Unfinished Renovation Project and Failed Flips
It’s not uncommon to find an unfinished renovation project on the MLS that was originally someone’s rehab or “flip” project. I come across these projects and it makes my stomach turn. You might be wondering ‘why’? Well, think about it. More likely than not, the property owner left the house in a state of disrepair. Non-working mechanicals or open walls. Unfinished roof, windows, and doors. Well, if a house isn’t in good shape…it only gets into worse shape as it sits there. And, these properties can ultimately result in the process of foreclosure.
Once a bank has determined to move a property into foreclosure, in the State of Connecticut, it often does not come back. Ultimately, strict judgment (CT Law) is passed and the owner leaves the keys on the floor and walks out the door. And then time passes with the issues only getting worse than when the project derailed. Obviously, empty houses deteriorate faster (see this article) than occupied and maintained homes.
And the problem is just passed on down to the next owner…
You may be wondering – so what? That’s their problem. Nope. As a realtor, this problem lands in my lap more than you’d expect. First time home buyers think they will purchase the home with an FHA 203k loan or the Streamline 203k loan. When a house is an unfinished renovation project – it’s really, really hard to get these homes to meet full 203k status. Normally, the best chance is for the buyer to qualify with a 203k Streamline, but this has a ceiling of $25-$30k in rehab monies. Not nearly enough to finish off a major renovation that was left in a lurch.
So, if you have a project that you don’t want to, or can’t, finish – give us a call. We’re happy to look it over to see how our services could help. Better yet, before it gets to that point – give us a call. We’ll give you a couple of options for how we can take over the project. This is especially good if we can get to it before the lender opts to foreclose on the property. What’s an option? Well, maybe we work out seller financing and we assume the monies in escrow for the rehab. Or, depending on how things stand – a straight cash offer may be the easiest and best approach for both of us.