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House Without Kitchen

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rmathew

Thread Starter
Freshman Member
Joined
Sep 5, 2008
Professional Status
General Public
State
Illinois
Hello All,
We are in desperate need of your input. We have put down on a foreclosed property which was in a great shape except for the kitchen. The previous owner started kitchen rehab but did not get to finish it. Currently, the kitchen only has sub floor, No cabinets or sink and no appliances. We didn't know nor our Realtor told us that lender will only give us a rehab loan which carry stricter guidelines than a conventional loan. As it stands we can't get the rehab loan. We do have the money to fix it but we are told that we have to have the rehab loan because house is not in livable condition. My Realtor has suggested that with the permission of seller we should do some minimum work on the kitchen to make it a "workable" kitchen and then aply for a conventional loan. I don't really know what it means. My question is if I were to do something to this kitchen what exactly will make this kitchen a "functional" kitchen and satisfy the HUD MPS requirements. We really like the house and don't want to lose it. Please help us and give us your input. I want to get this kitchen in a position where I am able to get a conventional loan. We are in Illinios.
Thank you in advance for your help.
Roger
 

Obsolescent

Senior Member
Joined
Jul 6, 2004
Professional Status
Certified Residential Appraiser
State
Minnesota
You should check with the town in which you are purchasing the home. The building and zoning dept. should tell you what constitutes a legal kitchen. A kitchen might be "workable" but a village inspector may not give an occupancy permit if the gas lines, venting, etc. aren't up to code. It'll likely have to be done right the first time or there is a good chance it'll jam you up later.

I won't go into the risks of improving a home that legally isn't yours and the things that can go wrong before closing. I presume you're reasonably intelligent and have done your homework. Once a kitchen is installed its become part of the real estate. There is no going back and tearing it out if the deal goes south.
 
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Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
My advice is to close your heart and open your mind. Rent a movie...its an old Tom Hanks movie about a house he and his bride buys...called " The Money Pit"..think about it.

Weight this like any other investment...Are you getting a real deal (and by that I mean less than 50% of the assessed value or so) or just a run of the mill foreclosure? You have a bucket full of work to do....So...why not use a bridge loan? Go to a real bank in house money, not an S & L, not a Credit Union...you know a REAL bank FDIC, state or national charter, not thrift - not some mortgage scum - get a shorter term loan (say 5 year or 10 at most), with enough to fix the kitchen. Once you have the kitchen fixed then seek permanent financing at your favorite mortgage company (please don't tell me it's some sleazy mortgage broker with a corner office next to the Adult bookstore)

How much can you put down? If not 20% or so, then I'd walk. Save up your money. This market will be bad for at least 2 more years. Saving $400 a month gives you $10K in 2 years.
 

rmathew

Thread Starter
Freshman Member
Joined
Sep 5, 2008
Professional Status
General Public
State
Illinois
Dear Obsolescent,
Just to confirm, Appraisers use village's specification of working kitchens and not HUD's MPS? Can you tell me what FHA/HUD considers a working kitchen in their work books? I searched HUDs websites but could not find any details on kitchens.
Also just so you know, I am not going to live in it until property is remodeled completely so there is no need for city inspectors just yet. That will be done after contractors are done rehabbing it. This exercise is only to avoid getting a rehab loan and securing a conventionl loan.
thanks again for your great fedback..
 

Obsolescent

Senior Member
Joined
Jul 6, 2004
Professional Status
Certified Residential Appraiser
State
Minnesota
I don't know where you are in Illinois, but some municipalities require a village/city inspection before the house is transferred to make sure they're up to code. Some have their zoning/building codes on line and might have something about minimum kitchen requirements. I would also consider the good advice offered in Terrell's post. Mortgage providers are are now scrutinizing everything very closely and can, at their whim, decide not to lend for the slightest of reasons. Your putting money into the house before it is legally yours may be riskier than you think. And if your going for an FHA loan, the home has to meet even more stringent condition criteria, so the kitchen could be only part of what would need to be repaired before an FHA loan can be secured.
 
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rmathew

Thread Starter
Freshman Member
Joined
Sep 5, 2008
Professional Status
General Public
State
Illinois
I am in Bolingrook. I had the inspection done already and everything is up to code. The kitchen is the only issue. This is not a FHA loan either. This is my second property as an investment.
Besides cabinets, sink and counter top is kitchen floor needs to be tiled. I am just trying to get someone to tell me what is the criteria you guys use to appraise properties for lenders. Can someone answer that? Am I asking the right question? I do understand the risks and lending issues.
Thanks
 

Obsolescent

Senior Member
Joined
Jul 6, 2004
Professional Status
Certified Residential Appraiser
State
Minnesota
Needs a working, functioning kitchen based on minimum village requirements. Anything missing, e.g., floor, counter, etc. will be noted in the appraisal. Refrigerator is personal property. The property will likely be appraised "as is" on the date of inspection. Good luck.
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
My advice is that I would never ever put money into a property that I didnt own. You could sink $10,000 into this house and the seller then could demand more or walk with your improvements. Not that they would, but the fact of the matter is its not smart to "lend" someone you dont know money. I simply wouldnt do it.
 

rmathew

Thread Starter
Freshman Member
Joined
Sep 5, 2008
Professional Status
General Public
State
Illinois
Thanks ladies and gentlemen! I appreciate all of your feedback. You guys are the best.
The most I am putting in this place before closing is may be $300 for used 3 cabinets and $50 sink. I think it is worth if the pay out is almost 50k.
 
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