Posted by Irwin on November 19, 1998 at 07:05:34:
Well spoken as usual. It’s nice to see there’s someone out there steering the young 'uns down the right path.
HELP!! Need advice… - Posted by Kevin(OK)
Posted by Kevin(OK) on November 17, 1998 at 21:52:40:
…on problem. Most of the houses in my area (Tulsa,OK) have foundation problems (clay soil). Some are severe ($10k to repair). I have let many a good deal pass because of foundation problems. Right now I have an out of state owner who wants to sell a $166K FMV home. It has been listed for a year, listing has expired. He owes $110K and the house needs 20 piers ($500 ea. pier = $10,000). I am sure this is why the house hasn’t sold yet. Does anyone know of a way I can pull this deal off without having to come up with $10K for foundation repairs? Please help!!
Kevin(OK)
Re: HELP!! Need advice… - Posted by Bud Branstetter
Posted by Bud Branstetter on November 18, 1998 at 11:40:31:
Besides trying to find a contractor that would finance the work(themselves or finance company) look into the possibility of the homeowner getting a Title I loan to do the work. Also look at getting other bids to do the work. I’ve seen bids twice what another contractor would do the work for. $500/pier seems high. Make sure an engineer’s report says 20 piers are needed. Contractors make money on selling more than is needed.
Re: HELP!! Need advice… - Posted by young buck
Posted by young buck on November 17, 1998 at 22:46:46:
I know that im young and new at this but I have spent almost two years around real estate people so I’ll just give it a shot…
Why dont you just talk him down. He’s been trying to sell the house for a year, Im sure he will be happy to finnally sell it to you for $15,000 less which will cover the $10,000 for the 20 pier (i dont even know what piers are) and $5,000 for closing fees.
get from bank $166,000 original price (assuming)
- $15,000 repairs & closing costs
$151,000 what you offer to pay
- $110,000 what he owes bank (assume)
= $ 41,000 for seller
Im not sure if that makes since…like I said Im a “young buck”. If you do get a better answer or idea please let me know what I did wrong and why this would not work…good luck
Re: HELP!! Need advice… - Posted by JohnBoy
Posted by JohnBoy on November 17, 1998 at 22:28:39:
Are you going to be able to get the house for the $110K owed on it?
Assuming you are you might try getting together with the contractor that would be putting the piers in and explain that you are buying the house. Your contract will require the seller to pay for the piers to be put in. But the problem is that the seller doesn’t have the $10k to pay for this up front. See if the contractor would agree to fix the foundation by securing the $10k with a 2nd mortgage against the property due and payable at the time of closing. Tell the contractor you will have your financing in place and the paper work held in escrow waiting to close once he completes the job. Then his $10k would be paid.
Get the seller to agree to this by writing up the sale price for $120k with the contingency of the seller having the foundation repaired prior to closing.
This would put your sale price at 72% LTV even after adding the extra $10k to the sale price. You shouldn’t have any problem getting a loan at 72% of FMV providing the property appraises for the $166k.
Old buck . . . - Posted by Joe Kaiser
Posted by Joe Kaiser on November 17, 1998 at 23:16:04:
Alex made a good point. When you know, shoot. When you don’t know, it’s usually best to spend that time reloading.
Here’s where you went wrong on this one . . . we don’t work for free!
We fix up to make a profit (if you’re into that sort of thing). We don’t buy property for the exercise or so we can say we bought another property, we buy to make a profit. I house with a $15k defect won’t be attractive to an investor unless it is discounted significantly beyond $15k. Not only that, I can easily double my money with $15k worth of carpet, paint and maybe some kitchen cabinets. Not sure I could do that with $15k worth of new foundation. In other words, it would have to be a big discount to get me to stick $15k into something the house sits on that no one is going to see.
Joe