Can you ask a bank to finish a new built REO that is being sold as is?

Question

There is a new build that was stopped before completion, the builder obviously ran out of funds. It is bank owned and being sold as is. It needs all carpet and wood floors laid, garage doors put on, landscaping and sod laid..... Is there anything we can ask the bank to do for us or give us a credit for if we offer to buy the REO? thanks! Kim

Answer 1

If the property was legally taken back by the bank during a foreclosure, they are selling the building in an as-is condition. Normally at the juncture they just want out of the property, so the short answer to your question is no they will not normally do this

You may offer the bank a lower than the asking price offer, which could get accepted. Now your friendly real estate agent is not gonna wanna hear of this and will offer as many excuses as Carter has liver pills as to why he can not take your offer to the bank.

Insist on making your lower than asking price offer and threaten to make it directly to the bank yourself if he is unwilling to do so. Tell him you want a written denial because some will say they submitted the offer and inreality they have not.

If the bank fail to accept the offer you can always counter, but don't tell the agent that you will counter, have him beleive that this might be your final offer and you are willing to walk if the offer is not accepted.

If all else fail and they still insist on the full price, make an offer to them that they will finance funds for the completition of the project. They might require additional collateral such as a home if you have it, they will do a wrap with your home added as collateral.

Failing to do that and you still want the property, if you have a line of credit use that for temporary funds after that refinance or sell the house.

There are hard money lenders that might lend the money to complete the project.

I hope that this has been of some use to you, good luck.

"FIGHT ON"

Answer 2

Can you? Yes.

Should you? It depends.

For the most part the bank wants to get out from the deal. You can make two offers. One where they get a higher price but finish the work. The second where they get a much lower price and you find a different way to finish the work.

Many times the bank will take the lower price and move on.

If you need financing to buy this property then the work might block a lender from extending a loan. If that is the case then you may be able to get a credit from the seller (the bank) where X% can be set aside to finish the work after escrow closes. This is normally limited to 6% or less.

Buying an REO is normally an as-is transaction where the seller wants to put no more money into the property before the sale closes. They just need it off their books.

As you are focused on a 'credit' I suspect you expect to get a loan. You may find the property foes not qualify for a normal mortgage so you need a construction loan that will later be replaced by permanent financing (a mortgage). Factor in such costs. It could be possible for the selling bank to offer you construction financing if you agree to use a licensed contractor to complete the work.

Anything is possible as the bank is the seller. That said they are legally a bit bound to cut and run rather than hold out for best price. They are a bank and can not hold property as inventory. If they are a local bank they might be able to show some flexibility in how they exit in terms of providing financing to a credit worth buyer.

Answer 3

It's being sold AS IS for a reason.

The Bank neither has the time nor inclination to deal with it.
In addition, they dont want to touch it. Legally how can it be determined when you move in, -what the bank did to the house and what the previous builder did? He was running out of funds, he could have been cutting corners. The bank doesnt want to deal with workers that dont show up, carpet that was installed with the wrong color etc.
There may be a loan program to help you out.

These properties are offered as a financial deal for those that can do the work but need it cheap. Asking for things will make your offer go the bottom of the pile and the guy who just offered cash, as is ...his offer gets moved to the top!

Good Luck!

Answer 4

The REO company probably doesn't want to deal with it. Make your offer with a financing contingency, then speak to your local lenders. You may be able to use a construction-to-permanent financing program where the construction loan is converted to a mortgage loan after the certificate of occupancy is issued. The advantage is that you only have to have one application and one closing. Depending on your view on interest rate trends, you could also purchase a rate-lock agreement valid through the expected completion of the construction. Just make sure you allow for the inevitable construction delays. A construction loan, unlike a mortgage, isn't meant to be around for a long time. The construction portion of the loan will most likely have a higher interest rate, but will lower upon conversion to a mortgage. Good luck!!!

Answer 5

Kim,

I assume that the REO is offered for sale at a reduced rate, seeing how it is not yet complete. Additionally, stating that it is "as-is" tells you that the bank is not going to do any repairs and/or work to the property to sell it.

Either the property is offered for sale at a reduced rate because of its current state, or a financial concession needs to be made for you to accommodate the work yet to do.

Speak with a REALTOR about COMPS on the home (assuming that it IS a finished product) and compare those numbers to the bank's asking price. If the comps come in higher, then chances are the bank took the condition of the home into consideration. If the comps come in right around the sale price, then you need to offer what you feel is fair with doing the work yourself.

Also, ask your REALTOR (or check tax records online) to see what the bank paid for the property.

If you need the assistance of someone who specializes in REO purchase, let me know and I can direct you to someone in your area.

Answer 6

No. It is an as is sale so the bank will not do any work. I am sure you bought at a discount for this reason?