When you come right down to it, all homes are mysteries. What do you really know about a home and the property it's setting on without investigation?
That's why I've decided to tell you this story-which I hope will clue you in on steps to take before you purchase.
A couple I had sold a home to ten years ago called to check out a house they had seen in a really good neighborhood. The last sale in the neighborhood was a year ago for $450.000. The seller for the mystery house was asking $299,000 "as is."
Now that is the catch "as is." What ever could be wrong we were thinking?
We made an appointment to "go see" what "as is" surprises there were. The home belonged to a lady who had passed on and her son was the trustee of the trust. The primary problem was the ABS drain pipe had failed and needed replacing. A big cost item. There was a big hole in the kitchen floor and some cabinets had been town out when the plumbing was checked. There were other problems as well.
My clients had their own contractor with them who gave a written bid of $30,200. This was a good bid since the clients planned to obtain a FHA/HUD 203 (k) rehabilitation loan. Well let's say they offered $310,000 for the home, FHA would loan an additional 30K to rehab the house.
You say why $310,000? I forgot to mention the home already had two all-cash offers for over the asking price. We found out they were from investors and, since this was a family home with seller sentiments attached, we thought we might have a chance. This is a sweetheart family and the wife was going to write a cover letter to present with the offer telling the seller what a great match they were for the home, You know, successful husband, great stay-at-home mom and attentive Dad. Two daughters 8 and 6 attending Catholic school, active in sports, well you get the picture. They loved the home(ok, the swimming pool was questionable) and planned to stay there until the girls were out of school.
I checked everything out with the listing agent so we could present a good, clean offer as time was limited. We did not want any counters and were told there would not be a response to an offer since they had the great "cash" offers. I also found out the seller would not accept any contingencies like "I have to sell my house first."
My clients said no problem they would rent it out and they already have a renter. They have great credit, and the lender was giving us an approval letter. All we had to do was just write the offer, get signatures, submit poof of funds and the approval letter.
Fortunately, I asked the listing agent if she had any other documents I needed to review to help us decide. We did have a little hang up as the daughters were having many tears and discussions with Mom along the lines of "why do we have to move?" (The new home was only two miles from the home they are in). The agent emailed me the contractor bid from FHA which concentrated on the ABS pipe replacement, some of the cabinets, flooring and primarily items FHA requires to be livable. It would not include cosmetic or updating improvements. When we figured it out, it would cost an extra $25,000!
So you can see my clients did not make an offer on this "as is" Mystery House in a nice neighborhood.
And the moral to this story?
Happiness is not getting in over your head. It is drying the tears of two little girls and making them smile.