Septic Problems On Bank Owned Property
Hello,
In dealing with a REO property has anyone gotten the bank to accept a price lower than the original offer based on results from inspections? I just got a septic inspection completed on an REO property on which I originally made a full price offer of $50,000. The results of the septic test indicate a problem(water in the probe holes). The inspector recommended a PSMA evaluation costing around $900 for a conclusive report. I do not think the bank will pay for such a test and I do not want to spend it considering the septic is original 1968.
I made my offer based on a functioning septic and heating system and find out the house has neither. Cost of a new septic is between $12,000 and $20,000.
The value of the property after rehab could be between $8o,000 to $85,000. However, I calculated at least
$15,000 in other repairs.
I would sincerely appreciate any ideas on how to handle this situation.
Thanks so much.
Helen
The numbers your showing don't work for me. I would pass on that one.
Get your repair estimates from contractors and deduct them from your offer price. This is much the same process as a short sale when buying REO properties.
I think your offering price depending on your market is high...
have you figured holding costs for 6 months, contingency, min profit 10-15K etc.
At 50K I don't think it is much of a deal, appears to be retail...
[addsig]
I regularly replace septic systems in Iowa for around $3500 to $4500 depending on if the system uses laterals or mound-type system.
This includes tearing out the old & putting in the new---parts and labor.
Wait a minute, you made an offer on an REO that was subject to an inspection? All REOs I ever see are AS-IS.
The long and the short of it is if you have a contingency on your offer and are now able to excercise it then why not?
It is simply a matter of convincing the bank that nobody is going to pay more than your new offer. If you bring their attention to the fact that the property has a defect like that with actual documentation doesn't that become discloseable to all new buyers and will lower the value? If it legally does not become disclosable at least it is in your best interest to convince them that nobody is going to be stupid enough to pay them the original offer because everybody is going to discover the defect on their own, so they might as well stop wasting their time and discount it to you.