gainesville, FL · Member since 2011 · 22 posts · 0 votes
I am currently attempting to obtain a conventional loan with 25% down on an bank owned investment property.
There is a negative slope grading issue that allows water to flow towards the basement. As a result, the basement, which contains a garage and 3rd apartment has evidence of water and mold.
Most would say to pass on this house but it is at such a great price and the solution to the problem is obvious.
I am currently waiting on the appraiser to come out and examine the property. In the mean time, I am a bit concerned that he will document the water and mold problem, keeping me from obtaining the loan.
I already received estimates to fix the grading problems and am prepared to do so once I close on the house.The bank refuses to do any work to the home and is selling it as is.
Any thoughts on the likelihood that this loan is approved based on the mold and water problem?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
15y
In my experience, if this is a conventional loan, your chances of the bank approving the deal is very slim. You may want to try finding a smaller bank that lends against investment properties and is willing to underwrite a loan on a house that needs work.
Rental Property Investor · Taylor Mill, KY · Member since 2011 · 105 posts · 24 votes
15y
Not saying it won't happen, but you might be surprised what the appraiser will say in his report. I recently bought a REO that had similar issues. The concrete driveway was broken up and the slab had tilted toward the house. Any rain from the front half of the house would end up emptying right at the foundation of the house. The water had soaked into the house and caused mold/mildew to start in the crawlspace on this tri-level house.
I fully expected the appraiser to point this out in their report, but they just noted the dampness and stated it smelled somewhat musty and that it was normal for a house in this area.
In my estimated repairs list that I turned into the bank, I included a line for mold remediation. My loan officer called me after he got the appraisal and told me that since the appraiser didn't mention it, I should remove that line and hide that cost in another line item. He said that would give me the best chance for underwriting to ok the loan.
So, just because you see it (and Ray Charles could see it), doesn't mean that it will be noted in the appraisal.
Involved In Real Estate · Rochester, NY · Member since 2011 · 138 posts · 11 votes
15y
Michael,
I've had both situations happen to me. Is this a bank you have used before? Do you have a relationship with them?
From my experience, if the appraiser does note it in the report, a re-inspection is required. Then you have time to complete the repairs. It also depends on how bad the mold is.
Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
15y
Michael,
You are correct in your worries. Banks are VERY slow to lend on a home with mold issues. If you look at the video in my status, you will see a mold home I am involved in. The way I got that one through the bank was I used a mold expert, and when I say expert, I mean it. He has more initials after his name than I can count.
He completely pulled the deal through for my student. I can pass you his number if you want. I am sure you are out of his area, but he may be able to help you with reports and so forth to get the deal done.
I would not run from mold, I would just use it to negotiate the snot out of the deal! Good luck! :mrgreen: