Zillow Advice: Buying Foreclosures - Buying home that needs repairs before the bank will lend on the property.

Bill has the best advice ...

Mon, 26 Jan 2009 23:20:00 GMT

Bill has the best advice - look into the 203k. It is time consumming but it gives you the most protection.

Yes, the best answer is a ...

Mon, 26 Jan 2009 23:05:00 GMT

Yes, the best answer is a FHA 203 loan. If you make repairs prior to closing and something goes wrong, you will be in the lurch. Even if you have a signed agreement stating reimbursement.

Been there, done that - a worker getting seriously hurt, the house being vandlized, faulty wiring causing the house to burn down and contractor disputes with mechanic's leans on a house that is not even yours. These guys are going to be coming to you - not to mention your binder insurance company.

With the 203 the loan gets a greenlight, it is budgeted in and work can be done after closing.

Bill has good advice. 203K ...

Mon, 26 Jan 2009 22:54:00 GMT

Bill has good advice. 203K is your best bet. They will lend the funds for repairs even if the home is deemed unihabitable.

Suggest you take a look at ...

Fri, 23 Jan 2009 07:28:00 GMT

Suggest you take a look at the FHA 203(K) program, it may work for you. You are even allowed to do some of the work yourself.

Hi Dave,Be very careful... ...

Fri, 23 Jan 2009 07:23:00 GMT

Hi Dave,

Be very careful... for any buyer to do repairs on a sellers property is a risky proposition...you may not close... you may not get reimbursed... they may decide not to pay you... so many things could go wrong... seek the advise of an attorney and keep in mind you are considering great risk... this is not for the faint at heart and if this is your first investment property, you may want to not go forward with this property (which sound like a property that is a 'needs cash deal') and seek a deal around the corner that will not be as risky... keep your options open and keep looking regardless...

The addendum would have to ...

Fri, 23 Jan 2009 06:58:00 GMT

The addendum would have to be very specific as to the amount of repairs, otherwise the bank is cutting a "blank check" by agreeing to reimburse you in full if you can't get funding.

I had one instance where we did an escrow hold back. Basically the buyer had to deposit 1.5 times the estimate for the repairs into escrow, and once the work was done (after the loan funded) the contractor was reimbursed through the escrow account.

Another option may be to look into an FHA 203k loan. You can finance up to 35k in repairs, and the work can be done once the home closes.

Hi Dave,This is done on bank ...

Fri, 23 Jan 2009 04:57:00 GMT

Hi Dave,

This is done on bank owned properties and it can be a risk for you.
I tell my clients up front, it may come down to this. It depends on what the cost is for you. A major repair no way but a small one o.k.
If you are possitive that you will get the property than, yes, because you will have to do the repair anyway.