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REAL ESTATE Repairs before closing?

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CarrieW

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I have a question that I think I know the answer too... I need to see if I am wrong or not. the lender is closed so I cant call them...

if I wanted to buy a home that had foundation issues that needed to be fixed before the lender can lend, am I able to get it under contract and use my own money to bring the place to code and then complete the purchase???

I have no idea if this is something that is commonly done :( I know things get escrowed for after but I am not sure about buyer spending money before ownership... I would imagine it can be done but buyers wouldn't like to risk spending money before they actually own something, I personally would be willing to risk it in this case.
 

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Red

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I would personally advise my clients against making repairs to a property before they own it. Too many things can go wrong before the escrow closes & you've just improved a property you don't own. I wouldn't advise my clients to do it & I would not do it myself outside of an agreement for compensation should the home not close. And even then, good luck collecting on something like that.
 

SteveO

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Ditto what everyone else said. The safest way is for you to find a lender that will allow the money for repairs to be set aside or held by an independent escrow company. Once closed, the lender would need to sign off on the dispersal of funds for payment on the repairs.
 
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CarrieW

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that would be the safest way I agree... and the way that would make the most sense... the lender at my bank and wells fargo and quicken specifically said they will not do that for a manufactured home :( I supposed if it was a regular stick built home it would be different. I don't understand it myself... but I have tried... I am literally stuck in a catch 22 with this place. I am determined to figure it out! I have already learned a lot and even If I don't get it I will know I at least did everything humanly possible... if only it were an investment property... grrrrrrrrrrrrrrrr they will refi after its done(6 mo seasoning) but will most definitely not hold escrow :( does it make any difference that it is a fannie mae house??? I wouldn't trust a person, but what are the chances of not closing with a locked in contract from a gov agency?
 

CarrieW

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I just got a lead to someone from a friend in the business... I have several calls out. (several dozen is more like it LOL) I am not giving up till the fat lady sings! I have heard tons of no's but I am not giving up, the more I hear no the more it makes me want to find the yes!

I am trying!!! first thing bright and early I will be back on the hunt... my kids homeschool is all about the housing and loan markets this week...LOL they know more about buying a house now then most adults!

I haven't given up on this repair before closing idea yet LOL I know its risky, but honestly I would rather take the risk and pay off that mistake (if it ends up being one) and eat the loss, then lose the place because I wasn't willing to risk it, but only because I really feel like it would work out... I don't know if I am being brave or stupid! until I do I am just going to keep plugging away until the answer becomes clear. do it or walk...
 

AroundTheWorld

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Is this bank owned?
How much will foundation cost?
How much do you have for down?
 

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CarrieW

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in eight days I can... right now its only open to bids from owner occupants... I will be bidding then, hopefully not against someone else... I just have to talk my hubby into that being a good idea to wait 6 more months to get out of our rental!
 

CarrieW

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Is this bank owned?
How much will foundation cost?
How much do you have for down?
yes it is bank owned...
haven't gotten the estimate for the foundation yet, I had someone lined up for this afternoon but it started torrentially downpouring :( initial estimates are between 3-12k (depending on what is under it, it could be as easy as replacing the vinyl skirting with a masonry wall... or as complex as starting from sratch) I will have estimates on hand soon...
and we have around 5% down. we were putting that towards the deposit, inspections, appraisal, and insurance...
 

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Simple solution.
Buy the home with seller financing. Get the DEED to the property. You own it. The seller gets monthly payments until you can get refinanced.
Since you own it, you can start doing the repairs. This whole process will take about 4-5 days. Much easier than using bank financing.

Plan A. The seller will make more money if you pay them 4-5-6% vs them putting their money in the bank owning 1/2 of % - if that much. Convince them that selling the home to you with seller financing is the smart way to invest their money. Worst case, they get the home back after it is all fixed up so they can sell it again and make even more money. Show them an amoritization table to illustrate how much they will make over time.

Plan B - still buy with seller financing. But instead of using expensive and complicated (picky) institutional financing, find a NOTE BUYER to buy the note at closing or after 3-6 months. They will love putting their money to work vs sitting in the bank earning less than inflaltion. Note buyers advertise in the local newspaper. Do not, I repeat, do not use a big national note buying company because they want too big of a discount.
 

SteveO

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You can buy it as an investment property and move into it right away. I think that the only restrictions are going the other direction. You cannot get an owner occupied loan and then rent it out.
 

CarrieW

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the seller is Freddie mac. they are not offering any kind of financing on this property. only owner occupants can bid right now. I am actively seeking hard money and/or other sources... none that I have found are willing to do owner occupied on a manufactured home... please if anyone knows of a lender private hard idc if they will work with us I am more then willing to pay them for their services... I have been contacting anyone and everyone I can possibly think of! I am willing to explore a different approach to the purchase once investors are open to bid. the only issue I can foresee with that is we would be paying for our rental and the new place until it was fixed and rented. depending on the terms of the loan that may or may not be doable...
 

CarrieW

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thanks for that site! I will try them as well, I just noticed what I have seen on every site I have found "investment property under contract" definitely another contact once it opens to investors :)

went through the app and got to the dreaded question...

Residential (Non-Owner Occupied)Multi-FamilyCommercial

:p gahh! there has to be a way!
 
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Red

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Buy the home with seller financing.
There is no seller financing available in a scenario like this.

but what are the chances of not closing with a locked in contract from a gov agency?
It has little to do with the seller not performing & more to do with unforeseen circumstance preventing closing -ie: what if it burns down? Tornado? Flood? All very unlikely, but all reasons that the escrow would come to a grinding halt. And every single scenario has happened (and waaaay more than I could every possibly list here).

Also make sure you know what govt agency actually owns the home. If it's HUD, you may be restricted in how it can be used for up to 3 years after the date of closing (ie: Good Neighbor Next Door program). Just make sure you read all the fine print that comes with the bank rider (and there WILL be a bank rider) & make sure you can fulfill the terms, as they DO check up on the homes & their usage.

The worst thing you can do is set yourself on ONE property. There will be other options, there are always other options, there is always other opportunity. When you view something as the one & only, you start compromising your normally logical decision making skills. By all means, make sure you explore all financing options available to you, as that can always come in handy, just don't set all your hopes/dreams/expectations/aspirations on one single home, there are ALWAYS other homes.
 

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CarrieW

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You can buy it as an investment property and move into it right away. I think that the only restrictions are going the other direction. You cannot get an owner occupied loan and then rent it out.
idk how I missed this post.... I was actually thinking after I posted about 2 payments... once its open to investors buy it under a llc or something with hard money/whatever and then rent it to myself until the llc can sell it to us in 6 month after repairs... then we would not be paying for 2 places!

so that is my new plan for in 8 days... still tho I would love to lock this up for myself before having to compete with actual investors who are sitting on more cash then I can get my hands on before bidding :( I will not be able to do a contract to assign on this place I have to have proof of funds with offer... theres so much equity they can well afford to outbid me at full asking and still make lots of profit :(
 

SteveO

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Carrie. You are overthinking and overstressing this whole deal. Just keep calling. Find the objections and figure out a fix for each one. But, keep calling.

The type of lender you should be looking for will not care if this is owner occupied or not. They will just care that they will get their money back and make a profit. There are lenders out there that will loan on a manufactured home. You just need to find them.
 

CarrieW

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there are tons of other homes yes you are correct :) none others right now that are for sale for such a discount! why pay full price for just any house when I can pay 60% off on an awesome one? I have a full commitment for a 100% usda direct loan for 133k I could take my pick of over a dozen houses (cookie cutter 1/4 subdivided lots YUCK) I would much rather have this place. 5.49 acres, warts, improper foundation and all then a mint house for 133k! the land value alone is 41k. and the house is in almost perfect condition built in 2008 vacated in 2011... but if I have to I will move on to another property... the fat lady hasn't sung here yet :p
 

CarrieW

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the qualifications for owner occupant for the Freddie mac program this is listed under is to move in within 60 days and live there for at least a year or pay a $10k penalty... that's just to bid as an owner occupant... once the first look period is up it opens up to the public, investors etc... every time we have bid we had to sign the paper as an addendum to the offer.
 

CarrieW

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Carrie. You are overthinking and overstressing this whole deal. Just keep calling. Find the objections and figure out a fix for each one. But, keep calling.

The type of lender you should be looking for will not care if this is owner occupied or not. They will just care that they will get their money back and make a profit. There are lenders out there that will loan on a manufactured home. You just need to find them.
I am very stressed... if it was a business deal it would not be as bad lol. as it is I have to constantly explain and update 2 kids and a husband who want to know when we are moving, and everytime I try to explain the steps I am taking to try to figure out how to do it, I get met with whines of were never gonna move and were screwed no one want to help us :( I know we will end up in the exact house we are supposed to be in. but they are all driving me frickin bonkers!
 

Carny

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3-12k (depending on what is under it, it could be as easy as replacing the vinyl skirting with a masonry wall... or as complex as starting from sratch)

I'm confused as to what the problems are. It has skirting and a foundation? Can you post a pic of it (or one like it)? "Skirting" and "manufactured" make me think of a mobile. Is it?

If it does have foundation problems being only 6 years old I would want to know exactly why. If someone skimps on the most important part of a house then you can bet that they cut every other corner they could.
 
D

DeletedUser2

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tell the kids, and husband to chill while you get it done. and then focus on getting it done. asking mom questions will not get it done any faster.


pick 1 road.
go down it.
buy it as investment,
after it closes, and you make repairs, move in, and start the refi process.
use hard money and get the deal done


what ever you decide to do. PICK 1 path and solve the problems for THAT path. not the other 10 that come up around other paths. or you will run out of time.
Z
 

CarrieW

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it is a manufactured home (essentially a double wide trailer) that they build in 2 halfs and then drive to the lot and install it... on install they remove the axels wheels and tounge.

it is considered personal title property until it the title is surrendered and you file a cpl (certified perm location) with the county and the title is void and the home then becomes attached to the deed and conveyed with any sales...

there are many kinds of foundations that can be done... from what you would see under a mobile home with wheels (some cement blocks and jacks) to footers with blocks on them and skiring around it , to footers buried and a crawl space masonry foundation perimeter wall and then the house is attached to that permanently . or a slab.

what is under it now is most likely footers with blocks or just blocks and a vinyl skirt... I have not been under it yet. all I know is that for sure the skirting auto fails. it has to be masonry... obviously footers and a crawl space is more cost effective then an entire slab.

basically someone bought the land with a older actual mobile home on it. went and replaced the trailer got it deeded to the land then lost the land to foreclosure... did the cheapest install which is for a mobile and not perm like fha requires...

edit to add... theres nothing wrong with the foundation that's there except its not up to the fha/hud code for financing... if it was a dealer finance the difference in the cost from what they did to hud/fha code is about 7-10k
 

Carny

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I am very stressed... if it was a business deal it would not be as bad lol.

SLOW DOWN! You are letting emotions dictate your actions.

The next few comments can easily be taken as me being a jerk. I'm not. Read these as a concerned friend.


as it is I have to constantly explain and update 2 kids and a husband

I understand your kids are excited but if you let them make financial decisions (especially as important as this) you'll end up very broke and they will too. Your husband is your partner and should be helping you in the process.


I get met with whines of were never gonna move and were screwed no one want to help us

I could type pages about this comment, but I'll try to be concise. First, if a bank that makes money by lending money won't lend money on a property there is probably a very good reason. If they did loan you money on a house that fell apart in a short time, did they "help" you?

Banks or any other lender aren't into "helping". They are out for a profit. If you or your family thinks that unless you get help you are screwed then you need to take a step back and think about a few things. Why do you feel like you need help? Why can't you just get what you want? If you don't have and can't get what you want, what steps are you taking to change that?

I know we will end up in the exact house we are supposed to be in

This is starting to touch on spirituality/religion and I don't want to go there, but do you believe that there is one perfect house for specifically for you? Be very careful with this. If you think this is the one house that you are supposed to be in you will ignore every single warning and red flag that comes up. I think it's much more important to provide for your family. That's hard to do if you buy too much house or one with more problems than you can handle. If you get a house that you can't afford it will be a curse, not a blessing.
 

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