All Forum Posts by: Yiu Law

I was getting ready to make an offer on a foreclosure HUD townhouse, but found out from one of the disclosures that the bank had an appraisal done on the home. One of the statement was

"PER APPRAISER, PROPERTY IS INSURABLE AND MEETS FHA MINIMUM PROPERTY REQUIREMENTS.

Per the appriaser the Remaining Economic Life is less than 30 years, this may affect insurability." 

I have never heard of this economic life phrase before.  I asked my agent and she told me to stay away from the house, there is probably something major with the house.  The fact that it is a townhouse worries me even more.  If one house has structural or foundation issue, wouldn't that adjacent houses have similar issues as well?

I did some research on economic life and why appraisers make that statement and found various results.  Some say that it is just a formula used to calculate depreciation, it has nothing to do with the actual physical life predicted of the house.  The house was built in 1974.

My question is, is it something I should stay away from, or is it just a cookie cutter statement that some appraisers like to put in their report?  Does putting out a statement like this essentially limit the lifespan of the home?  Would it be difficult for me to obtain insurance for the house?

Thanks.

Hi Russell,

Thanks for your response.  I actually listened to your podcasts recently and was pleasantly surprised that you are in the DC area as well.  

My dilemma is that I can't get a dollar figure from them, which also limits my ability to understand exactly what their offer is.  I just spoke with a friend who is a realtor, she told me that this is actually typical for banks to do because it looks better on their accounting to have a higher selling price on a property, which I can understand.  She also told me that when the bank agrees to pay for closing cost and tax etc (as in my case), they would pay for everything, including all the taxes, appraisal, title insurance, etc.  Right now, I think I am just going to make a conservative counter offer working under that assumption.  I know assumption is never good in business, but it is what is it at this point.

Thanks.

Hi All,

I am new to this website but have heard nothing but good feedback about it, so I am hoping to be able to get some good advice here and hopefully provide some in the near future.

A little background about me.  I live in probably one of the more competitive cities called Washington DC where nice houses fly off the market like hot potatoes.  I am recently trying to close on a foreclosure (needs a lot of work) in the suburban with a 30 year conventional loan and 20% down.  The bank has countered at a much higher price, but agreed to pay for closing cost, inspection, taxes etc up to the amount my lender would allow, which is 6%.  I've been trying to get a clearer picture from the bank to get an itemized list of what they would pay, for instance, what do they mean by "tax?"  Does that include the 4 months property tax, transfer tax and recordation tax?  That along can be a difference of several grands.  However, the bank has been very vague about it and only said they would pay up to the 6% of what the lender allows, which equates to about $18,000.  However, that's misleading because the closing cost (including everything) will surely be less than $18,000, so I am not really getting a $18,000 discount.  

I want to see from the wealth of knowledge here that in cases like this, what can I expect them to pay at closing?  And if I should just counter with a clean offer?

Thanks.