Posted on: 18th Feb, 2009 09:10 pm
I am purchasing a foreclosure. The appraisal came in at 250,000 with repairs at 15,000. For a net of 235,000. the sale price is 202,000 with 30,000 down for a loan of 171,000.
the bank is now saying I need to place in escrow 1.5x the 15000 for 22,500.
all of problems r cosmetic and would not stop us from moving in.
the big problem is the appraiser greatly inflated the cost of all cosmetic items.
I totally disagree on price of repairs. do I have any bargaining rights on the repairs? I believe the repairs r in the 3000 total range
Example 1500.00 for a stove and dishwasher,
600.00 for a door on master closet,
1500.00 to seal the deck.
the home has 3 full baths and a "roughed in" bath in basement. it mentioned 3000.00 to finish the “roughed in†bath.
600 to install a fan/light kit in mstr bdm
300 to install door knobs on kitchen cabinets and on and on. :(
the bank is now saying I need to place in escrow 1.5x the 15000 for 22,500.
all of problems r cosmetic and would not stop us from moving in.
the big problem is the appraiser greatly inflated the cost of all cosmetic items.
I totally disagree on price of repairs. do I have any bargaining rights on the repairs? I believe the repairs r in the 3000 total range
Example 1500.00 for a stove and dishwasher,
600.00 for a door on master closet,
1500.00 to seal the deck.
the home has 3 full baths and a "roughed in" bath in basement. it mentioned 3000.00 to finish the “roughed in†bath.
600 to install a fan/light kit in mstr bdm
300 to install door knobs on kitchen cabinets and on and on. :(
Hi horizoncourt,
I do not think bargaining will help you a lot in this matter. But you can always consult another appraiser who can appraise the house for you. You can then compare both the appraisals. Then you can accordingly take the decision whether you want to buy the property or not.
Thanks
I do not think bargaining will help you a lot in this matter. But you can always consult another appraiser who can appraise the house for you. You can then compare both the appraisals. Then you can accordingly take the decision whether you want to buy the property or not.
Thanks
i want the property and it passed inspection with a few minor problems included. i am not trying to lower sales price. what i want is to purchase the house and do some repairs later, my god with the apprasil and down payment i will have equaty of 63,500.
why is the bank being a hard ass on this. is this normal for underwriters to do this?
why is the bank being a hard ass on this. is this normal for underwriters to do this?
Normally underwriters do not do this. Why don't you go for another appraisal as suggested by James? This will help you in determining the value of the property. Thus, you will be able to negotiate with the lender.
Horizoncourt,
I agree that those repair costs may be a little on the high side, but with that being said, we as appraisers must consider the contractors cost in addition to the cost of the item. Instead of getting a new appraisal, you may be able to negotiate with a simple contractors estimate. I would advise you to get a few written estimates from different contractors and then, if all of them are lower than the appraisers estimates, it will put you in a much better position to negotiate. Plus, most contractors will give you an estimate for free or at very low cost.
I agree that those repair costs may be a little on the high side, but with that being said, we as appraisers must consider the contractors cost in addition to the cost of the item. Instead of getting a new appraisal, you may be able to negotiate with a simple contractors estimate. I would advise you to get a few written estimates from different contractors and then, if all of them are lower than the appraisers estimates, it will put you in a much better position to negotiate. Plus, most contractors will give you an estimate for free or at very low cost.
I recently signed a purchase agreement on a foreclosure home the purchase price is 156000 but it needs repairs . the appraisal came in at 175000 subject to repairs . the purchase agreemen stated " as is "
I am putting down 10% on the loan borrowing about 140000 now the bank will not close the deal until the house gets repaired but the house is sold as is I try to tell the bank that Iam going to fix the house as soon I close the deal I do have the funds available which I dont think will cost more than 10000 I need advice desperatley please thanks
I am putting down 10% on the loan borrowing about 140000 now the bank will not close the deal until the house gets repaired but the house is sold as is I try to tell the bank that Iam going to fix the house as soon I close the deal I do have the funds available which I dont think will cost more than 10000 I need advice desperatley please thanks
Something like this will probably not fit a conventional loan product. You will probably need to do some type of specialized rehab loan, perhaps an FHA 203k or something.
If the repairs are strictly cosmetic in nature, then the appraisal could be done "as is" and as long as the value exceeds the sales price, you should be fine. On the other hand, if the needed repairs affect the livibility, soundness, or structural integrity, the appraisal must be done "subject to completion" of these repairs. And the lender will most likely require these items to be repaired prior to closing.
If the repairs are strictly cosmetic in nature, then the appraisal could be done "as is" and as long as the value exceeds the sales price, you should be fine. On the other hand, if the needed repairs affect the livibility, soundness, or structural integrity, the appraisal must be done "subject to completion" of these repairs. And the lender will most likely require these items to be repaired prior to closing.