Hello BP! This is my first post!! My husband and I are interested in a two flat in an excellent location in good condition. It is currently rented. We believe the deal could be very good at the right price. The problem is that the seller has disclosed that there is water in the basement. There are no floodplains in the area.
Three deals have fallen apart on this property in large part because buyers cannot secure financing due to this disclosure. The seller received a quote of $9,500 to remedy the problem by adding a sump pump and tile drainage. The seller has no money to pay for this repair (they don't even have money to cover half of the cost).
We are able to put down 25% on this property at the price we have in mind and are pre-approved for conventional financing. We could also pay for the repair if necessary. The problem is that we do not have a lender that will underwrite this deal. The basement issue is actually what might allow us to purchase the property at the right price!! Any ideas on how we could finance this deal?
Thanks very much!
Kristin Finn, JD
Renovation loan would be good option 2nd would be asked your lender if they can escrow that amount and you will do the repair. You have to show your lender you have extra money to complete the repair. Mostly lenders are cap on certain amount, before you proceed with application make sure they cover you amount. Can you get occupancy permit on this property?
Thanks for your help, Harjeet! I found two lenders who would let me escrow the cost of the repairs (1.2 times the cost of a quote for the repairs). Unfortunately, the seller received a cash offer of the same amount we offered with no contingencies related to the repairs and the seller still rejected the cash offer as well. The numbers do not seem to work at the price the seller wants, but I did learn a valuable lesson in escrowing repair costs and made new connections with lenders.
@Kristin Finn We all learn something new everyday.
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