Ask Judy O.: Will a bank-owned seller give credits?

Dear Judy O: Should we even bother asking for credits on the bank-owned house we are buying because we heard banks don’t give credits ? The house is old and the garage is pretty rotten, windows painted shut and bad drainage in the back.

Answer:  I think that you until you go through the process of having your own inspections and subsequently approaching the bank for credits, there is no way to know what the bank is going to do in advance.

Unfortunately, when you buy an old house, there are always going to be things to address.  It’s important to distinguish between the things that are desired by you versus those that are actually critical.  There are “upgrades” and there are “necessities”.

With respect to old detached garages and their condition or ability to house a modern car:  I typically tell clients that old garages like this are a “gift with purchase.”  They’re rarely in good shape and really are a bonus if you can get some use out of them structurally.  You likely have a driveway which gives you off-street parking, which is a good thing.

With regard to the windows, I think that in the space of a day you can probably get a handyman to at least chip away at the old paint and get them to open.  New sash cords and making the windows operable may be a wish list item and something you may need to save for.

Regarding drainage issues:  Historically, most homeowners never paid much attention to drainage and runoff until recent years.  But, as homes keep getting older, technologies have improved and access to hands-on ways of dealing with potential problems became more available to the homeowner.  There are ways to deal with drainage that are not expensive.  In a transaction, issues relating to drainage or cracked/failed retaining walls that don’t impact on the house itself are in the realm of  an “upgrade” or improvement to a property.  A seller rarely will pay for this type of request.

If this were an investment property that someone bought for its current price and upgraded, would it be worth approximately 25% more in today’s market?  If you use this formula you can determine if  there’s already equity in the house at its sale price.  But you’re the ones that will ultimately be the arbiter of its value.  I always say, it never hurts to ask for credits, but especially with a bank owned, don’t expect too much -  if anything.

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