Buying a foreclosure in Bahama (best neighborhood, sale, foreclosures) - Raleigh, Durham, Chapel Hill, Cary - North Carolina (NC) -The Triangle Area - City-Data Forum

DanielleNC · 12-19-2008, 03:00 PM

I just posted this in finance but it looks like it moves slowly. Besides, this is local as it is a house in Bahama

and I am sure the laws are different by state anyways. Here is my question:

My boyfriend is going to look at what we assume is a foreclosed house. Looking at the pics it looks like it needs about $40,000-$50,000 worth of work assuming it is structurally sound without water or mold damage. It will be his first house and we have no idea about how the process works as far as the mortgage and borrowing money to fix it up. Do we take out a regular mortgage and they give us a special loan to fix it up? After doing so, do we refinance for the new value of the home with the previous loan rolled into it?

Obviously I have no idea what I am talking about and am completely lost. If he did borrow money it will still be less than what he was approved for on a mortgage. We haven't looked at the house yet or know the details on it. Just trying to get an idea of how things potentially work.

Thanks for any and all help!

goat1of2 · 12-19-2008, 03:26 PM

I do believe that if the house is listed on the MLS, then the bank has already bought it back. This means that the sale will proceed like any other sale. I'm sure someone will correct me if I'm wrong!

As a person who has successfully bought (and sold) a couple dumps in her lifetime, I would advise you to pay for an inspection of such a house BEFORE you make an offer. And in fact, the "inspection" should really be more along the lines of having a remodeling contractor come and give you a real honest-to-god estimate of what it will cost to fix. You may be unpleasantly surprised at the sum. And it can be hard to get out of a purchase contract....better to do your due diligence before signing anything! It's always nice to be able to walk away from a house simply because you got cold feet. Especially in a situation like this one.

As for financing, that may be difficult in this environment. You're proposing something with a lot of risk and it sounds like you are not experienced rehabbers....don't know how that would work. Or if.

DanielleNC · 12-19-2008, 04:08 PM

Ok, thanks on the info about getting an inspector along the lines of being more of a remodeling contractor. I didn't know if we could do that before putting an offer on the house. If that is possible that would be a definite. No, we are not experienced, but are very careful. It's in a nice neighborhood and we wouldn't spend more than needed. Assuming it is just the aesthetic things that need to be replaced I think we are fine. Hopefully nothing major would pop up; otherwise it would not be worth it to us (bad foundation, water/mold damage, etc.) Someone also mentioned to me about the FHA financing of borrowing up to $35,000 for repairs and remodels on rehabs.
Thanks goat1of2!

DanielleNC · 12-19-2008, 04:18 PM

I also just wanted to add some of the work we will be doing ourselves to save money. We both grew up very hands on and my bf even helped build his parent's lake house. We also have a friend of his who is in construction who will be helping. We wouldn't be messing with anything structurally. We would also have the flooring put in by professionals. Otherwise, we are not afraid to do most of the work ourselves, yet we would not do anything that would be over our heads. I just hope it is in decent enough shape before I get my hopes up too much!

JackieRTP · 12-19-2008, 04:32 PM

Are you working with an agent? They can help to answer these questions and guide you through the process.

DanielleNC · 12-19-2008, 04:37 PM

Quote:

Originally Posted by JackieRTP

Are you working with an agent? They can help to answer these questions and guide you through the process.

No, not yet. My bf plans on getting one soon. I think he just wants to get through the holidays and will jump on things in a couple weeks. I have read several threads where I agree agents are needed in most cases, especially being a first time buyer. I guess we need one in this case even though we know exactly which house we want and don't necessarily plan on negotiating?

DanielChang · 12-19-2008, 04:52 PM

Quote:

Originally Posted by DanielleNC

I guess we need one in this case even though we know exactly which house we want and don't necessarily plan on negotiating?

I'm sorry if this sounds dumb, but why would you plan on NOT negotiating?

I'm sure you've done your research on the pros/cons of using an agent, so I won't get on my rant.

However, I will say that if you don't want to bring an agent with you to the table, at the very least, get your own lawyer to review the contracts.

MikeJaquish · 12-19-2008, 05:38 PM

It is hard to get a conventional mortgage on a home that needs significant repairs. At minimum, the home needs to be habitable.

You might consider an FHA 203k loan, but you need to talk to your lender about the process. The 203k allows funds for repairs.

DanielleNC · 12-19-2008, 07:40 PM

Quote:

Originally Posted by MikeJaquish

It is hard to get a conventional mortgage on a home that needs significant repairs. At minimum, the home needs to be habitable.

You might consider an FHA 203k loan, but you need to talk to your lender about the process. The 203k allows funds for repairs.

Thanks Mike, we are looking into the FHA loan.

Quote:

Originally Posted by DanielChang

I'm sorry if this sounds dumb, but why would you plan on NOT negotiating?

I'm sure you've done your research on the pros/cons of using an agent, so I won't get on my rant.

However, I will say that if you don't want to bring an agent with you to the table, at the very least, get your own lawyer to review the contracts.

We would definitely get a lawyer. I have heard a lot of foreclosures won't negotiate. If this isn't the truth then obviously negotiating would be worth it. It is however so cheap to begin with that if they aren't willing to negotiate then it would still be a good deal (assuming there aren't any scary surprises).

And don't worry everyone we are very cautious and wouldn't do anything without doing our homework. That's why I posted on here so I could get as much info as possible from different viewpoints and experiences.

Thanks!

Tampa Red · 12-19-2008, 08:18 PM

Quote:

Originally Posted by DanielleNC

Thanks Mike, we are looking into the FHA loan.

We would definitely get a lawyer. I have heard a lot of foreclosures won't negotiate. If this isn't the truth then obviously negotiating would be worth it. It is however so cheap to begin with that if they aren't willing to negotiate then it would still be a good deal (assuming there aren't any scary surprises).

And don't worry everyone we are very cautious and wouldn't do anything without doing our homework. That's why I posted on here so I could get as much info as possible from different viewpoints and experiences.

Thanks!

It is very much a buyer's market. You want to risk a real drastic rehab job and a foreclosure? (sometimes bad surprises).

May I ask why you are willingly giving up your tremendous leverage, given that there are record numbers of unsold houses on the market?

Old radio advice guy Bruce Williams used to say "don't fall in love with something that can't love you back".

If I were you, I would be looking at dozens or more houses hoping the right situation falls in your lap. These days its almost a definite.

Most houses will require some work, why not find the best one in the best neighborhood you can afford (and money talks these days) and save some risk?

Good luck.