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We are looking at purchasing a home that is an Estate Sale (inherited property that the heirs no longer want).
The listing says they are selling as-is with no intent to repair.... but my lender says that even in As-Is situations, sellers are forced to make the repairs anyway because no bank will issue a mortgage.
How often does that situation actually happen? It sounds like otherwise this house is meant for Cash-Only buyers, but the area doesn't really seem primed for that kind of sale.
While you may not be able to buy the home with a VA/USDA/FHA, or even traditional conventional loan, cash buyers may purchase it, or you may purchase with a FHA 203k loan, or a Conventional Rehab purchase loan.
We were looking to purchase using an FHA Loan and are willing to go the route of 203k, especially if the sellers don't want to make the repairs. Our credit isn't good enough for a Conventional Loan (rather, we qualify but our rate would be in the 6-7% range, as opposed to the 3.6 we are locked into with FHA).
The issue with the house as far as I can see is that there's a hole in the drywall where some work was done (leaky ice dispenser) that they never patched up. The Weld work on the pipes themselves is sound. Also, the fan controls for the house are exposed and need a box cover. Plus the house was built somewhere around 1970. But we won't know the full extent of the house's problems until we get the Inspector, and we can't get the inspector unless the seller accepts our offer, and we can't present the offer until we get our Pre-Approval Letter.
Hey I have to ask: in the absence of a Contract, how are you "locked in?"
I just don't want you to be misled. If it's the same lender as in your original post, they seem to be using misleading terms.
You can't lock into a rate without a Subject Propety, and time frame, be it 30/45/60/etc days. Also, in general, fha and fha203k rates can be different.
Actually, I have to disagree........you can ask for anything you want. I bought a home "as-is" and even had a home inspection for informational purposes only. When something was "off" - I got an electrician out here PDQ. I needed a new box for the breakers, the current one had issues. I worked for the lender, but I did not advertise my home inspection. We did go back to the seller - my contract was still contingent on HOA docs and financing. It served no purpose to play games - we went to the seller and got a $2500 credit. It was not a condition of the appraisal and I got to hire whoever I wanted.
As-is can always be challenged. Whether the seller rises to the challenge is a whole different matter.
We were looking to purchase using an FHA Loan and are willing to go the route of 203k, especially if the sellers don't want to make the repairs. Our credit isn't good enough for a Conventional Loan (rather, we qualify but our rate would be in the 6-7% range, as opposed to the 3.6 we are locked into with FHA).
The issue with the house as far as I can see is that there's a hole in the drywall where some work was done (leaky ice dispenser) that they never patched up. Drywall is cosmetic, if the seller insists upon "as-is," the conditions of the appraisal won't get this changed.The Weld work on the pipes themselves is sound. Also, the fan controls for the house are exposed and need a box cover This is a $2.00 or less fix. You are talking $.10 wire cap covers and an electrical plate cover. . Plus the house was built somewhere around 1970. But we won't know the full extent of the house's problems until we get the Inspector, and we can't get the inspector unless the seller accepts our offer, and we can't present the offer until we get our Pre-Approval Letter.
Home buying is a pain.
See comments in red.
There's not a whole lot there for a 203K. Maybe, just maybe you are at a few hundred dollars for these repairs. A 203k will most likely slow down the approval and appraisal process. As a seller, I would want to close quickly and without a bunch of hassle.
Actually, I have to disagree........you can ask for anything you want. I bought a home "as-is" and even had a home inspection for informational purposes only. When something was "off" - I got an electrician out here PDQ. I needed a new box for the breakers, the current one had issues. I worked for the lender, but I did not advertise my home inspection. We did go back to the seller - my contract was still contingent on HOA docs and financing. It served no purpose to play games - we went to the seller and got a $2500 credit. It was not a condition of the appraisal and I got to hire whoever I wanted.
As-is can always be challenged. Whether the seller rises to the challenge is a whole different matter.
In my experience with buying homes my contracts have been contingent on inspection(usually to be done within 10 days)...if major issues are found with the home the buyer can request $$ and the seller can refuse or counter with a less $$...and the buyer can refuse counter and walk...but if it is a bank owned property usually "as is" is just that...and they will tell you to pound sand !
Hey Pfhtex, you're right, I misspoke. The current rate is 3.625, it won't be locked down until they agree to the contract. Sorry, I'm not very knowledgeable about this kind of thing!
My Realtor suggested that we do some kind of repair escrow of maybe 1k to make it easier on the sellers. Maybe not quite make it worth their while but at least get them thinking about doing the repairs. Haven't pitched it to my lender yet but I plan to this evening.
My Father-in-Law (contractor) agrees with SmartMoney, there probably isn't a whole lot of cost involved in getting it FHA-compliant.... so I think 1k is more than fair?
EDIT: Well, nevermind. Our Realtor got in touch with the owner actually selling the property and he hung up on my guy twice(!)..... but not before saying he got his house appraised "as-is" and won't take less than 40k more(!) than what his Realtor listed.
Soooo we're wishing him well and going on our merry way. The search continues!
Last edited by TheMillersWife; 04-11-2014 at 05:11 PM..
We were looking to purchase using an FHA Loan and are willing to go the route of 203k, especially if the sellers don't want to make the repairs. Our credit isn't good enough for a Conventional Loan (rather, we qualify but our rate would be in the 6-7% range, as opposed to the 3.6 we are locked into with FHA).
The issue with the house as far as I can see is that there's a hole in the drywall where some work was done (leaky ice dispenser) that they never patched up. The Weld work on the pipes themselves is sound. Also, the fan controls for the house are exposed and need a box cover. Plus the house was built somewhere around 1970. But we won't know the full extent of the house's problems until we get the Inspector, and we can't get the inspector unless the seller accepts our offer, and we can't present the offer until we get our Pre-Approval Letter.
Home buying is a pain.
I realize this has essentially ended with the recent results you got from the seller. But I would like to point out that you can get an inspection you pay for anytime if the seller agrees to it. Many people want in inspection even before making an offer. We have done this and have even done limited inpsections on, say, the foundation...or, in one case, one very if-y corner of the foundation. One would need either a good solid inspector/engineer/contractor who is also aware of the peculiarities of financing.
The plot thickened this morning.... my realtor followed up with their realtors as an aside to see what was going on. As it turned out, the heir isn't actually in charge of this sale - it's all up to the Estate Lawyer, who flat-out told us that the heir doesn't know what he's talking about. The house is still going for the listed price.
Sooo, we are going to request an inspection (at our own expense, of course) to see the extent of the damage. Otherwise, we're going with our original offer of 7k above listing w/3 percent help and a 1500 repair escrow.
Hopefully at inspection we'll find out what the extent of the damage is, and if as-is it'll hinder our ability to get an FHA loan.
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