amount of time/money. If you don't know much about houses.. there may be many other hidden things that will come up that makes what you see as "issues" minor. When you pay for the home inspection (your out of pocket expense and non refundable) is to use this opportunity to learn about house and maintenance. Hire a home inspector that will let you be there to talk with you after the inspection. They don't want to be interrupted during the inspection but good ones will gladly go over major things with you in person.
Thanks for the reply! How can I find out about the roof and the HVAC? My realtor didn't know. That will make or break the deal.
You hire a home inspector.
And nothing is "reasonable" when dealing with REO. Of course, it's not like you're going to anger someone who's emotional about selling either... so asking for $2k off for appliances isn't going to hurt. They'll almost certainly come back and say no, but the only thing you lose is time.
Think of it this way: REO negotiations, if you'll get any (generally), will be Health or Safety related. Discover mold or asbestos? They may reduce the price to compensate for some of the remediation. Find out that the floor joists are rotten/trash from termite activity ~ same deal. Don't expect to get 100% of that remediation/repair cost, but they may budge Some on the price.
Then again, if the price is Already low don't expect much.
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Lets separate them out and see if we can't get you comfortable.
