Profile picture for ElizabethGrzesik

First time homebuyer in need of help :(

We are going to purchase a house and it is priced at $48000 and appraised at $38900. 

It is the perfect home--- except the roof has never been replaced and it is slate. The house was built in the 1820's and it most likely will need to be replaced... The house is 2600 square feet and the roof is estimated about $10000 of work.

Other issues...
1. Roof replacement- $10000
2. Updated electric- $2500
3. Hot Water Heater- $500
4. Windows were never replaced- $5000
5. Siding is chipping and not up to area codes- $12000

What should I offer for this home? Should I ask for certain things to be done with the home in the asking price? I also only have $7500 saved for closing costs and the down payment and I need at least $2000 to be saved for a car and emergency purchases... What type of loan should I get and how much? I was thinking that the roof would NOT pass inspection by any bank and I really can't afford to just throw another on there and I know for a fact the bank will tell the person selling the home that she has to have the roof done before the bank gives any person a loan to purchase her home. Should I use a 203k or 203b or something else? 

I am pretty sure the roof needs to be done before I can even get a loan. The electric would be next, then the water heater, the siding, and the windows last.

I am so confused about what to do and my family and I need to move before school starts. Thank you in advance for your help.
  • June 12 2011 - Utica
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Answers (15)

In your situation, this might not be the right home or time to buy.
With very little down, your probably going with an FHA loan
that requires specific repairs be completed before closing.
Based on the price of this home and the appraised value,
this owner is not reasonable. I would suggest waiting for another
home and stay away from this property.
  • June 29 2011
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FHA 203k could be a great tool... but not necessarily the best.  if you would like competitive quote, feel free to look up my contact info and give me a shout. I would be glad to help. :)
b
  • June 29 2011
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Hi Elizabeth,

Take a deep breath, step back and look at the replies to your original question and the comments you have added. "It's a perfect home, but it needs a roof, electrical updating, water heater, windows and siding. The roof won't pass inspection and the siding is not up to code" If you were someone else, reading these comments, what would you advise? You may love the house, but it needs way to much work ... you never addressed the plumbing, is it copper or galvanized pipe ... another expense? How is the heating system? How well is the house insulated?

According to your statements, the house appraises for $38,900 and needs $30,000 in repairs. So, when you're done, you could have $68,900 into the house. When you're done, will it appraise for $70,000 or more?

I hate to say it, but it sounds like you should keep looking for a house that might be a little more "perfect." Good Luck!
  • June 26 2011
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Eek! Elizabeth...I agree with Robin, below. If you REALLY REALLY love it, you can get a lender to do a 203k rehab loan. BUT those have tougher standards, a larger downpayment and aren't friendly to Do-It-Yourselfers. I would advise you to pass on this one. There will be others, trust me. I find a house a day to fall in love with...and you will too.

If you still want to make an offer on the house, go with your gut. If you don't have a buyer's agent, do as much research you can on sites like this one and try to figure out what to offer.

Where is the house? I may be familiar with it already.

GOOD LUCK!

Jay :-)
  • June 26 2011
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oh boy...sounds like a place with huge potential...for a buyer with huge pockets.  I know , I live in a home from 1750 with a slate roof....a labor of love. My advice, walk away and save your historic home for a day when cash is more available.  there is no easy answer for this. the simple fact is, you need a significant sum of available cash for the more than possible pitfalls a home like this presents.   best of luck!
  • June 12 2011
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Profile picture for Dunes....
Ah yes..the generous offer of a Referral from a Kind Agent...

Agents will kindly "Offer" to help you find another Agent...This is because Many of them if not all pay each other for  "Referrals "

"Referral Fees from One Brokerage to Another and Agent Split"


"Referrals come "off the top" before commission is split. The referral is a negotiated percentage paid to another company for sending a client, either as a seller or a buyer. Here's an example of a typical buyer referral:

1. Brokerage A has a client selling their home and leaving the area. They refer the buyer client to Brokerage B in another state with a written referral agreement at a certain percentage of the final commission earned by Brokerage B.

2. Using the $12,000 gross commission from above, and an agreed referral fee of 25% would give Brokerage A $3000 for the referral, and Brokerage B's agent and broker would split the remaining $9000.

3. Using the 50/50 split from the first example would yield $4500 for the agent in Brokerage B."..Link

So get that Referral from that Agent who knows a Quality Agent in every Market in the Country or wishes you to believe using an Agent costs you nothing ....LOL

Perhaps you might be interested in reading this Information provided by the Department of Justice..
Consumers Can Save Thousands of Dollars in Commissions

Competing Models of Real Estate Brokerage

Competition and Real Estate

What are the laws in your state?

Good Luck
  • June 12 2011
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Thanks you for your question Elizabeth.  I recommend having a buyer agent work for you, they are paid by the seller and can really save you money and headaches.  You can research good ones on Zillow and read past client reviews of them  [edited by Zillow moderator]

Good luck, hope this helps.
  • June 12 2011
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I would talk to a lender about a 203k option.  That being said, I think some of your repair numbers may be a bit on the low side-  2600 sq ft 1820's house that sounds like it hasn't had a lot of maintenance over the years is definitely going to take a substantial investment. 

Make sure you know exactly what you are getting into or you're going to have years of headache and heartache and possible financial disaster.

But I also know how you feel because I love old houses. 
  • June 12 2011
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Profile picture for ElizabethGrzesik
The house was appraised once it was going to be put up for sale. That is a normal thing to do seeing that many people want to know what it's worth. I didn't have an appraiser sent in.

It is appraised at $38,900.
They are asking $48,000.

I am having a hard time finding a lender that is a local bank and has fha loans, and I want to look but I don't know about how much the repairs would be and what type of loan I would need to make a total of $40,000 with closing costs and such.


Lenders in NY lend less than $50,000 quite frequently.... They don't usually lend a mortgage of $20,000 or less due to that being the price range for a personal loan.
  • June 12 2011
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Profile picture for wetdawgs
Humbly, if you purchase this property, you will quickly understand the meaning of "financial black hole".   A very old house is a labor of love, and rarely makes financial sense.

How do you know the appraised value, or are you seeing  a tax assessed value (not the same as an appraisal for purchase or financing)?

You can always offer $30k, 62% of asking price.   But, that is such an incredible low ball that I suspect it will be hard to convince an agent to spend their time writing the offer.


  • June 12 2011
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Profile picture for ElizabethGrzesik
The electric are fuses and the windows are kinda leaky with cool air.

Should I offer 30,000 with the stipulation that the roof be repaired not brand new, but repaired.... I can afford 40,000 at the most and this house isn't even appraised at 40,000...

I just don't know what to offer?

The paint is chipping and we would fix that later with our money and time.
  • June 12 2011
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Profile picture for Carole Tyne

Your note is a little confusing.   It is listed for X but it appraised for X makes us assume that you are already in contract for the purchase of the home.   Questions on the financing options are best left to lender.   Many lenders will not lend on less than 50K.
Seems like this house would be ever going project.  Maybe better to spend a little more and get a house with less problems.

  • June 12 2011
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Profile picture for hpvanc
Without knowing the condition of the roof, if it is not leaking your loan would probably not be rejected on that basis.  Since it is slate it is probably repairable, but the repairs may cost more than the cost of a new non-slate roof, you would need to do the math as to which was cheaper over the long-haul.  The value of the house is probably greater if you maintained the slate roof.

Electric needs updated, is it knob and tube?  If so you will probably need to replace it to get an insurance policy or pay dearly if someone will insure it.  If it is a more modern electric system, with copper wire, it is more of an inconvenience than a necessity.  Just don't use bigger fuses or breakers than what it was designed for.

As to the windows, unless they are severely rotted it should be more economical to repair and maintain them, as well as better for the future value of the property, than installing vinyl replacement windows. 

Not sure what you are saying on the siding, if it is chipped paint it can be repainted.  If it is rotted or damaged those portions can be replaced if it is wood, depending on the extent of the damage.  If it is not wood is the wood siding still underneath the replacement siding?  Many times it was replaced just because owners were tired of painting it, if so you may be able to strip off the cheap replacement materials restore the original and increase your value at the same time. 

What about insulation, heating systems and plumbing systems?
  • June 12 2011
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Profile picture for ElizabethGrzesik
Well the ceiling in one of the bedrooms had visible water damage but it claimed to be fixed. We went to the attic and under part of the slate roof was a bucket with water in it and the roof had a few holes that you could see through. I did not see any other holes than that area and no other damage- maybe it could just be repaired? Also, there is a VERY old gutter system and I am not sure what it would cost to get a new one.

Was the water damage actually fixed like they had claimed and should I make sure it's in writing? What else should I make sure is in writing? 
  • June 12 2011
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Profile picture for wetdawgs
Purchase of a house from the 1820s that needs a lot of updating tends to be a purchase of love and a very expensive proposition. 

What should you offer?  The appraised value is most likely very close to what you should offer because the in-person appraiser took into consideration that the house is not a brand new, code perfect house.

You may consider a 203k loan so that the loan includes money for repairs. 

Slate roofs can last 300+ years if properly maintained.  Do you have a reason to think it needs replacement?

Be careful you don't bite off more than you can handle.  Those I know who purchase old homes either spend every evening and weekend working on the house or have very deep pockets.
  • June 12 2011
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