Special offer

When REO's won't turn the utilities on or make minor repairs...BUY IT!

By
Services for Real Estate Pros with And the United States of America AZ SA543893000

Sometimes it seems that every non-short sale property that hits the market gets snatched up quick!

 

There are plenty of buyers, they just want deals!  The bidding-up of values sometimes gets crazy.

 

I have a couple with a large family.  They're looking to buy their first home.  They can easily afford it as the payment is slightly higher than the current rent payment on their lease.  They need down payment assistance and closing cost assistance.  Doesn't make too strong of a looking buyer even though they will sail through underwriting.  Very strong in all regards except the initial investment.

 

Regardless, a 6% concession is not as strong as a buyer with their own down payment.  In all other regards, they are quite equal.

 

Since they're willing to do some work of their own on a home, they didn't search for the creme-puff, they looked for a home with some minor "problems".  Preferably, broken window, peeling paint, broken stove, torn carpet in a room, damaged walls, empty pool, broken fan on A/C (they freeze up out here in AZ if you don't use them regularly.)

Then, we found it!!!  Only a couple of major FHA blocking issues:  The seller won't fill the pool, buyer must pay to do this for the inspection.  Seller won't turn on electricity.  Seller will make no repairs.

They did not care about whether or not they had to pay DPA or closing costs... They were smart enough to focus on the net.  We worked all the numbers out and my clients' offer was accepted with no counter.

 

We picked it up LOW!  It was priced low because it couldn't pass FHA inspection.  Pool was drained and AC/Heater wouldn't kick on.  Our target home!

As long as the home wouldn't pass inspection nobody could buy unless items were fixed.  Fortunately, this bank specifically stated, "Seller will make no repairs!  Buyers wishing to inspect must turn on utilities in their name!"  Our perfect home!

For $790.00, Joe Caba of Mr. Kool AC/Heating and Pool came out, fixed the A/C, cleaned and set the pool, inspected the pool equipment and made everything work out.

 

My clients went after what nobody else thought was possible.  They did know one thing was for certain:

Home ownership was always the end result they were focused on, in THEIR minds!

Posted by

Mark Organek

RE/MAX Excalibur

mark@monopolyman.com

www.monopolyman.com

Thank you for taking the time to read this post.  Hopefully one day we can interact or meet soon.

Comments (19)

Aaron Cullen
Brokers Inc. Residential Real estate - Folsom, CA
Folsom, El Dorado Hills & Sacramento Real Estate &

Supply / demand dictates price right?  I always look for what no one else wants...

Aug 25, 2008 04:53 PM
Gary Bolen
McCall Realty - South Lake Tahoe, CA
CRS - Lake Tahoe Real Estate Information

there are great buys in our market right now. some have been fixed, others not. the last two was one of each.

cheers

Aug 25, 2008 04:55 PM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.

Aaron - It seems like I'm on your page with that one.  We just have to find what others aren't going to be willing to deal with and buyers that see value in that.

Gary - Well, I hope that you got two sets of satisfied clients out of the whole thing!

Aug 25, 2008 04:59 PM
Lynn Krogseng
Keller Williams Premier Partners - Vancouver, WA

Your clients, the buyers, actually made repairs on the property prior to closing? I think I may have lost something in the reading. Or did your buyers not need the home to qualify for FHA?

I appreciate your point about staying focused on the end result.  That's important.

Aug 25, 2008 05:01 PM
Tom Ash
Agentspayingforward.com - Sacramento, CA

In some instances you can also use an FHA 203K loan.  You buy the house as is, but determine what the costs of repairs are, appraise the value after the repairs, and finance based on the value after the repairs/improvements have been done.  In so doing, you may not have to worry about repairs being done by banks or short sales before close of escrow.

Aug 25, 2008 05:04 PM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.

Lynn - We had a contractor hired that was to be paid at close of escrow for the minor repairs needed.  Since the repairs were completed, my buyers could order an FHA appraisal and pass inspection.  They definitely worked themselves on this transaction.

Aug 25, 2008 05:07 PM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.

Tom - A very good suggestion but most lenders out here are either reluctant, have no experience or won't do them at all.  The ones that do take 30 to 45 days to close.  That's too much of a wait when you are competing for low priced/large sqft. REO's.  Still, FHA 203(k) is an EXCELLENT solution!  Our buyers had to close before DPA ends.

Aug 25, 2008 05:09 PM
Robert Machado
HomePointe Property Management, CRMC - Sacramento, CA
CPM MPM - Property Manager and Property Management

Smart buyers see things that the others do not.  Sounds like with help  from you they got what they wanted.  Nice job.

Aug 25, 2008 05:11 PM
Michael A. Caruso
Surterre Properties - Laguna Niguel, CA

That is the way to focus on the end result and see no challenge as an obstacle to get there.

Please call me if you learn of anyone moving to "The OC"

Aug 25, 2008 05:21 PM
Mesa, Arizona Real Estate Mesa Arizona Realtor
Homes Arizona Real Estate LLC - Mesa, AZ
AzLadyInRed

Mark, this is a wave of the future I'm afraid. My brother works with this type of situation all of the time. Good for you. ;-)

Pepper

Aug 25, 2008 05:32 PM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.

Robert - It has been a treat working with this family.  They are going to enjoy their home so much!  And, they will have great family time together in their backyard pool!

Michael - They did keep their focus on making things happen.  We've had some ups and downs along the way but all were overcome.  Their faith in a positive outcome kept the flames fired.

Teri - It is!  Fortunately, those agents that remain will be developing strong foundations of satisfied first time home buyers that will eventually be move-up clients.

Aug 25, 2008 05:40 PM
Peter Hackett
HutHub Inc. - Oakland, CA
The National Real Estate Network, HutHub.com

I think you did a great service to your buyers helping them find such a home....I hear of so many agents that try to upsell their buyers into homes that they don't want, and totally ignore the homes that they DO want.  Good job, and you've probably got some great long-term clients & referrals out of it.  Congrats

-Peter H.

Aug 25, 2008 07:00 PM
Mark Organek
And the United States of America - Mesa, AZ
It's not a game, it's your life.

Peter - I do feel that helping a family find and secure a new home gives me a great feeling.  It makes the whole job that much easier.

Aug 25, 2008 07:25 PM
Chip Jefferson
Gibbs Realty and Auction Company - Columbia, SC

I wrote a contract on my listing yesterday afternoon because the lender on another house wouldn't turn on the required utilities for an FHA inspection.

Aug 25, 2008 11:12 PM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Way to go outside the box. Special buyers need special realtors.

Aug 26, 2008 04:57 AM
Pam Jank
Coldwell Banker Schneidmiller Realty - Coeur d'Alene, ID
Your Coeur d'Alene & North Idaho Real Estate Pro

Mark, I have found this works with my Buyers that are not afraid of tackling minor repairs.   Unfortunately, there are those without vision and sometimes you just can't make them see.

Aug 26, 2008 09:12 AM
Doreen McPherson
Homesmart ~ Scottsdale ~ Tempe - Tempe, AZ
Phoenix Arizona Real Estate ~

Hi Mark,  Glad this is working out for your buyer.  I think there will be many who can buy if they are willing to do the work.  I know of many who did this in the late 80's early 90's. 

Aug 26, 2008 04:32 PM
Chad Baird
Re/Max Spirit - Dayton, OH

The only problem I see arise in my area is with the water bill (thats assuming the copper is still intact).  The lender will pay the water bill at closing, but not prior to closing.  The city will not turn the water on until the bill is paid in full.  The lender will not pay the bill in full until closing or reimburese the seller for the water bill.  I've seen these bills in excess of 3,000 dollars.  Crazy! 

Glad it all worked out. 

Aug 27, 2008 02:15 AM
Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Mark - Sounds like the smartest thing that these buyers did was get you for their agent.  You have what it takes to make it work.  Happy Clients - Great feeling, isn't it?

Sep 05, 2008 07:43 PM