Yesterday was a whole lot of bother. I sort of opened a can of worms when I asked the mortgage broker if I could get the loan when the property didn’t have a kitchen or a hot water tank. He said no. I asked him what other options I had. He said none. I asked about a 203(k) loan. He said they don’t offer that product.
I’m not completely giving up yet. I consulted with a couple of co-workers who are in the foreclosure rehabilitation business. I figured they would be good resources. The one surprising thing I learned is that because of my employers relationship with Fannie Mae (the mortgage holder), I have to disclose that relationship to the listing agent and also tell my manager I am pursuing a Fannie Mae property. But that’s a personal detail I’ll have to keep in mind for potential future purchases.
Our discussion focused on what makes a house habitable and how can that be accomplished. They suggested I call the county office and ask them. We also thought maybe I would be able to put a clause in the purchase contract something like “Purchaser will pay for necessary improvements to property in advance of closing to attain certificate of occupancy.” I was a little skeptical something like that would work since the HomePath addendum I got the other day made very clear that there are to be no alterations to the property before closing. But it sure sounded good.
That afternoon, I called the county offices and got transferred to the Permitting department. I’m not entirely sure they understood what I was looking for. I wanted to know what was needed to attain a certificate of occupancy, and all the information I got was what type of work will require a permit. Water tank: yes, screened in porch: no, plumbing or piping: yes, altering walls: yes. I’m not doing any of that. He also suggested I work with the bank to try and have that work done by them at my expense.
So, I emailed my mortgage agent and said I was going to pursue that option. He clarified the house must be livable at the time of appraisal, not at closing. Fine. Whatever.
Around that time, I got an email from my sales agent and she said there are multiple offers submitted. The term she used was “highest and best”, which required a bit of investigation. That term means that all offers are being collected and one will be chosen from them. “Highest and best” is pretty much a message to buyers saying, “you get one shot at this, make it your final offer because there’s not going to be a counteroffer.” So my agent asked me if I wanted to up my offer. I said I’d just go as-is at the asking price. Then I asked if we could put that clause in the purchase offer to pay for required improvements. No, it was too late.
At this point, I’m sort of doubtful that my offer will get selected. If it does get selected, I doubt I’ll be allowed to modify the terms of the offer. So where does that leave me? I do still have some options, believe it or not. Before I spell those out, I read of an interesting trick I may have to use sometime. If there’s a multiple offer situation, bid a few dollars over what you are offering. For example, if you think three people are going to offer the full purchase price, because who would pay more(?), up your offer by $13 (any small, odd number would work). Yours then technically becomes the highest bid. It’s like being the last person in The Price Is Right, except you’re bidding up, not down.
Now, my available options. The first thing I could do is find a lender who will give me a mortgage with the property in the condition it is in. That could require a lot of running around. The other option is to get a personal loan and buy the house with cash, then get a home equity loan after the sale (since I’ll have 100% equity, right?) and that would become my “mortgage”. The interest on the personal loan will be pretty high, but it would just be temporary.