Nashville, TN · Member since 2016 · 12 posts · 2 votes
Hey everyone,
I'm pretty new to bigger pockets and RE investing in general, so hello to all! Have a question. I was in the process of writing an offer on a vacant property and my realtor just called me saying we couldn't do the deal anymore due to the following:
This past weekend we walked the property with the seller. During that day, he was cleaning out the house from the last renters, and he ended up pulling out several things including the kitchen cabinets. My realtor is telling me that this now makes the property "uninhabitable" and i can no longer get a loan for this deal (I'm unable to do a cash offer).
First, is this true? And second, do any of you have experience with this and what have you done in circumstances like this? I'd rather not deal with a hybrid or construction-type loan. Really only because i haven't looked into that at all and not sure what that would entail
I'm pretty new to bigger pockets and RE investing in general, so hello to all! Have a question. I was in the process of writing an offer on a vacant property and my realtor just called me saying we couldn't do the deal anymore due to the following:
This past weekend we walked the property with the seller. During that day, he was cleaning out the house from the last renters, and he ended up pulling out several things including the kitchen cabinets. My realtor is telling me that this now makes the property "uninhabitable" and i can no longer get a loan for this deal (I'm unable to do a cash offer).
First, is this true? And second, do any of you have experience with this and what have you done in circumstances like this? I'd rather not deal with a hybrid or construction-type loan. Really only because i haven't looked into that at all and not sure what that would entail
You're help is greatly appreciated! Thanks!
Lenders are very picky and if there is anything that makes the property uninhabitable like hole in the roof, missing or inoperable HVAC and I would think the kitchen as well because occupants can't move in and make use of it.
And I think it's the conventional loan type that is more critical of this whereas I believe there are other options.
Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
10y
That is something for your lender to tell you, not your realtor.
You could end up getting this under contract. If the lender tells you the same thing (in writing) you could use that to renegotiate with the seller.
Once I had to patch some stucco and repair an interior handrail while I was under contract to buy. I did the work myself one afternoon and got the seller to reduce the price for my trouble.
Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
10y
@Julius Smith Yes, as others mentioned, many banks will not lend in this situation. I've seen some banks as picky as requiring outside clapboards be replaced. In that case, negotiate a closing credit from the seller, do the work now so it can be financed, and then you'll essentially get reimbursed at closing. Or require the seller to do the work now.
You can also shop around with other lenders, but the "uninhabitable" clause is definitely valid an I've seen this before.
Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
10y
@Julius Smith If there is not an operating kitchen, you will never pass the appraisal. On my last build, the appraiser came out to due the appraisal for my permanent financing (to pay off the construction loan) and we were switching over the power to the house from temp power to main power, and the appraiser noted that to the bank. They bank made the appraiser come back to verify that power was installed on the property. They would not close on the loan without them coming back out.
I bought a condo before the housing crash without a finished kitchen using financing (the appraiser lied and said the kitchen was poor condition when it was in fact gutted), but those days are long gone.
Unless you have other means of financing, I would walk away and find another property. Otherwise you will likely be out appraisal and inspection fees when you find out you can not get the financing done.
Nashville, TN · Member since 2016 · 12 posts · 2 votes
10y
Thank you all for your input. Unless the seller is willing to negotiate a much lower cash offer for this property, looks like i'll be moving onto the next one. I'll keep everyone posted if something changes!
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
10y
Wait a while. The seller may not accept a lower offer now, but will find that he will have lost any conventional buyer and has reduced it to investor buyers, who will not pay market value.
So, the extra money that you might pay to a hardmoney lender, might be similar to what the seller will have to reduce the price for - in which case it would be a good deal again.