FHA mortgage loan and offer?

I am putting an offer on a bank owned REO. It needs a new roof and the electrical is a nightmare. As these are safety issues, I can not get a FHA 203k loan because they would have to be fixed. I have been reading that banks do not like to deal with fixing this stuff and just want the best offer. There are a couple other offers that are not up to asking price. This property is valued well above listing price. Should I offer listing price and add these to be fixed, or should I go a little bit above? Please help!

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  • 9 years ago
    Favorite Answer

    If you submit an offer on a REO they usually won't accept any stipulations for repairs and they also won't allow you to make repairs prior to closing to get FHA approval.

    On repossessions they already know they are going to take a loss so they want it over as quick and easy as possible, the bank probably has hundreds of these to liquidate.

    That is why buyers with cash can get such great deals right now, those willing to pay more cannot get financing on homes that won't pass a health and safety inspection.

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  • 9 years ago

    Who told you that you cannot get an FHA 203k loan on a foreclosure. My real estate company sells almost exclusively foreclosures and I know for a fact that many of the FHA buyers get a 203k loan, otherwise, they could not get financing. As far as what to offer, your realtor should be helping you with this, that is what they are there for. We have not seen the house, so we cannot even suggest what a good offer might be. Foreclosures are not for everyone, but if you go into this fully aware that the house needs work and that foreclosures are priced very low b/c they do need work, you are ahead of the game. A lot of people think banks HAVE TO fix everything if they want to sell the house. This is not true. They may fix some things on your list and not others.. It never hurts to ask.

    Source(s): Licensed Real Estate Broker
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  • glenn
    Lv 7
    9 years ago

    The price you offer will not change the bank. They will not do repairs. Find a different house or get a different loan that will not require repairs. Or one compromise idea- you can speak with loan officer about a FHA 203k loan. I have never had success with it on a bank owned house- but it could work. It allows you to borrow more than they are selling you the house for and you will make the repairs yourself out of that loaned money.

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  • Anonymous
    9 years ago

    This is the exact situation where a 203K loan works. You are allowed to close and then complete the repairs with the 203K loan.

    Source(s): I'm a mortgage banker/broker
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  • David
    Lv 6
    9 years ago

    Won't matter, they don't want to be bothered with fixing things. Get a regular loan and not a fha loan, it would be cheaper in the long run.

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  • Sonia
    Lv 4
    4 years ago

    even the most blind, head-strong banker in the entire western world has had his fill of toxic loans. Eventually, even an idiot learns [or dies along the way]. all the idiot bankers are dead by now. Absent some very unusual circumstances, no one is going to make a mortgage loan when the debt to income ratio is in the 50% range. It just isn't going to happen.

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  • godged
    Lv 7
    9 years ago

    It depends on the seller. Some banks will not do any repairs no matter what your offer is. Some will do repairs with an acceptable offer. All you can do is ask and move forward from there.

    Source(s): Oregon Realtor
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