experiences with bank-owned home...

we looked at a house today
and it is "bank-owned"

it also has been "winterized" water and electricity turned off.

The realtor tried to convince us not to consider it..bec she said you cannot get a loan...bec you cant get is "appraised" (?!?!?!?!? not sure if that is the correct term) when you cant check the running water or electricity.

Is this true...anyone have any (good) experiences with winterized foreclosed bank owned homes!?!?!

it needs a lot of work..but has a lot of potential!!

Message edited 4/9/2011 11:04:01 PM.

Re: experiences with bank-owned home...

Generally, a house has to be habitable in order for it to be mortgageable, so it has to have all major systems -- plumbing, electric, heating, etc. -- in working order, as well as have a working kitchen and bathroom.

If it is not habitable -- and many bank-owned homes have long been vacant and are not -- then you can get what is called a 203(k) loan or rehab loan. It is a special type of FHA loan that allows a buyer to roll the costs of the necessary repairs into their loan. There is a streamlined 203(k) loan that you can get if the repairs are estimated in the range of $5K (minimum) to approx $30K. If it's more than that, you have to get the regular 203(k) loan, which is a more cumbersome process, because an FHA planner gets involved. With the streamlined version, you have a licensed contractor submit estimates for the repairs to your lender's underwriter (an FHA planner doesn't need to get involved).

However, if the only thing wrong with the home you looked at today is that the water and electricity are turned off, then you shouldn't need an FHA loan. The water and electricity can just be turned back on and there shouldn't be an issue getting a traditional FHA loan or a conventional mortgage. But there are usually more issues with a bank-owned house (which is why the listings often indicated that a cash buyer or 203(k) loan is needed).

Also, I have never personally sold a bank-owned house, but based on my colleagues' experiences, I know that it can be hard for the average buyer to get their offer accepted. The banks select certain REO realtors to list bank-owned properties, and those realtors have a network of investors/builders who they often sell bank-owned properties to in blocks (say 5 properties at a time). So for an average buyer who is looking to buy one home as a primary residence to live in, it can be a challenge. It's more profitable for the banks to sell foreclosed upon properties in bulk.

Re: experiences with bank-owned home...

wow! thank yo! Very informative and helpful!

I really appreciate it!

I think the realtor mentioned something about 203K loan.. But I had no clue what she was talking about and forgot to ask her to explain!

Re: experiences with bank-owned home...

I have sold many and done 203K loans ranging from $15- $100k

I have a lot of experince in this area

FM me the MLS# so I can give you accurate advice


ETA- if it's the just turning the plumbing back on- you will need to escrow money in case there is a broken pipe some where- and you most likey will have to do an FHA loan- or possibily a 203B

buying a bank owned house is a little more complicated and many realtors do not have the experince nesscary to advise their clients on this process

Message edited 4/11/2011 10:29:21 AM.