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Considering a bank-owned home? Here's some advice (sort of long)
DH and I bought our first (and hopefully last) home back in September 2011. It is our 'dream' home. It is a very unique (and modern) octagon shaped house with a perfect 10 sq acres (about an hour, 10 mins N of the cities in MN). It's got 9 ft windows in the living room facing the South - great sunlight. It also means the N. side of the house doesn't get much access to sun. The house when built and when it went back to the bank - was more than 3x what we paid. In fact, we actually bought a house that still had $36k in equity after multiple appraisals. Good, right?
It was a bank-owned home. It was built in 2002, finished in 2006 ... when it went back to the bank, it sat during one of the worst winters.
We had an inspection, we tried for a home warranty, no go...the septic needed to be re-done (the bank wouldn't budge) etc.
Within the 6 months of now owning this home, we had 5 busted pipes (we knew about two when we moved in -bank would not pay to), a regulator on the water heater go on Xmas Eve, 2 months later, the water heater went, a furnace issue, and then some additional furnace issues. All in all - we have paid about $2k in parts and new water heater. My husband is literally one of the handiest people alive-he's done all the work/labor ourselves. When quoted rates -we have realized DH has saved us upwards of $7k in labor if we had to hire it out. (Not to mention the septic - 12k).
So, here is some advice:
When buying a home, especially a bank-owned home (granted, ours is in the country, so there tends to be more cost associated with living in the sticks)..., remember, BE PREPARED FOR ADDITIONAL EXPENSES.
All those money savvy people that talk about e-funds and the like, Yepper, make sure you have plenty. In any homeownership, there are unexpecteds that come up, but a bank-owned home often comes with more surprises. Whenever a house sits, things go to waste.
Is it still our dream home? 150% yes.
Re: Considering a bank-owned home? Here's some advice (sort of long)
Thanks for posting. Yes, you need to be prepared to do open your wallet and let the $$ fly out.
We have been considering buying another property- this time to rent (at minimal cost) to a family member in need and looking at foreclosures. We found one we like, and have figured it will need a gut job after sitting all winter with no heat and a leaky roof thruout the winter. New furnace, water heater, update the electric, plumbing repairs, new floors (the hardwood is all buckeled), all new appliances. Then there are the cosmetics. For us, this still would be worth the dollar outpour, as it will provide a home for a person that is safe and affordable and a good rental property if the family member's circumstances improve (unlikely as there is mental illness involved).
Great tips. I think this is very true. DH and I considering a home that had sat vacant for 3 years but after closer inspection and consideration, it was just way to much work for us! This house wasn't a bank owned but it was part of an estate. The children could stand to sell it while mom and dad where still living so it sat vacant while they were in a nursing home. I can understand not wanting to sell the house but if you planned to sell anyway, I'd say go ahead and sell.
Your very lucky that your DH is handy. My DH and I joke that we are pretty much the most un-handy people in the world so a fixer upper is not for us.
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Sorry you have had a bad experience. We also bought a bank owned property in Sept. 2011, and our experience has been the opposite (our home was vacant for 8 months prior and was neglected for who knows how long before that).
In addition to a 2 year home warranty that the bank included in the purchase, we negotiated many repairs that came up during the inspection (including plumbing, electrical and a/c). With the home warranty, the one thing that broke (the starter to our gas range) was fixed with an very inexpensive copay. Our biggest expense right now is landscaping--but we knew that going in.
Any home can have problems that come up after closing--it is not limited to bank owned homes nor are all bank owned homes destined to be money pits.
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I totally agree. But I wouldn't lump all homes that have say vacant into the same category. Our home was vacant for more than a decade before we bought it in 2008 (the crack wars were pretty brutal for my neighborhood). The sellers (the niece and nephew of the woman who had lived here for 50+ years) put a lot of time and money into he house before listing and completed another $10,000 in repairs post inspection.
I'd be pretty wary of " as is" properties regardless of my financial means but to me vacant doesn't necessarily mean trouble.
Buying a house is a great goal for the New Year.
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