House Flipping folks....what would you offer on this house?

[frugalmama]

Trying to see if my offer is too low or about right.

 

http://www.zillow.com/homedetails/5051-Guinevere-Dr-San-Antonio-TX-78218/26325245_zpid/

 

I've looked at the house from the outside & windows, and see no obvious defects other than a few missing shingles on the back side {which I can repair quickly}, and missing appliances / window screens. It does need a good paint job inside and out too, and I would plan on replacing the front door and all locks.

 

I know it was given back to the lender with a balance of about $43k a few months ago.

 

What would be a good offer to put in on this house?

Edited August 27, 2012 by frugalmama

[Catwoman]

With a notification that "seller is exempt from disclosure," I would hesitate to make an offer on that house -- you have no protection whatsoever. The house could have major problems, and the seller won't be held responsible for any of them.

 

I know that houses are sold in that manner all the time, but if you're determined to make an offer on it, estimate the repairs that the house will need, and then double that figure to give yourself a cushion. If the house has visible issues, imagine what's lurking behind the walls and ceilings, and under the floors. That house needs to be checked from top to bottom, and you need to really know your stuff about things like wiring, plumbing, and HVAC systems. You also need to know how old the roof is, what condition it's in, and how many layers are already up there. What about things like termites, other bugs, and vermin? Has the house ever flooded or been on fire? Are there cracks in the foundation and are they structural? Are the floors level or do they sag? Is there any water damage on any of the ceilings or walls? What about the bathrooms -- is the tile cracked in the shower or around the bathtub? Because if that's an issue, you could have a serious mold problem behind the walls.

 

Honestly, unless you are an experienced contractor with a lot of home remodeling experience, please be extremely careful about buying a bank-owned fixer-upper. Even experienced home remodelers can lose a lot of money on these projects due to unexpected issues, and they know what to look for.

 

I'm sorry to sound so discouraging, but I'm worried that you might be buying a money pit. How much are the other homes in the neighborhood selling for? Is the neighborhood safe? Is the neighborhood on its way up or on its way down? What if you have to sell the house again soon? Will anyone want to buy it? Will you ever get your money out of it if you end up having to make a lot of costly repairs? (If the owner of the house was willing to walk away from the property owing only $43,000, you can bet it's probably not even worth that much.)

 

If you can say that this is the least desirable home in a good, well-maintained neighborhood, and all of the other homes are selling quickly for substantially more money, then maybe it would be worth taking a chance on it. But if that's not the case, please don't rush into buying it. Even if you only have to do basic remodeling on a bathroom and the kitchen, that's going to cost almost as much as you're paying for the entire house -- and you can be pretty sure that there will be other problems that pop up as you go along.

 

So please be careful. And don't even consider making an offer without having that house thoroughly inspected first, preferably by people like an electrician, a plumber, a roofer, or a good general contractor, rather than just a regular home inspector (because a lot of those guys miss a lot of huge stuff!) And know in advance what the major repairs will cost, so you don't over-pay for the house.

Edited August 23, 2012 by Catwoman

[Dobela]

There are so many factors in determining a price. Location, age, value of homes in the area, how much damage that is unseen... I don't know what I would offer

[Dobela]

With a notification that "seller is exempt from disclosure," I would never make an offer on that house.

All foreclosures are written this way, or at least all the ones I have seen. If it is bank owned, it could be in bad, bad shape. Any offer I make would have to be based on inspection as well.

[frugalmama]

With a notification that "seller is exempt from disclosure," I would never make an offer on that house.

 

Here it's pretty standard for Bank Owned homes to put that in the listing. The offer would be contingent on inspection.

[elegantlion]

I would want to see inside before making any type of offer. I would want to know the condition and age of all HVAC systems, hot water tank, roof, any rotting, mold, or termite issues.

 

I'm having trouble getting the page to load (probably my computer), but I'll add more once I look at the page.

[frugalmama]

All foreclosures are written this way, or at least all the ones I have seen. If it is bank owned, it could be in bad, bad shape. Any offer I make would have to be based on inspection as well.

 

It's actually in really good shape from what I can tell from looking in the windows, but I would plan on getting an inspection to make sure we're not dealing with termites or foundation issues. Learned that lesson the hard way with the house we're in now.

 

I would call it move-in ready, but from what I understand because it doesn't have the appliances, window screens, screen door, and a few light fixtures, it can't be classed as such and eligible for a regular mortgage. Since we'd be paying cash, financing isn't a concern and I'm fine with doing a little home rehab :D

[frugalmama]

I would want to see inside before making any type of offer. I would want to know the condition and age of all HVAC systems, hot water tank, roof, any rotting, mold, or termite issues.

 

I'm having trouble getting the page to load (probably my computer), but I'll add more once I look at the page.

 

I plan on getting my agent to open it up for a inside look within a day or two. HVAC appears to be in good running condition and less than 5 years old {it was running when I looked at the house from the outside}, but I will have to confirm when in the house. The other issues you mention I'll have to have an inspector check out. I'm 95% sure it doesn't have mold as I'm highly allergic and had no issues when around the house.

[frugalmama]

With a notification that "seller is exempt from disclosure," I would hesitate to make an offer on that house -- you have no protection whatsoever. The house could have major problems, and the seller won't be held responsible for any of them.

 

I know that houses are sold in that manner all the time, but if you're determined to make an offer on it, estimate the repairs that the house will need, and then double that figure to give yourself a cushion. If the house has visible issues, imagine what's lurking behind the walls and ceilings, and under the floors. That house needs to be checked from top to bottom, and you need to really know your stuff about things like wiring, plumbing, and HVAC systems. You also need to know how old the roof is, what condition it's in, and how many layers are already up there. What about things like termites, other bugs, and vermin? Has the house ever flooded or been on fire? Are there cracks in the foundation and are they structural? Are the floors level or do they sag? Is there any water damage on any of the ceilings or walls? What about the bathrooms -- is the tile cracked in the shower or around the bathtub? Because if that's an issue, you could have a serious mold problem behind the walls.

 

Honestly, unless you are an experienced contractor with a lot of home remodeling experience, please be extremely careful about buying a bank-owned fixer-upper. Even experienced home remodelers can lose a lot of money on these projects due to unexpected issues, and they know what to look for.

 

I'm sorry to sound so discouraging, but I'm worried that you might buy a money pit. How much are the other homes in the neighborhood selling for?

 

Well, the house we're in right now is a money pit with a mortgage :D . To date in 7 years we've put nearly $15k in repairs into this house, and it still needs another $25k for a new roof. So I don't mind buying a fixer-upper without a mortgage.

 

I have some home-rehab experience, and my mother helped build my childhood home so she has some as well. I also have an experienced friend who does home-rehab on the side from his regular job who I can call. I do plan on getting a through inspection to document needed repairs, and if there is anything major it will be a no-go. However with the small budget I have to purchase a home, I'm realistic and know that all I will be able to afford is a fixer-upper and the best I can do is find one that needs the least amount of work. Without the mortgage payment from our current home over our heads, we'll have a small budget each month to put towards rehab. And we will be frequent customers at our local Habitat Restore which is only a few blocks away. :D

 

Other homes in the neighborhood mostly are not selling due to lack of financing, but prices range from $45k to $120k - it varies a lot. This is a smaller house for the neighborhood, and a little older. I live a few blocks away from this home currently fwiw.

[Catwoman]

All foreclosures are written this way, or at least all the ones I have seen. If it is bank owned, it could be in bad, bad shape. Any offer I make would have to be based on inspection as well.

 

Here it's pretty standard for Bank Owned homes to put that in the listing. The offer would be contingent on inspection.

 

I'm aware of that. That's why I mentioned in the next paragraph that I knew many homes are sold that way. I was just saying that I, personally, wouldn't make an offer on it.

 

Sorry for the confusion -- I'm having one of my clueless moments again! :tongue_smilie:

[itsheresomewhere]

Make sure you have thought about how you are going to sell your current home. Even though you are paying cash for this factor in bills for both- electric, water, sewer, etc.

[Catwoman]

I have some home-rehab experience, and my mother helped build my childhood home so she has some as well. I also have an experienced friend who does home-rehab on the side from his regular job who I can call. I do plan on getting a through inspection to document needed repairs, and if there is anything major it will be a no-go. However with the small budget I have to purchase a home, I'm realistic and know that all I will be able to afford is a fixer-upper and the best I can do is find one that needs the least amount of work. Without the mortgage payment from our current home over our heads, we'll have a small budget each month to put towards rehab. And we will be frequent customers at our local Habitat Restore which is only a few blocks away. :D

 

Oh, OK! That makes a lot more sense, then! :001_smile:

 

When I read your initial post, it sounded like you'd seen the house from the outside, looked in the windows, and were already prepared to make an offer. That's why I was so worried!

[Dobela]

The best way to make money on a rehab flip is to do it quickly, as in under 30 days. Otherwise any money you might make is lost in utilities, maintence, taxes, permits and inspections, and more. The longer you spend working on it, the less money you will make.

 

Our house was well maintained but built in 1963. We have had in the last 2 years expensive electrical repairs, plumbing repairs, and fireplace issues just from age.

 

The price is not bad, just from what you are saying, IF it is the worst house in the neighborhood, the houses in the neighborhood are selling for much more, it really doesn't need much work, and houses in that area are actually selling. If the homes in that area are only selling for $90K, I would leave it alone. You won't get much profit.

 

Houses, even flipped ones, are not selling much. People are buying them for rental properties here, but not much else.

 

Honestly, the best deals usually go fast. If this one has not sold in that many days, with the large number of cash investors out there, I would be very very cautious. It could mean that the market in that area is not good or promising, that the house needs lots more repair than it appears, or some other concerns. The house across from us sold for $75K as a foreclosure. The owner took months to update and repair, then it took nearly a year to sell for $135K. When it was over, he said he did not even break even. Most of his expenses were taxes, electric, yard care, water... Even though he paid cash up front, he said having that much tied up in the house was a mistake and put a real financial bind on the family.

 

To get the best money on a flip, people are also not going to be looking for refurb from ReStore. They will want new, up to date most likely. Our ReStore rarely has those things.

 

I asked my dad to look at it, as he flips houses regularly, and he said he would offer no more than $25-$30K. There are just too many risks involved.

[elegantlion]

We bought our house as an as-is foreclosure. It had no furnace, no kitchen, the ceilings were cracked, the bathroom was not operational, and the floors were sanded but not refinished. It took dh 60+ days of hard work and a good chunk of change to get it livable, he's a contractor.

 

Anyway, I would look at what would have to be done to make it livable, paint floors, etc. I would also have an insurance agent look at it, that was one of the issues we had. We had so many days to make the place livable to keep the insurance.

 

Our house still needs some work, but it's nice to live in a decent house. Just make sure you ask lots of questions, and do the footwork.

 

We also had an issue of a flipper bidding against us. He didn't make the offer until ours was on the table. Our agent was not the listing agent and we think the listing agent had a flipper lined up ready to offer if someone else did. So keep that in mind, sometimes bank owned properties may have multiple offers, be sure you know what your top dollar bid will be if that becomes an issue.

[TranquilMind]

All foreclosures are written this way, or at least all the ones I have seen. If it is bank owned, it could be in bad, bad shape. Any offer I make would have to be based on inspection as well.

It could be exempt from disclosure because it was owned by elderly people who died. In my state, the heirs need not make reports on homes in which they have not lived.

[Dobela]

It could be exempt from disclosure because it was owned by elderly people who died. In my state, the heirs need not make reports on homes in which they have not lived.

This is also important. In our state, you must be notified if someone died in the house. If so, it is amazing just how many people will not live there, even if the person died of natural causes.

[Catwoman]

I was just thinking, and I think part of my concern about the house is that I can't wrap my head around the idea of being able to buy a decent house for around $50,000. Where I live, that same house would cost more like $300,000, so that's probably why I was so incredibly suspicious of the condition.

 

It's amazing how home prices vary from one place to another!

[LisaKinVA]

Other homes in the neighborhood mostly are not selling due to lack of financing, but prices range from $45k to $120k - it varies a lot. This is a smaller house for the neighborhood, and a little older. I live a few blocks away from this home currently fwiw.

 

That's quite a range. Being on the smaller/older side, it's value is going to be on the lower side, too

 

If they gave it back to the bank and owed $43,000, they most likely were not able to do a short sale of even $35k.

 

So, my starting price, before deducting for repairs would probably be close to $30,000, then I'd start adding up the known repairs... if it's possible take a contractor through the property when you go through it. Make a detailed list of every problem, and attach a price for fixing it. Add at least 30% to your budget for unforeseen problems.

 

Sooo...based upon what you've listed (assuming that is the worst), I would probably offer about $20k.

[elegantlion]

nm

Edited August 23, 2012 by elegantlion

[elegantlion]

silly page, ugh!

[Jann in TX]

Looks like it is in an older neighborhood--but GREAT location for commuters so lots of potential if the right improvements are done-- AND if the neighboring houses are also in good condition.

 

Lot/tree sizes in that neighborhood are also good...

 

You really need to go with an inspection if you are serious. You have less than $50,000 to play with and still make a profit... missing shingles could mean the whole roof needs to be replaced or possible foundation issues.

[frugalmama]

The best way to make money on a rehab flip is to do it quickly, as in under 30 days. Otherwise any money you might make is lost in utilities, maintence, taxes, permits and inspections, and more. The longer you spend working on it, the less money you will make.

 

Our house was well maintained but built in 1963. We have had in the last 2 years expensive electrical repairs, plumbing repairs, and fireplace issues just from age.

 

The price is not bad, just from what you are saying, IF it is the worst house in the neighborhood, the houses in the neighborhood are selling for much more, it really doesn't need much work, and houses in that area are actually selling. If the homes in that area are only selling for $90K, I would leave it alone. You won't get much profit.

 

Houses, even flipped ones, are not selling much. People are buying them for rental properties here, but not much else.

 

Honestly, the best deals usually go fast. If this one has not sold in that many days, with the large number of cash investors out there, I would be very very cautious. It could mean that the market in that area is not good or promising, that the house needs lots more repair than it appears, or some other concerns. The house across from us sold for $75K as a foreclosure. The owner took months to update and repair, then it took nearly a year to sell for $135K. When it was over, he said he did not even break even. Most of his expenses were taxes, electric, yard care, water... Even though he paid cash up front, he said having that much tied up in the house was a mistake and put a real financial bind on the family.

 

To get the best money on a flip, people are also not going to be looking for refurb from ReStore. They will want new, up to date most likely. Our ReStore rarely has those things.

 

I asked my dad to look at it, as he flips houses regularly, and he said he would offer no more than $25-$30K. There are just too many risks involved.

 

I'm not really looking to profit, as I'm looking to flip to live in it and not resell it. But I am trying to do the same thing as those flipping houses and buy very cheap. The range your dad said is right about what I planned on offering if there were no major problems with the house :D

 

The market in this neighborhood is iffy. It's not the greatest neighborhood, but again with my small budget a great neighborhood isn't going to happen and honestly we wouldn't fit in there anyways :D But It has the potential to come back if they expand the base again, as it's only about 5 minutes from the biggest base here.

 

This is also important. In our state, you must be notified if someone died in the house. If so, it is amazing just how many people will not live there, even if the person died of natural causes.

 

I'm one of those quite often. I decided not to even look at a house this morning after doing a drive-by of it and getting a bad vibe. That combined with a death in the house made it a no-go.

 

I was just thinking, and I think part of my concern about the house is that I can't wrap my head around the idea of being able to buy a decent house for around $50,000. Where I live, that same house would cost more like $300,000, so that's probably why I was so incredibly suspicious of the condition.

 

It's amazing how home prices vary from one place to another!

 

It's a bit low, but normally a house like this here would be $75-$100k.

 

That's quite a range. Being on the smaller/older side, it's value is going to be on the lower side, too

 

If they gave it back to the bank and owed $43,000, they most likely were not able to do a short sale of even $35k.

 

So, my starting price, before deducting for repairs would probably be close to $30,000, then I'd start adding up the known repairs... if it's possible take a contractor through the property when you go through it. Make a detailed list of every problem, and attach a price for fixing it. Add at least 30% to your budget for unforeseen problems.

 

Sooo...based upon what you've listed (assuming that is the worst), I would probably offer about $20k.

 

$20k would be great - I'm thinking more around $25k-$30k at the most for an offer. Hoping to have some left from the budget to fix up the place I'm in and get it sold {it needs a lot of cosmetic work}.

[extendedforecast]

No more than $25,000.

[frugalmama]

Thank you all for your replies:001_smile: I wasn't sure if my offer was too low, but it appears it's actually right on the money or a little high from everyone's replies.

 

Now I will call my realtor and get a showing of the inside of the home, and hopefully it will check out okay for inspection as we'd like to be moved by the end of September {or sooner!}.

[plansrme]

we'd like to be moved by the end of September {or sooner!}.

 

I hope it works out for you, but I would not count on end of September. Bank-owned houses can be a pain in the you-know-what to buy. We are closing today (right this minute, in fact--we have already signed and are not present at closing) on a cash purchase of a house that we started trying to buy in April. It was a short sale, and the bank (B of A, of course) had already approved an offer from another buyer. That buyer dropped out, we stepped in with the exact same offer, except that ours was cash, so it should have been a no-brainer. They approved the sale the last week of July. Most of April, May, June, JULY. Did I mention that our offer was for the exact same price that they had already approved? They only got off their behinds and started moving when my husband sent a strongly-worded e-mail to the negotiator about how this would make a great story for the regulators about why banks have such a massive inventory of deteriorating residential property.

 

Best of luck to you--it looks great! But I wouldn't start packing yet.

 

Terri

[Happy]

I hope it works out for you, but I would not count on end of September. Bank-owned houses can be a pain in the you-know-what to buy. We are closing today (right this minute, in fact--we have already signed and are not present at closing) on a cash purchase of a house that we started trying to buy in April. It was a short sale, and the bank (B of A, of course) had already approved an offer from another buyer. That buyer dropped out, we stepped in with the exact same offer, except that ours was cash, so it should have been a no-brainer. They approved the sale the last week of July. Most of April, May, June, JULY. Did I mention that our offer was for the exact same price that they had already approved? They only got off their behinds and started moving when my husband sent a strongly-worded e-mail to the negotiator about how this would make a great story for the regulators about why banks have such a massive inventory of deteriorating residential property.

 

Best of luck to you--it looks great! But I wouldn't start packing yet.

 

Terri

 

A short sale is a way different animal than a straight foreclosure. A foreclosure could (and should) close within 30-45 days. Less if it is a cash deal. Depends a lot on the bank holding the mortgage.

 

Short sales make me crazy because the banks are sooooo difficult to work with.

 

 

To the OP, be sure to check out the electrical and plumbing. I showed a magnificent foreclosure to a buyer last spring. The house looked to be in near perfect shape--it needed carpet and all. We couldn't figure out why it was priced so low for the neighborhood until we noticed no wiring in the breaker box. Most of the home's wiring had been stolen. Same for all the copper pipes....

 

Neither were a hard fix, but something that didn't show on first glance.

 

I've seen some cream puff type foreclosures in the past two years. Fresh paint and new carpet were about the extent of the needs. I hope yours turns out to be the same.

[frugalmama]

A short sale is a way different animal than a straight foreclosure. A foreclosure could (and should) close within 30-45 days. Less if it is a cash deal. Depends a lot on the bank holding the mortgage.

 

Short sales make me crazy because the banks are sooooo difficult to work with.

 

 

To the OP, be sure to check out the electrical and plumbing. I showed a magnificent foreclosure to a buyer last spring. The house looked to be in near perfect shape--it needed carpet and all. We couldn't figure out why it was priced so low for the neighborhood until we noticed no wiring in the breaker box. Most of the home's wiring had been stolen. Same for all the copper pipes....

 

Neither were a hard fix, but something that didn't show on first glance.

 

I've seen some cream puff type foreclosures in the past two years. Fresh paint and new carpet were about the extent of the needs. I hope yours turns out to be the same.

 

Thank you for this reminder. Copper theft is rampant here and I know these homes have copper pipes at least, and probably copper wiring. I'm not sure how to check the pipes though as the house has likely been weatherized and has no water service.

 

This home isn't exactly a foreclosure, and isn't exactly a short sale. From what I've been able to dig up, the previous owners had an ARM mortgage. They had it listed for sale for just a few months and then signed it back over to the bank in May of this year.

 

The house does look in near perfect shape - one door in a bedroom has stickers all over it {kids room :D}, it needs new screens and I'd like to replace the front door as it's not sturdy enough for my taste. It has nice carpet, but I do plan on replacing with tile floors ASAP.

[Dobela]

Thank you for this reminder. Copper theft is rampant here and I know these homes have copper pipes at least, and probably copper wiring. I'm not sure how to check the pipes though as the house has likely been weatherized and has no water service.

 

This home isn't exactly a foreclosure, and isn't exactly a short sale. From what I've been able to dig up, the previous owners had an ARM mortgage. They had it listed for sale for just a few months and then signed it back over to the bank in May of this year.

 

The house does look in near perfect shape - one door in a bedroom has stickers all over it {kids room :D}, it needs new screens and I'd like to replace the front door as it's not sturdy enough for my taste. It has nice carpet, but I do plan on replacing with tile floors ASAP.

Do you have a friend that is a handy man or a contractor that you can take with you? We had a couple that we could call when we were house hunting. While I was looking at the big things (paint, floors, windows, doors, etc) they were in the attic, on the roof, in the crawl space.... Lots of good feedback and it only took them a few minutes of time. One noticed in the bathroom of one house that all the fixtures were corroded in a certain way and told me that it was from certain types of chemicals being stored in the cabinets.

[frugalmama]

Okay, an update. Went and saw the inside of the house today. It's really not in too bad of condition overall with a few exceptions. I have not had an inspection

 

It needs:

The fascia & soffit boards replaced in places & repainted in others.

One or two areas of the eves may have dry-rot in trim boards

the roof may have a few small leaks or soft places

it has mold in the master bedroom - a small area maybe 2'x3' and it's not black mold. Possibly old mold issue that has resurfaced due to them keeping the house at 82.

The master bedroom has had some water leaks and damage to the drywall on the bottom 2' or so of most of the room.

all the carpets need heavy cleaning or just removed {At least in part of the house there is tile underneath}

the kitchen needs all new cabinets {they are there but in poor shape} as well as a few tiles installed

the entire house needs cleaned and painted on the inside

a fan in the dining room needs re-attached to the ceiling

The sliding glass door in the dining room needs replaced

neither of the bathroom fans appear to work

toilets flush slow

windows are 1960's metal frames & need updated

front door & screen need replaced

The hot water heater may need replaced

trees in yard need trimmed back

 

Most of these issues are cosmetic, and a few actually are better for me as I needed to modify for handicapped access anyways. I do really like the house overall, even with the work it will need.

 

So....with all those issues - what would you offer on this house? My agent doesn't think they will go for as low at $25k, but is willing to try it to see.

[Mama Geek]

How much money do you have to do the repairs that would need to be done immediately? That would have to be factored in if it was an issue.

 

We bought a foreclosure more than a year ago. We looked at the costs of doing the needed repairs and what the house would be worth after the work was completed based on comps. We also left some room for problems that we didn't anticipate. And of course all of that had to fit in our budget. We have probably spent about what our house is worth between purchasing it, repairing it and then doing some of the oh yeah, lets do this too list. We now have a really, really nice place. Good luck with your offer.

[jujsky]

Wow! Prices are really inexpensive where you live. There are too many factors to say what I'd offer, but....wow. Prices in NH are way, way higher.

[frugalmama]

How much money do you have to do the repairs that would need to be done immediately? That would have to be factored in if it was an issue.

 

We bought a foreclosure more than a year ago. We looked at the costs of doing the needed repairs and what the house would be worth after the work was completed based on comps. We also left some room for problems that we didn't anticipate. And of course all of that had to fit in our budget. We have probably spent about what our house is worth between purchasing it, repairing it and then doing some of the oh yeah, lets do this too list. We now have a really, really nice place. Good luck with your offer.

 

That depends on how much I end up paying for the house. I have $33k total to work with currently. In theory after I get out of my current home and into this one {and I'm fine with living in part of the house while I work on the rest} I should have about $500 a month to work with. We have a Habitat Restore a few blocks away to help extend our funds as well

[elegantlion]

Don't forget about closing costs. Even on a cash deal you could be left with 3-5k in costs (that's a guesstimate). So if you start on 25k, add 3k for closing you're at 28k. That leaves a little, but not a lot for repairs.

 

I think the next step would be have an inspection. If the roof is going to have to be redone even before you move in, that can run 2-5k. Some insurance companies won't insure it without a decent roof.

 

If the kitchen needs new cabinetry before moving in, that can be expensive. We bought off the shelf unfinished cabinets and spent almost 1k for a small kitchen, that's with dh doing the installation. We ended up getting appliances and countertops used and free, but we still spent another 300.00 on faucet and sink.

 

You need to start lower so you have room to negotiate. From what it sounds I wouldn't offer over 22k, but that's just a throw in the dark offer from what you've posted. You need to get a good idea of closing and if you'll be able to get insurance without doing too much work.

[Ann@thebeach]

All those leaks and water damage would be a huge red flag to me. "Soft" spots in the roof probably means LARGE areas that need replaced.

Probably has dry rot under the floor and/or in walls and that could mean major structural repairs with support beams or joists.

Heck, a neighbor having her NICE bathroom remodeled had dry rot under the floor that no one was aware of that added thousands of dollars to the remodel. And that was just a small room.

 

Good luck!

[Catwoman]

Truthfully, it seems like too much work to have to do on a limited budget. As always, I'm more concerned with all of the things you can't see, if there's such a long list of obvious repairs that are needed.

[elegantlion]

All those leaks and water damage would be a huge red flag to me. "Soft" spots in the roof probably means LARGE areas that need replaced.

Probably has dry rot under the floor and/or in walls and that could mean major structural repairs with support beams or joists.

Heck, a neighbor having her NICE bathroom remodeled had dry rot under the floor that no one was aware of that added thousands of dollars to the remodel. And that was just a small room.

 

Good luck!

 

Very true, and many of those things won't be known for sure until you start working on the roof. I would make sure an inspector gets in the attic and checks.

 

It would be worth paying to have an inspection before you make an offer, or make the offer contingent upon a decent inspection, although many bank owned properties are offered as-is.

[Lanny]

By coincidence, earlier today, I read this article:

http://www.foxbusiness.com/personal-finance/2012/08/27/buying-foreclosure-watch-out-for-these-5-landmines/

 

There is a possibility that we will move to Texas and that article lessened my interest in buying a REO....

 

Hopefully, if you read it, it will help you, with your offer. GL

[frugalmama]

After a night of thinking about it, I've come up with the following plan. I think this way it would be a win-win either way if I flipped it or moved in.

 

I am going to spend today looking at repair costs & take notes to see total repair cost. I will probably put an offer in of $20k contingent on inspection, and walk away if there is substantial dry rot, roof, or mold issues. If they accept my offer, I'm going to flip it doing most of the work myself when possible and finding the best option for the cost between Habitat Restore and Home Depot / Lowes, fix the major issues and pretty it up, and hopefully have it back on the market to resell in 30-45 days, but know that if it doesn't sell quickly I may just move in instead of selling. It's a little smaller than I'd like, but we could make do in that house. I can hold out covering bills on both for 2-3 months but no longer than that unless finances change. If I really don't like the house when I finish but have to move in, we'll put part of our things in storage and show it while living there.

 

I'm prayerfully hoping that I'll be able to flip and sell it quickly, and then I will use those funds to pay off our current home or buy a new one.

[elegantlion]

I was thinking about this last night too. Did you say the mortgage was 43k? Some banks won't do a thing about low offers. There is no disadvantage, or there wasn't when we were looking, to them sitting on empty houses falling apart. Some of them are owned by national banks with offices several states away, they have no idea of the current market in the area, and probably don't care (or at least give that impression).

 

So I would continue looking at available properties, even if you decide to move forward with an offer on this one.

[frugalmama]

I was thinking about this last night too. Did you say the mortgage was 43k? Some banks won't do a thing about low offers. There is no disadvantage, or there wasn't when we were looking, to them sitting on empty houses falling apart. Some of them are owned by national banks with offices several states away, they have no idea of the current market in the area, and probably don't care (or at least give that impression).

 

So I would continue looking at available properties, even if you decide to move forward with an offer on this one.

 

:iagree:The owners gave it back to the bank in May of this year with a balance of $42k owed on the loan. It's owned by JP Morgan Chase.

 

 

I'll keep looking too - I have Zillow set to send me a daily email with all the new listings below $65k and all the price changes below $65k.

[Dobela]

Our rea estate agent once suggested we pay for the inspection on a foreclosure before we put in the offer, if we really want the home. Even though it is several hundred up front, it would give us an advantage. The inspection report would be attached to the offer as proof that the house actually needed those things. It could really turn the deal.

 

I would also subscribe to realtor.com.

[Mama Geek]

If you do get it and flip it remember that you will end up paying capital gains on it as well. Just something else to keep in mind.