Comment of the Day: The Mods and the Bankers

COMMENT OF THE DAY: THE MODS AND THE BANKERS “My fiance and I have wanted to purchase this home for over a year. We’ve heard the banks won’t approve financing due to the foundation problems; we’d love to restore it to [its] original glory, it needs a MCM loving family–maybe you’re an investor who’d like to help us out? We don’t want this house to get into the wrong hands, it’ll break our hearts.” [Jessica Define, commenting on Scouting Report on a Walnut Bend Mod]

8 Comment

  • With a good % down from the buyers, banks that turn away such loans are just stupid (or rather, they’re not real lenders, they’re just putting together the paper to sell off to someone else).
    There is no reason estimates couldn’t be provided for the cost to fix the foundation, and then that money put in escrow till it was fixed. Or, treat the buyers like adults (if they’re putting down their own equity) and let’s assume they’ll fix the foundation to protect their new investment. If we’re talking about risky 0 down loans on an overpriced house that’s one thing…
    I bought a 4-plex a few months ago that had a terrible roof — needed to be replaced *for sure*. Of course I planned on replacing the day after I closed. However, the bank wouldn’t close with the roof in bad shape. I explained to them that obviously I’d be replacing the roof, and even offered to escrow the funds. I said “no shit it’s bad, I plan on replacing it. The property is priced accordingly”
    Nope. Not good enough.
    I ended up having to replace the roof, with my own money, BEFORE CLOSING.
    Bleh, banks…
    Banks were not making rational decisions a few years ago when they’d lend to anyone. They’re now not making rational decisions by basically not lending to anyone.

  • This one is a tough nut. “Cody” is accurate with respect to the loan environment – locating a lender who does not have its head up its own a** may be a challenge but someone will loan you the necessary funds.

    However, depending on the extent of the foundation issue(s), a purchaser will likely have to not only address the foundation, but the below grade plumbing as the shifting of the slab during leveling may alter the plumbing connections. Most likely the below grade plumbing is original and subsequently will have to be replaced — $$$.

    It’s also very likely that other issues may manifest as a result of leveling. A ball park allowance for work mentioned above would be 20 to 30K (probably on the low end).

    Flat roof too… unless it was re-roofed recently figure another 20K.

    You may wish to investigate securing a construction loan — not easy to do — but it would likley be the best bet in terms of funding this effort.

    The property can be saved, but it’s going to take a significant outlay of moneys just to acquire it… let alone stabilize/restore/renovate.

  • Actually, Cody/JAH:

    It sounds like the poster is looking for outside $ to buy the house, otherwise, “it will break their hearts”.

    I could be wrong.

  • It’s a short sale and they’re only taking cash offers.

  • and it’s fallen out of the option period 3 times already. Not a great sign.

  • @JAH: “Cody” is my real name so you can feel free to use it w/o quotes :-)

  • There are options for buying a home that needs repairs. The problem may be that the seller will not look at finance offers. I would suggest you hire a Realtor if you are serious about this home. The Realtor you choose may not be able to secure this home for you, but it will give you a better chance. Houston has one of the largest collections of Mid-Mod homes in the country, so locating another one that needs love is not going to be a problem.

  • This house is sold.

    Sold for between $105-200,000.

    Wish it was mine.

    If it’s YOURS, let us know how the improvements are going!