Bank Owned Property With Illegal Building Issues
I'm looking at a bank owned property. It has been on the market for 6 months. Fixed up it should sell from 175k, bank asking 153k. Bank says they are very, very close to their bottom number.
Problem is the previous homeowner added an addition on to the house and left it 80%complete. I check the building dept and the only item that was permited and signed off correctly was the foundation. He took out a construction permit for the framing, no electrical or plumbing or mechanical. He cancelled the construction permit and then built the addition. He took out a roofing permit, then cancelled it and put on the roof. He then took out another construction permit to finish the interior and went into foreclosure.
The roof is illegal and won't pass inspection, the electrical is messed up and the walls are drywalled.
The bank is selling it as is.
My question is they know nothing about these issues, but no mortgage company will loan money to my buyer after I fix it up unless the permits are closed. And if I buy it I will have to tear out all the wrong stuff and re do the roof. The bank is holding firm at 150k because they don't know about this stuff.
It seems to me that they would like to just pretend that this stuff doesn't exist and keep trying to sell it to someone who won't know better.
How do I make these issues known to them so they become a disclosure issue and they have to devalue the property if they ever want to sell it, to me or anyone else?
Is the bank completely aware of the code violations? If so they can't realistically expect someone to buy it at that price. There would have to be enough equity after you get it from the bank to fix all the violations, and it doesn't seem like there is enough there currently. If they don't give you enough of a discount to cure all the violations I would walk away. Good luck.
I have had to do this before and I had to take all this information to the bank. All the opened and then cancelled permits. show them the amount it would cost anyone to remove & repair the illegal construction.
They may drop down on the price for the amount of the removal & repairs to have it done correctly.
I would provide them with all the documention and photographs of the current condition.
Try to find out who the main person at the bank with make final decisions on this property and speak with them one on one. There is alway one person that makes the final decision. Not the first few people you speak with at the bank.
You might find out that the bank will decide to take a loss on this one and drop there asking price. the bank is also looking for that one person that does not do their homework like you have down. No coming back on an "as is" sale.
Good luck.
Do you have an appraiser who will work with you? One that will give you an apprasial as is, deducting for the permit, structure deficencies, etc, so you can present to the bank. The permit issues will go away with a good contractor who is known to do quality work. Why do you not discuss the problems about the house with the bank?. Banks always say that their price is firm, but I have never bought a house from a REO officer at their price. I buy at my price, if not, I look for one.
Good luck.
Chuck
Roo bad you are so far away. This type of scenario is a perfect candidate for a Short Sale Proposal.
Though typically linked with a preforeclosure situation, a Short Sale
Proposal may be used to acquire REO at a discount, too.