Getting the Deal Done...
We fell in love with a house but there is a major problem…no kitchen, no furnace, no boiler, and a few other unfinished items. The owner literally has no money to finish it. WIthout it being “habitable,” we can’t get a mortgage. Someone mentioned a “mechanics lien” to us. Sounds a bit risky to me….
We fell in love with a house but there is a major problem…no kitchen, no furnace, no boiler, and a few other unfinished items. The owner literally has no money to finish it.
WIthout it being “habitable,” we can’t get a mortgage. Someone mentioned a “mechanics lien” to us. Sounds a bit risky to me.
Anyone been through something like this before or have advice for us.
Recommendations for lawyers who are experienced in complicated transactions like this would also be appreciated!
You can ask him to make a deal where you install a really cheap kitchen and boiler so you can get a regular loan, otherwise you will have a really hard time getting a loan.
I live nearby and have been into many of the adjacent houses on this block. They are beautiful classic Italiantes. You’ll need to do some work to undo his cheap solutions (when I walk by on my way to the subway I always notice the nasty varnish on the front doors) but nothing that can’t be fixed. Sorry I don’t have any technical / legal insights but you need a good lawyer more than opinions. Have you tried Lynn Sculley, 718 499-6481? She represented us 10 years ago so our relationship isn’t current. But she’s tough, no-nonsense, honest.
He can just throw in some used appliances and a used oil boiler (if the house is set up for oil) and they’ll never check.
However, I would question why he can’t afford $6500 for a boiler to sell the house. No telling if the heating actually works.
It has no kitchen or boiler and the broker starts off the listing with “Flawless”???
My understanding is that this guy spent money “unwisely.” It’s listed for $2.250, but appraised at $1.7, so that’s another issue. He restored the mantles, wedding cake moldings, floors and did new electrical and heating…and then literally couldn’t put anything else in.
In case anyone cares, here’s the listing:
http://www.corcoran.com/property/listing.aspx?Region=NYC&ListingID=1923268&ohDat=
(Yes, Frownstoners, I know many ppl don’t like this place, and I agree the high gloss floors suck, but its really quite nice.)
Still think this FHA 203k would work?
Thanks everyone who has replied so far!
When you are “talking hundreds of thousands of dollars” is exactly when you should be quibbling over 1%–because it’s still a big number to pay. The point is that non-habitable properties are more difficult and expensive to finance and that needs to be factored into the purchase price. Having to negotiate finishes and other requirements with an FHA consultant is a serious added complication to the renovation process.
You might investigate whether it would be possible for the seller to get the house up to habitability standards before the sale by adding a used stove and fridge etc. However, presumably they would have done that already if it were possible for a minimal sum. You don’t mention whether electrical and water are running, which would obviously not be something you could just cobble together cheaply for a mortgage appraiser.
It is also not totally true that 729k is the absolute cap. Caps are stepped up to 4 families (over 1M). Get a good FHA consultant to manage the loan disbursements. They’re usually flexible on finishes and other requirements.
PS. the fees don’t mean anything if the loan enables you to buy a property that would otherwise remain impossible to finance. When you are talking hundreds of thousands of dollars, will you quibble over ~1% of your purchase price?
“additionally you with FHA 203k loan you can not purchase any “luxury” items for your renovation. which means your if go with FHA loan you will have a house full of linoleum and ceramic tile.”
That is not at all true.
additionally you with FHA 203k loan you can not purchase any “luxury” items for your renovation. which means your if go with FHA loan you will have a house full of linoleum and ceramic tile.