Re: Newbie question on “Remodeling Credit” for buyer? - Posted by JohnBoy
Posted by JohnBoy on April 05, 1999 at 13:47:36:
You can give a repair allowance on the sale of a property as long as the lender allows it. If you add the repair allowance to the purchase price, then the property will have to appraise for that price.
Does the property need the $5k in repairs? If it doesn’t, then offer the $40k with the seller giving you the $5k as a repair credit. If you add the credit to the price then the seller isn’t giving you anything! Your just borrowing that much more against the property that you will have to pay back with interest!
If the property does need the $5k in repairs, then treat it the same as a rehab. Current as is value, $42,500 - $15k profit, - $5k repairs, - $2k holding costs, - $1k marketing costs, = $19,500. Tell the agent you’ll pay what it’s worth if you take it “as is”. $19,500! That’s assuming the house is worth $42,500 fixed up. What would the house sell for in fixed up condition??