All Forum Posts by: Barb F.

@Nicole Marshall Thank you for sharing your experience. I was thinking something similar, like a short term lease that we repeatedly renew. I'm a little hesitant about something that says it goes to month-to-month automatically and indefinitely, because what if I need to get them out of there? Perhaps language along the lines of "This lease will continue month-to-month after the termination of the original 3 month period, until such time as the landlord serves 30 day notice" (or whatever notice is permitted here in Virginia.)

As for house rules, yes! I'm a very quiet person so I like the idea of having quiet hours. Division of chores (like we're each responsible for our own messes and stuff, but I take primary charge of the bathroom and kitchen and they get vacuum duties). Have you had experience with "legislating" chores like that in a lease?

@Cameron Tope Thanks so much for the recommendation! And the fast reply :) If I could perhaps avail myself of your wisdom once more... doesn't BP provide downloads of residential lease forms / packets for each state for Pro members? Sounds silly but I just can't find them anywhere. The only thing I've found is this link which repeatedly says "upgrade to Pro!" and says it costs $99 for the forms. I thought they were free... any insights? I'm going to send an e-mail for help if I can't figure it out soon.

@Clarissa David Hi! Did your situation ever work out? I'm looking at a similar situation now: I'm getting ready to buy my first home and wish to take in a roomie to house hack. How did you end up navigating your situation? Thanks in advance for any wisdom you might be able to share now :)

@Joshua Stein I'm getting ready to buy my first house and am in a similar situation: I want to take in a roomie but am wondering about how to design the lease. Did you ever find something that worked for you? One tip I've heard is to put numbers on the rooms. That way it's very clear-cut if you should need to do an eviction. And for context, I'm in Virginia.

Hey group! Just wanted to remind everyone about tomorrow's meetup. Let's come ready to talk about where we each our in our real estate investment goals so that we can bounce ideas around with each other. Bring your questions that you want to get the group's input on. I'll be sharing my story of putting my first offer (ever!) in on a house last week and ultimately didn't get it... but I'll be ready to talk about how much I learned by going through that process. Looking forward to seeing folks tomorrow night from 6:30-8:30 in Group Study Room #3.

@Amy H. Wow, thank you for that offer! I just looked over the VHDA website very quickly so I think I know the answer, but it's worth asking a pro: Does the VHDA offer some type of renovation loan that would permit repairs to be held in escrow rather than be performed before closing?

After the bank's response, I countered with a lower sales price and re-instated contingencies. They wrote back an "take it or leave it" counter to that. I don't agree to that last offer... however they came back to me twice already. They've bluffed, and shown some of their cards. I'm willing to throw a Hail Mary offer and if they catch it, perhaps we can still close this deal. But they are insisting on repair costs being held in escrow, which my lender contact said could be achieved with a reno loan. She initially ran me for a FNMA Home Style Loan, but I'm wondering if there's a VHDA program that will achieve the same thing.

Thank you!

@Christopher Phillips yes, that’s the conundrum I’m puzzling over. I’m wondering if I should counter with essentially my original inspection contingency (10 days, which was agreed by both before making the offer and I have a trustworthy, vetted appraiser who says he’s ready to go) and financing contingency, but lower my offer price to something like $177-180 for my trouble? Because again, I don’t mind coming up with the difference in cash, if I can tighten that gap up somewhat. The bank will probably still get more than they would have otherwise, I get a house that will help me build wealth.

I’d previously been looking at 2BR or small 3BR, which is all that’s usually available in this price range. I probably would NOT have a roommate in such cramped smaller spaces (this house has much larger square footage than others I’ve seen).

@Christopher Phillips Forgot to add that since this is to be my primary residence for a while, that’s where I’m coming in at being okay paying a bit more. It’s what I want and haven’t seen anything else fitting my specs so well. And in addition, even if I don’t have any housemates, it’s still cheaper than my rent.

@Christopher Phillips Thanks for the input. If it makes a difference, the bathrooms are both small (5x6 and 6x7) and the kitchen is 11x14. My estimates on repair costs are from my realtor, who is also a builder and works closely with contractors.

Hey BP family, long post for a newbie with the highest offer on an REO. I could use some outside eyes to help me see if I'm assessing my situation correctly.

I've been casually browsing the market in my expensive Virginia area for the last three years. After considering out of state investing, I decided to look closer to home and consider a house hack. Not much in comfortable price range pops up, including MFH in this part of the state.

Then a lovely 4BR/2B foreclosure appears. It's brick (visually in good condition but I'm not an expert) with hardwood floors (need refinishing), with some serious drawbacks: both bathrooms needs to be gutted and remodeled, kitchen needs updating, last occupants left SO MUCH CRAP behind (seriously the 5 mattresses are the least of it). I'm seeing dollar signs everywhere because this place is going to be gorgeous once I'm done sprucing it up (able to do a lot myself, including refinishing hardwood floors, paint, and re-tile bathrooms). And with 4BR/2B and a partially finished basement, I'd be able to rent out at least one if not two rooms to help keep my costs down and start getting landlord experience.

My realtor pulled comps, defined as all 4BR/2B properties on less than .5 acres (subject property is .31 acres) in the last 6 months in the zip code. One was a short sale, and 9 were regular sales. I drove around the neighborhoods of all of them and the best comps (for ARV) were in the $220-260k neighborhood. My realtor is also a builder, and he said it should only take $20-30k to rehab it to move-in ready. I'm pessimistic and inexperienced so I mentally have budgeted $40k. Even if you take the worst ARV comp and then subtract repair costs from $220, you're left with $180k. I knew I was in a multiple bid situation, so I offered $182. Probably (definitely) went too high.

We were told, ahead of time, that the minimum they would accept was $165k. We knew that they had at least two other bids on the first day in addition to mine, and again that it was a multiple bid situation. Moreover, this isn't a *pure* investment situation for me: this is going to be my primary residence for some time, and I've had a devil of a time finding something this affordable that is a property and a location I can actually tolerate and truly like, and as I said I plan to rent out a room or two.

We were contacted today that I had the highest offer, but they counter-offered with an ace up their sleeve. They said that their minimum of $165k was actually the value of their appraisal of it (a month ago) and basically they're concerned about my ability to get financing because my bid was so far over their appraisal. Terms as below (omitting #1 because it's irrelevant):

2) No reduction or repairs. (If the property does not appraise the seller will not lower the offer price nor make any repairs)

3) Property is sold as is and any repairs will have to be escrowed.-(If thereare any appraisal condition issues, your lender would have to allow the repair cost be placed in escrow by your buyer)

4) Buyer responsible for the difference if the appraisal does not appraise - (This home appraised for the List Price of $165,000 at the time of thh listing. If your appraisal does not come in for the offer price of $182,100, the buyer would be required to make up the difference in cash. They will need to also show that they have the differerence of $17,100 availible should they need it for this difference.)

5) . Buyer's EMD non-refundable if lender denial received for buyer's financing. -(Since your offer is above the current appraised value and there are property condition concerns, your buyer would need to agree that the EMD is Non Refundable based on financing.)

When I, my dad (an insurance lawyer, but not a real estate attorney), my realtor, and the lender I've been working with all looked at their appraisal, none of us thought they had good comps. They only had one REO and it had sold back in December (slower market here back then) and it was a 2BR/1B with less square footage but a slightly larger lot; it appraised at $185k (overall condition unknown). Three more were arm's length sales, not all were within the last 12 months, some had different # bedrooms/bathrooms, different floor plans, etc. Two more comps were current listings. Even given those sub-par comps, we all thought the appraisal came in too low and think it could appraise for more.

The end of their appraisal lists "MPR repairs" totaling $4k and "Non-MPR repairs" totaling $16k, or $20k altogether. MPR repairs include: cost to install co (not sure what this means but they listed it for $80), replace damaged light fixtures $500, replace damaged doors $800, install railings on both stairways $1200, fix damaged front stoop $900, fix peeling paint $500. Non-MPR repairs: update kitchen $4700, refinish hardwood floor $1500, remove debris / junk from interior $300, update both bathrooms $7000, interior painting $2500, landscaping $200.

My lender has been looking at a VHDA loan for me with a 2% down payment assistance grant because of my first time homebuyer status. She says the VHDA loan is less strict than FHA or VA (which would require all MPR repairs to be done before closing) but can be more strict or just a mixed bag compared to a totally normal conventional loan. She's tapped her VHDA guy to see what they might be likelky to require before closing.

Finally we get to my deliberations.

I'm not agreeing to the terms #2-4 that they set out. We understand that it's a bank owned and they won't do repairs. However my team (dad, lender, realtor) are concerned about making me take on the risk of fronting the money for any repairs that might be required for closing. In a typical transactions, repairs the lender requires before closing are often a dance of "I'll fix this or lower the price a bit" between seller and buyer. But as you can see in term #2, they want me to agree to take on that entire risk myself because they won't go lower or fix anything.

For #3, my lender said that they can't agree to put repair costs in escrow because they haven't done their appraisal and inspection, so they can't agree to that. Therefore I can't agree to that. She said they could do it for a small amount of repairs (ballpark $1k) but that's not sufficient to meet the MPR repairs listed in the seller's appraisal.

For #4, I am theoretically okay with producing the difference between an appraisal and my offer price because I believe this house is worth every penny of the $182 that I offered, based on my knowledge of the market, review of comps, and plans to house hack. It's a house that will really suit my needs very well, and since it can make me some money on top of that, I believe it's a good investment. I'll keep it once I'm done living in it (probably not less than 3-5 years at least, and longer if I stay single) because the nearby town, among other thriving businesses, has a college and finding renters for a 4BR/2B shouldn't be too hard.

However, to me it depends on what my lender's appraisal says. If it appraises for, say, $175 and I have to cough up $7k to get to $182k, fine. If it appraises for $155k and I have to cough up $28k to get to $182k, I want to walk because I won't have enough spare cash to do the repairs. The way they phrased term #4 is that I will forfeit the right to back out if I can't get the financing. I'm not sure how to navigate my true answer, which is "I will do that to a point, but if it's too ridiculous I'm going to walk."

And for #5, I'm telling them no. If it doesn't work out, they don't get to keep my darn EMD.

PHEW. I think all relevant details are here. Overall, I am kicking myself for having offered so high. But I really want the property. I haven't found anything remotely in line with the type of house I want to live in, and it would be able to make me money while I live in it and after.

The selling agent let slip that they have a number of offers that also have financing contingencies. I suspect there might be a non-owner occupant investor / flipper waiting in the wings with cash, for some amount considerably less than what I'm willing to pay with financing, and they're just willing to work with me because my offer is considerably higher.

Because they were, in my humble opinion, really freakin' ballsy about trying to remove the financing and appraisal contingencies, my knee-jerk is to counter with my original terms but for less (like $177 or 182k). Diplomacy is not my strength. Their counter-offer essentially might end up having me pay (lender-required) repairs before closing, before I own the property, without assurances that they won't turn around and take my improvements and put it back on the market for a higher price. 

Overall, we're planning to say "no" to those terms. Yes the property is sold "as is," but no to the rest: if lender won't provide financing until those repairs are done and I have no protections that I'll still have the property even if I do them, I want the option to back out. I'm not crazy, right? This is a reasonable stance to be taking?

And a final question: Should I start hastily looking around for a lender that would be more amenable to not requiring those MPR repairs to be done before closing? Are there such lenders out there? I'm just frustrated because those are absolutely repairs that I will 100% do, and plan to do them in the first month of ownership while I'm still living elsewhere, in order to get it move-in ready for me. I'm balking at being put in the position of having to do them before closing when I don't yet have the title because I don't see how I'm protected.

Am I missing anything huge here? Or have I thought through this mostly reasonably? As much as I really do want this house, AND still think it's a great property for me and my future at $182, it definitely is not right at the terms of the bank's counter-offer. Sigh. Thanks for sticking with me to the end of this, and I'm looking forward to (but may not be able to respond immediately) to your feedback.