VA Appraiser's question.

[wyecoyote]

Ok all have a question for you VA Appraiser's. I know part of the answer allready, don't know until inspection. :twisted:

Here goes, I'm looking to buy a house that is a foreclosure. The house is small and needs some work. I will have to get a LO (god forbid I have to actually talk to one of these blood sucking creatures of the night :evil: ) and prequal, have my VA certificate. The house needs some work from what I have seen no dryrot but will ask for a Free and Clear Pest and Dryrot inspection. Overall required work floor covering, paint interior (Ext metal siding) roofing has moss not alot just typical (don't you love the word typical) appliances have been removed, insulated vinyl windows, electrical, water, and sewer all work. So my question is would VA loan on a place that requires work before livable. And as a VA appraiser what work orders do you require to be completed.

The reason that I ask is if it would run the risk of being rejected I won't try it VA just go conv. Though I'm looking to try to get in on a no money down. This one is a long term investment for me, because, site can be subdivided down 3 times. That is why I'm considering this one.

So any thoughts from you VA appraisers would be much apprciated.

Ryan :twisted:

 

[Richard Carlsen]

You are asking appraisers to answer a LO's question.

But here is how I see it. If you purchased the house and I did the VA appraisal and came up with all of these things that had to be done in order to qualify for a VA loan, the appraisal would be "subject to" all of these repairs. Since it is subject to repairs, the repairs will have to be done before the loan can close. And the work would have to be done in good, workmanlike manner. Since the house is a foreclosure, I am sure the bank will want to sell it "as is" and is not willing to put any bucks into it. In addition, I'm not sure they would be willing to sit on it while you either do or have the work done. Lots of liability letting someone else come in and work in a house like that. So you are going to either have the work done or do it yourself. If it could be done in a very reasonable amount of time, you might be able to pull it off it the bank has no other buying leads.

You are sort of in a Catch 22 on this one but if you think the work can be done in a reasonable amount of time, I would try to enter into a P.A. with the bank that would give you access to the property, plenty of time to get the work done and permission to do the work. Remember that before this thing closes, you are going to be putting your money in someone else’s house. Best to make sure everything is set up right in advance.

 

[wyecoyote]

Yes I know that is a LO question. But really needed a VA appraiser to answer if VA would back allow a Fair condition property and someone to hit me upside the head with the fact that VA won't lend on this type of property. Really needed this to be answered in order to find out wether or not just to go conv and/or even attempet to go VA. That is true don't want to do any work on a house before it is in my name. The funny thing is this property has been for sale since sept of 2001 as a foreclosure. Pretty sure that as of now there willing to entertain any offer. Will probably go ahead and offer them to buy it provided they finance and get a $5K-$10K note on the property for the repairs, I'll do the repairs myself (know that I can do them have been working on remodels since I was a kid). Then maybe refi in six months after all work is done. But that is one that I will have to decide on.

Ryan

P.S. Has anyone purchased one of the VA foreclosures and what problems have you run into with doing this??

 

[Dan Leggett]

In the past the VA, FHA, & others would allow for a repair escrow, 1.5 - 2 times the amount of the repair bids and usually held by the closing agent. The deal closes, the seller receives their cash except for the amount of the escrow, you have 30 days to complete the work, VA requires a satisfactory completion inspection, seller receives balance of escrow. I don't know if VA still allows such or if the seller would go for it or not but might be worth a shot. In the past, most resistence to a repair escrow is generated by the lender of your funds, not VA. Make sure your get a 'No' from VA, not the lender of your funds.

 

[wyecoyote]

Dan,

Thanks for the info. I'll look into this "repair escrow". The only problem is receiving bids. Do you know if the work has to be completed by a licensed and bonded contractor? :?: 30 Days to complete all repairs should be possible. But then again would only find out with a home inspection and an appraisal.

Ryan

 

[Dan Leggett]

I don't even know if a repair escrow is still allowed by VA, but if so they're probably going to require formal bids by licensed contractors and will probably require the closing agent to issue or verify payment. Every VA region has different 'house rules', contact the one that the property is located in.

Also be advised that in some regions the Vet can request waivers of certain required repairs, increase in loan guarantees (for sale prices over the appraised values), and other items to accomodate the Vet's purchase.

Good Luck,
Dan Leggett
:twisted:

 

[Don Clark]

8)

The lender has the responsibility to make sure repairs have been completed and a final is done. Some will allow what you are looking for, some won't. Under the LAPP program, the lender controls all the events, then they send to VA for a guarantee. BUT, I have seen instances where the lender has asked me personally to do a final, months, and in 1 case, a year after closing. VA will not guarantee a loan without all paper work being in order. I have done as many as 6 "finals" on a property where funds were escrowed, the lender was told the work had been done, I was asked to reinspect, and the work was not done. In one case, after 9 months, the lender asked me to do a final on a property. I called, made the appointment, and when I got to the property the buyer, now owner refused to let me inspect the property. Seems that the post closing department does not talk to the loan servicing department, the buyer/owner calls the servicing department that tells hime he does not need a final as his loan has closed. This guy even called the police on me. They told hime to not let me in. Incredible. :evil:

Bottom line. The lender had to eat the loan.

But, talk to the lender. You may be able to work it out.

Don

 

[Dan Leggett]

You're right Don. I am still not used to the LAPP system. Thanks for the correction.

 

[Ron in AR]

Ryan,

I seem to have a different take on this.

First of all, I didn't see in your post if you qualify for a VA loan. Are you a Veteran?

It has been my experience, unless VA has changed their guidelines, that if they own the property and you want to buy it, there are three options:

1. You pay cash and walk with the property
2. You get a loan apart from VA
3. VA will make the loan themselves.

Obviously, if you go FHA or conventional, repairs will have to be done.

If I understood you correctly, this is a VA-owned property, a foreclosure. If you win the bid on the house, they will actually finance the property as is. They already own the thing and they want to get rid of it.

VA told me once that they accept bids on foreclosures with this priority:
1. A veteran with cash that wants to live in the house
2. A veteran that wants to live in the house and wants VA to finance
3. A veteran that wants the property for an investment
4. A non-veteran that wants to live in the house
5. A non-veteran that wants to use it for investment property.

They may have changed guidelines but I would check it out. You may not have to make any repairs at all before closing.

Ron in AR

 

[Don Clark]

8)

Ron:

You are correct. My son, who is not a veteran, bought a VA Foreclosure some years ago. He lived in it about 6 months. The house was eaten up with termites. He tried very hard to make it work and ultimately had to give up. He had to file bankruptcy to get the deal off his back. So-------be very careful.

Don