Appraisal Problem C6 Big Opportunity

1 Reply

Hi, I recently had a direct mail success for my first home. It will be a live-in situation that I am going to rehab over the first few months of living there. I have a contract on the house and am working on achieving financing through my local credit union (conventional loan, Freddy Mac). The appraisal value will easily meet and exceed what I am paying for the property but according to my appraiser, the house may be considered a C6 property (unsafe) due to a variety of factors including a deteriorating deck, missing electrical outlets, the water, AC and Heat have been turned off on the home since no one has lived there the past year. I knew all of this going into this which is the reason I was able to secure the home for such a discount but I was wondering if anyone had any tips on how to get around this. The seller wants to sell the house AS IS which I completely understand and have all of the tools, skills, and resources to fix these issues but according to my lender, the loan would be "subject to repair" meaning that the seller needs to at a minimum fix the safety issues (which they do not want to do). Please let me know if anyone has any advice for getting around this situation. 

@Cole Hagen - this is a situation where folks use private money or a hard money lender. Use these funds to buy and fix up the home. Then refinance after the work is done to a traditional loan.

You could always try to offer more money to the seller to have them fixed.

Then lastly, a way that is a lot riskier is to get the minimum work done yourself needed to satisfy the loan during due diligence. You run the risk here of the seller backing out and benefiting from the work you have done. I did something similar with a fourplex a while back. Two units were vacant and kept getting squatters. So when I finally got the property under contract, they also insisted on a long closing period because the owner was out of country for 2 months. I did the gutting, spray primed everything with killz and boarded the windows before closing. This gave me a jump start on the rehab process. I figured worst case I am out $1,500 bucks and the community is slight improved. 

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