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Old 02-05-2010, 12:25 AM   #1
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Appraisal problems... Advice?


Warning, long post, I apologize in advance.

My wife and I are trying to buy a repo'ed home on 1.8 acres. The home was built in 1981 or 82. It was repo'ed by Fannie Mae (government), and has been sitting on the market for several years. It has been a little neglected in that time frame, but the price was just dropped 30k and it is now well below the market value of the land by itself. The house needs some work, but nothing so severe that it can't be moved into after a few thousand dollars are dumped into it.

The reason it has been sitting so long is because of financing problems due to :

1) Deck is rotten and very very unsafe (no pressure treat used anywhere on the deck) This one I can fix easily myself, by ripping off the deck and building a 4x4 platform with 1 step down at the door basically to replicate what was there before except on a smaller scale.

2) No source of heat. It appears to have had a monitor heater before, but i'm sure whoever moved out took the heater and drained the tank. (it's empty). Does anyone know what kind of heat is required for an appraiser to say A-OK ? Can I get away with a cadet heater in the living room?

3) The siding (waferboard type T1-11) has about half a dozen holes that could have been kicked in or beat in with a hammer, and the rain has gotten behind it and caused it to deteriorate further. The biggest one is about 4" in its largest dimension. Aside from that, the siding is questionable at best and probably in need of replacement this summer, but it isn't so bad that it won't make it through the rest of the winter. A coat of paint could have probably prevented that problem. It appears to have tarpaper behind it, so hopefully the subsiding and framing are still in good shape. What is the preferred method for repairing these holes? I can take pictures tomorrow if it would help.

The seller (Fannie Mae) is unwilling to make the repairs necessary to allow the home to be financed, but they have agreed in our offer/contract to let me make these repairs at no cost to them. Apparently these three items were the only thing holding it back on the last attempt at financing, and the buyer was unwilling to make the repairs. This is my shot at a great deal on a nice flat piece of land with no standing water anywhere (in wintertime too!), so i'm going to do whatever I can to get my hands on it. Any other advice greatly appreciated, sorry for the long post.
-Alan

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Old 02-05-2010, 05:11 AM   #2
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Appraisal problems... Advice?


Please do take pictures and post them here of all 3 areas of concern.
The HVAC could likely be the biggest obstacle you'll need to deal with.
I'd call and have a building inspector come and look too.
This will cover more bases and you may find other things that need to be updated/repaired as well.
(Plumbing, elec., etc.)

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Old 02-05-2010, 05:29 AM   #3
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Ditto on the inspector. Well worth the money in this situation not only to confirm the things that must be fixed to close but so you know what you really are up against and that the house will be safe to live in while you fix it up.

As I remember California is still primarily a title company closing state? Other than the repo situation, there are no other liens on the house as far as you know? You might want to spend an hour with an attorney just to go over contracts on this one.

Last edited by user1007; 02-05-2010 at 05:31 AM.
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Old 02-05-2010, 07:33 AM   #4
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Appraisal problems... Advice?


Are you working with a good mortgage broker? One who is well experienced should be able to help find a mortgage for this situation. That said, in my experience unfortunatly it can be challenging to find a good mortgage broker...
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Old 02-05-2010, 07:39 AM   #5
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Quote:
Originally Posted by vsheetz View Post
Are you working with a good mortgage broker? One who is well experienced should be able to help find a mortgage for this situation. That said, in my experience unfortunatly it can be challenging to find a good mortgage broker...
Not really. A best friend is a great one in Northern California but usually works on much larger loans and does a lot of private placement sorts of things now. PM me if you want his name; he may be able to help or refer you to someone he know closer to you. Reputable mortgage brokers belong to an association that weeds most of the bad ones out. As far as I know, they can only work in the States in which they are licensed. I talk most of my clients into using brokers and they get much better deals than going the conventional financing route.

Still think you are going to need, and should have, a complete inspection if for no other reason than to borrow enough money to buy and fix the place up so you can live in it. I would hate to see you get this thing and then have to live 3rd Worldish in the house.
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Old 02-05-2010, 09:15 AM   #6
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Appraisal problems... Advice?


Yeah, I worked for a bank, they usually want a permanent source of heat installed
My last house was in rough shape, I bought it with credit cards
Low interest cash advances (2.9-6.9%) - gave me 6 months to fix up & get a normal loan - at 8.5%
That was years ago before rates dropped

I would be concerned about putting $$ into a place without any guarantee of the sale going thru then being out the $$

Possibly a rehab loan ?
Then they are expecting something that needs repair
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Old 02-05-2010, 09:19 AM   #7
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Appraisal problems... Advice?


As far as home inspectors what would one actually do?

Here's what i've done:
I've crawled underneath the house looking for rot, standing water, anything super funky, and so far nothing like that. Everything is really clean underneath there, dusty at worst. The foundations look to be in really good shape, no cracks or anything like that.

There ARE a few minor leaks in the plumbing system(water) which i'm not worried about, those are things I can take care of easily being a plumber.

The well and septic were inspected in August and both tested ok except they recommend the tank is pumped. The roof looks in good shape, its not new, but i looked around in the attic for signs of leakage and nothing that I could find. Inside, sheetrock all looks in good shape, just a little dirty not cleaned after the repo. The carpet has some stains on it, and will need to be replaced, but I don't mind stains for a little while.

Am I missing any major points?

Special note : this will be our 2nd home. I am getting it for less than what the land is worth I plan to live where i'm at until I get that one to where I'd want to live in it. If it gets to be too much, I can sell it again, and I still have a place to live. I'm not against a home inspector, just wondering what he would do that I haven't already.

Thanks guys.
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Old 02-05-2010, 09:24 AM   #8
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Appraisal problems... Advice?


Quote:
Originally Posted by Scuba_Dave View Post
I would be concerned about putting $$ into a place without any guarantee of the sale going thru then being out the $$
That's why i'm asking the question about siding particularly. The deck will cost me nothing to tear down. I have lumber laying around to build a platform. No biggie. The heat, if i have to plop a baseboard in every room for temporary, thats ~ 40 bucks each x 4. Not really too bad. The siding is what concerns me because i've never had to patch it before, so i'm not really sure what that entails.
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Old 02-05-2010, 09:32 AM   #9
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My F150 cost more then my last house
I didn't have a home inspection, basically same deal the land was worth more then what I was paying
I did my own Inspection..did not find anything major, planned on a new (needed) roof
The day after I bought the house it was fumigated to "evict" the thousands of Tenants
We went down at nite after purchase & GF took one look at the moving walls & ran out

Might want to include something that you can remove anything you install if the sale fails

Possibly just patch the siding for now
Cut the holes square & cut pieces to fit, install backer strapping much like you would fix drywall & screw the patch in...caulk
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Old 02-05-2010, 05:15 PM   #10
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Appraisal problems... Advice?


Quote:
Originally Posted by Scuba_Dave View Post
My F150 cost more then my last house
I didn't have a home inspection, basically same deal the land was worth more then what I was paying
I did my own Inspection..did not find anything major, planned on a new (needed) roof
The day after I bought the house it was fumigated to "evict" the thousands of Tenants
We went down at nite after purchase & GF took onle look at the moving walls & ran out

Might want to include something that you can remove anything you install if the sale fails

Possibly just patch the siding for now
Cut the holes square & cut pieces to fit, install backer strapping much like you would fix drywall & screw the patch in...caulk
Thanks

That's what I was thinking about doing, but not sure if i needed to try to put flashing around the top edge or....?

Asking price on this place is down to 124,900. It's a gem at that price, and I can't see turning it down even if I have to knock the house over. It isn't however by any means a dump. It just needs a little TLC and some cleaning. Here's a link to the listing if you want to check it out. http://ccmls.fnismls.com/publink/def...5e8&Report=Yes

Possibly going to go take some pics of the holes in siding tomorrow.
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Old 02-07-2010, 10:48 PM   #11
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Appraisal problems... Advice?


I second the home inspection. A good independent report that includes a WDO report.. plus your research on permit history... When was the roof replaced.. (exact age).. etc... might be available online or at the local building dept.

This report will turn into a tool to help you shop lenders and speed up their apppraisal process. The report will also list the systems that are in good shape. Each new loan appraisal could find new things that the lender might want fixed prior to closing..

If the bottom edge of the siding has rot, they may require replacement of rotted areas. One lender may not like the age of the roof and require a new one.

A good inspector will have a moisture meter and let you know if the holes in the exterior walls have allowed possible other problems.

Call some local inspectors and ask to see a sample of their reports and fee
scale.

You don't need $ surprizes...
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Old 02-07-2010, 11:06 PM   #12
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did you notice this under remarks in the listing:

!
Quote:
This property is approved for HomePath Renovation Mortgage.
sounds like a marriage made in heaven.
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Old 02-07-2010, 11:18 PM   #13
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Quote:
Originally Posted by nap View Post
did you notice this under remarks in the listing:

!

sounds like a marriage made in heaven.
The closest contractor that does work on those type of mortgages is in SF Bay area.

Cut out some of the siding rot today. Discovered that they either A : used some cheapo siding they got a crapload of for a really sweet deal, so used it for subsiding as well, or B : covered over the old that they were having problems with. It's actually more like particleboard t 1-11. Never seen that around here (good reason i guess eh?), although I pretty much figure on replacing the siding this summer anyway, so i'm not worried about it except from an appraisal standpoint.

The good news? They used a nice heavy tarpaper underneath the outer siding. Assuming they did a good job, it shouldn't be getting into the inside of the house, which is a plus.
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Old 02-07-2010, 11:24 PM   #14
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I see nothing at the Fannie May site that limits the work to be done by any specific contractor, let alone actually a contractor.

It does state it is for primary residence only though.

It appears these lenders participate in the project and lend in California.

http://www.cnmcs.com/DeniseMassey/index.aspx

https://www.flagstar.com/

you had better get permission to touch that building. You can be held liable for any damages you cause unless you have clearance to touch it. On top of that, without a representative of the house there or permission, you are trespassing.
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Old 02-08-2010, 09:07 AM   #15
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Quote:
Originally Posted by nap View Post
I see nothing at the Fannie May site that limits the work to be done by any specific contractor, let alone actually a contractor.

It does state it is for primary residence only though.

It appears these lenders participate in the project and lend in California.

http://www.cnmcs.com/DeniseMassey/index.aspx

https://www.flagstar.com/

you had better get permission to touch that building. You can be held liable for any damages you cause unless you have clearance to touch it. On top of that, without a representative of the house there or permission, you are trespassing.
My wife has looked into it on their website, and it has to be a contractor certified by their 'program'. I have all my p's and q's in order as far as working on it. The real estate agent says she's always nervous about these, because people have tried to sue her in the past for working on a home like this and end up not being able to get the loan still. Not sure how that's her fault, but i'm not that kind of person. I realize i'm putting some of my personal time on the table here possibly at a loss, but I think it's worth it.

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