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1. Bank gives loan for an older home to a woman with little monthly income for 700K.
2. Home is large, but has roof issues, older appliances, floors etc dating from 70's. Home has acreage, but is unusable for farming and cannot be subvided.
3. Area is not desirable, so future development is unlikely. Rents in the area are low and dropping (my "landlady" research) and the schools are not ideal (low test scores).
4. KinkyT is in shock, because she has no idea how the bank valued the property at 700K in the first place, unless they never looked at it!
5. Anyway, owner predictably cannot pay mortgage or 10K yearly taxes (because house was sold for such a high price) and defaults. Maybe owner's ARM reset...
6. Kinkytoes sees property. Kinkytoes Likes anyway (very unusual house). Kinkytoes has not kids, so the bad schools are not an issue. Kinkytoes visits property and finds....
Severe property damage because house has been vacant while bank tried to sell it for 500K. Nobody in the area around the house can afford that price, and people who want to spend so much would not live there. Kinkytoes estimates damage repairs would cost 200K.
7. Bank now wants 400K.
This time Kinkytoes did not even try to offer the bank anything, KT just sadly shook head and walked away.
...
Anyway, I'm just wondering what the bank has based the value of the house on? It must the be the last ridiculous loan that they gave this elderly woman. As a SFH in that area, the house would cost 175, but because the taxes are so high, most people who would live in the area would have to pay less to afford the mortgage. 175 is the price for a house in good condition...
The estimated rent as an investment would be $1600 per month, which would put the cost at 160K MAX, because the taxes and insurance would eat any profits.
I'd still like the house, but since I don't have hundreds of thousands to throw away, the bank would practically have to give that house away. Any thoughts? (not spell checkin')
Banks have made LOTS of mistakes. I don't cry for them. I also do not shed too many tears for the people that get into something that pretty clearly was too much for them.
If you want the house and can handle the negatives then you have to build a solid case of comps that will help the seller (which while we call it a bank is really staffed by human beings, that on some level will find it easier to believe "new information" rather than just admitting they were delusional) that will "shine a light" on the real value of the property.
If there is ANY new construction /in-fill /teardowns activity in the area it might be helpful to research too, as eventually the "raw land" may be the only thing of value in such a situation...
Well, I am only shedding tears for myself. I have kind of gotten the hang of negotiating, but this is tough. What I would pay is 50K for this place. That's pretty far off from what they're asking, but a total outlay of 250 is reasonable for the property IMO Tough, right.
The other obstacle is that the bank is using an agent. I'm afraid that he might consider his comission when selling the property, even if the bank just wants to dump the place at this point. I'm not really sure what to do. If I can get comps and let him know the drawbacks and the cost to make the house habitable, will he even bite or keep holding out to see if anyone will pay what they want?
Believe me, the folks representing REO in my neck of the woods are NOT picked by the bank becuase of their impressive skill / knowledge. These are mostly inexperienced and overworked agents that answered a desperate plea from a far off place where an even more desperate and overworked bank employee was shopping for lowest commissions...
I'd still like the house, but since I don't have hundreds of thousands to throw away, the bank would practically have to give that house away. Any thoughts? (not spell checkin')
In time, the bank may come to the realization that it does not make financial sense to carry this place and order it bull dozed.
In time, the bank may come to the realization that it does not make financial sense to carry this place and order it bull dozed.
That's what I was thinking.
If you really like the house and want it, I'd get an inspector in there to go over it with a fine tooth comb. Take the 95 page report () to the bank and tell them, 'This is what it will cost to have the house brought up to liveable standards. This is what the house in perfect condition would be worth. I'll give you _____ for it' and see if they'll take it. Worse they can do is say no.
Wouldn't bull-dosing COST the bank money? Wouldn't it be better for the bank to take Kinkytoes $50k and be done with that property? Jeepers! You'd think the banks would be a little more savvy and take at least SOME money for the property rather than to spend money to level it after it was their fault in the first place for not pricing it right in the first place. I guess now there is no incentive for banks to do this since they are being bailed out by US the good ole American Tax Payers ..against our wishes.
I guess that house will be sold for a high discount...but that can take a very long time...To me the lady isn't telling the truth or had her application filled out wrong, whatever you prefer the wording to be.
How could she ever gotten the loan if at least the application wasn't filled out with her affording the loan....
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) to the bank and tell them, 'This is what it will cost to have the house brought up to liveable standards. This is what the house in perfect condition would be worth. I'll give you _____ for it' and see if they'll take it. Worse they can do is say no.
