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But how many of them are sold "as is" to first time buyers?
Even with the fixer mortgage deals... it's tough, real tough, as a first timer.
First time buyers are rarely allowed to buy fixer-uppers. FHA rules won't allow it. Shoot, FHA backed mortgage loans wouldn't even allow flaking paint - although maybe that has changed a bit in recent years.
I know there is an FHA 203k loan that allows one to buy fixers but I don't know how common they are and also what types of hoops need to be jumped through .
You have a serious problem when you combine the problems of the home, from all your posts. The home is not in a good enough condition, that the average buyer is going to buy it, even the DIY crowd looking for a home at a discounted price that needs updating. They will see the hidden plumbing problems over the kitchen, and no one knows the the hidden damage, till that ceiling is broken open and it can be really looked at. Is there a mold problem that can be costly to solve. As this has been going on for a while, is there rotten wood or have termites moved into water soaked beams. These type problems are very common, with a leaking problem which will often cause damage needing expensive repair before the plumbing problem is fixed.
Windows that need replaced, etc., counters warped and the island needs replaced, and this is over their ability to handle, and won't even count up the other needs to put back in nice condition. The sheer volume of problems, puts it in the category that only the flipper will consider it.
From 1972 till I retired, I was an investment broker. It has been rare, that the normal home buyer will even consider this home in my experience. I often bought homes that were not selling, and put them back in like new condition. I had retired maintenance man with 25 years experience maintaining apartment houses (very large complexes), and several other retired part timers to do the work. And another broker that I often partnered had a general contractor son who had formerly been the city building inspector over permits and inspections, who would do things I needed done that a regular DIY could not handle at a below market price. I had people that would bring in my home over hauls at a much cheaper price overall, than any one else in town could get them done. Our overhauls were top notch, and not like the typical flipper does. I would fix them up, sell them to one of my investors, and they would go to the rental market. I could make money, as I could restore the homes, for far less than other could that had to use regular contractors.
You have listed some of the things wrong with the home, but from experience I know there will be more that needs done to bring that house back to the condition that buyers will want it to be in.
The home is worth about a maximum of $190,000 according to the local sales you have listed after it is restored. You owe $ 112,000. Realtor commission and other closing charges are going to take about 9% of the total bringing down to $175 max. Less the mortgage balance, and you are down to $63,000 maximum cash to you at closing. From this you have to pay for any work done on your home, if you put the home back into good condition, as you will be hiring all the work done. Plus you have to pay quite a bit of money for the equity loan, which also must be taken into consideration.
With the unknown cost to put the home back into salable condition, you may break even but you don't have much wiggle room to keep from going in the hole after the repairs.
The problems with the home, will make it very difficult for a DIY home buyer wanting to buy one to fix up for their family to come out ahead. Most will not have the money available to do the work involved in your home. And it will be difficult to impossible to finance unless the work needing done is done before the mortgage can be issued.
At least see what the Investor is willing to pay. Only then can you determine if he/she is the best way to go.
I know there is an FHA 203k loan that allows one to buy fixers but I don't know how common they are and also what types of hoops need to be jumped through .
From what I've heard of the 203K loans, they're a long-shot. Only certain properties qualify, and potential buyers will have to jump through endless hoops to qualify. By the time they do that, the property has probably been sold to somebody else.
From what I've heard of the 203K loans, they're a long-shot. Only certain properties qualify, and potential buyers will have to jump through endless hoops to qualify. By the time they do that, the property has probably been sold to somebody else.
Yeah I could see it being difficult to buy with a loan like that especially in a hot market .
The OP faces some tough choices but talking to an "investors" is very likely NOT the smartest thing to do. The likely offer from any "investor" will be assume that the OP is desperate and although things are not going great for them (in other posts the details of illness / jump loss / getting behind on their payments were laid out...) things are not as bad as they could be...
The sad fact is the OP and her spouse do not seem well suited for home ownership as they have let many minor things get worse and diminish the value of their home. As someone who has been involved in several aspects of real estate (selling, landlord, buyers agent) I can predict that the hurdles needed to even make the home a bit more "listing ready" likely will go undone and then the "low ball offer" from an investor will sound better...
The fact is that MANY homes MUCH OLDER than the OPs have been not just "upgraded" but frankly cared for in a more consistent way and thus would likely be more attractive to 'regular' buyers. The fact that even the "investor" has not been easy to get a hold of leads me to believe that this will not be "an easy flip".
The OP asked about "what questions should be asked of the investor" and really I would turn this around -- what "scenarios has the OP and her family talked about" is really the better starting point!
The investor likely will follow the same sort of strategy that I have seen many times -- they get as much info as possible and bad as paint a picture as possible! The OP has stated that she has elderly family that might make sense to move closer to -- if that really is the priority than the costs associated with such a move might be all that matters. If the investor offer covers the cost of such a move (including some time re-establish work in what may be an even more difficult area...) that is one scenario that makes this a "go".
The other scenarios are that the OP does not get enough cash from the sale to make the move worthwhile BUT is at least 'unburdend' of a home that she believes to be falling apart around her. If this mentally gives her enough of a "fresh start" with a rental or buying another home maybe that makes sense.
If the offer from the investor is so meager that OP ends up in worse financial shape than they are it would be foolish to sell, believe it or not I have seen desperate people do that... Heck sometimes investors will promise to "pay for professional movers" and then just send over some goofballs in a rental truck and load up all the sellers stuff in a way that is truly insulting but of course by then it is too late.
When it comes to home equity loans I have seen some folks use them wisely but more often I have seen folks fail to really appreciate that such things are a SECOND MORTGAGE and when they've already had problems staying current with their debt the mindset of getting further behind is a real concern.
If the OP wants a little perspective it almost certainly makes sense to have a little phone call with the AGENT THAT SOLD THE NEARBY HOMES -- the OP can legitimately say "my own home is similar to some that have recently sold. Some have things that in better shape but some also seem to have worse carpet / paint / wallpaper. The KEY QUESTION is if we were list our home AS IS (because OP and husband really are not good at maintenance or repairs...) how strong in the local pool of buyers???
My gut says THAT SORT OF CALL should have already happened! Hopefully the OP can get that sort of feedback from those agents ASAP and use that info to help determine if it makes sense to list. If it does make sense to list the agents hopefully will also understand which lenders can make a 203 type loan easiest for potential buyers and do everything to get the OP moving on...
You can have the windows fixed that have seals broken for less than $100 per window.
Maybe several of your repairs are not as bad as you think. Maybe your front door side window can be fixed and the door can be repaired and painted and re-stained. Why don't you have a good hanyman walk thru your home and get an opinion on fixes.
The investors will usually offer you the least amount possible. In your case, it will be the loan balance. Many of them are wholesale brokers, so they buy the house as cheap as they can -- or just broker the deal and don't buy them at all -- and turn around and finance them for new investors.
Talk to a regular real estate agent first.
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