Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
I have a fixer property listed on the MLS with a flat fee listing. It's priced for buy and hold investors in the area. Not a lot of room for a rehab resale. Too many repairs for it to go FHA. Lots of interest and lots of showings after 5 days on the market. I agreed to respond to offers tomorrow.
The listing states cash only and "won't go FHA". But because there is so little inventory, half of the calls have been from agents with FHA buyers trying to scope out the repairs. Several have checked out the property themselves to assess the repairs. I have one agent who says her buyer can offer full price if I allow him to make repairs, at his expense, as they are called by the inspectors. Do sellers accept offers like this? It seems to me that the buyer's money is totally at risk. What if his loan doesn't go through? It needs flooring and paint and some major bath repairs.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y
The conventional wisdom is not to allow someone to start working on your property. However, I am in the same exact situation, I allowed the buyer to do the repairs, in two weeks, and property passed inspection and appraised out. I did pay an FHA inspector to do a walk through with us, unofficial, so the buyer had a detailed idea of required repairs. I made it clear to the buyer, in person and by contract addendum, that he was doing this totally at his own risk, and if his loan did not close for any reason whatsoever, he would not be reimbursed for anything. So, it's against typical advice, but it can work. One thing, this buyer was in the house renovation biz, so he did most of the work himself.
Investor · El Paso, TX · Member since 2013 · 8 posts · 3 votes
12y
I'm new here, so hopefully I'm not missing something--If the buyers the agents are bringing are FHA, then I assume they're looking at this as a primary residence. The full FHA 203K (not the streamline 203K) allows for some pretty extensive repairs. It will probably take them a little longer to close, certainly than a true cash buyer; but not too much longer than any other traditional loan if they use a lender proficient in the full 203K. The upside is that the repairs are done after closing, you've been paid, and they aren't on the hook for the work if something falls through... And they can finance the cost of repairs.
The conventional wisdom is not to allow someone to start working on your property. However, I am in the same exact situation, I allowed the buyer to do the repairs, in two weeks, and property passed inspection and appraised out. I did pay an FHA inspector to do a walk through with us, unofficial, so the buyer had a detailed idea of required repairs. I made it clear to the buyer, in person and by contract addendum, that he was doing this totally at his own risk, and if his loan did not close for any reason whatsoever, he would not be reimbursed for anything. So, it's against typical advice, but it can work. One thing, this buyer was in the house renovation biz, so he did most of the work himself.
Well, I'm sure you know by now that atypical advice is of interest to me. This buyer is totally capable of doing the repairs or managing them. I'd say 50% of the potential buyers in this area in this price range are in the home renovation biz. I'm thinking I could probably even get some kind of proof of funds to show he can afford to bring it up to speed. If he makes a full price offer at my asking AND does the repairs, the appraisal would be a non-issue. My asking is well below retail.
Real Estate Agent · Portland, OR · Member since 2013 · 154 posts · 67 votes
12y
My husband and I helped out friends who bought their house under similar circumstances. We all put in some long days and were able to get everything done on the list of repairs, which included painting the exterior. They got their loan and bought the house and the seller didn't have to lift a finger.
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y
I had no idea that pre-purchase sweat equity was a thing. I got another offer today from an agent with a buyer wanting to pay over asking and the agent has a crew that will do the repairs for the buyer. Both agents with such buyers say they have a good understanding of what will get called out by FHA and know a lot of the inspectors. I learn something new every day!
I went went with cash buyers just short of my asking. The ones with a good story: school teacher that works at the school down the street from the house.