Forclosed Home Buying (With a Violation)?

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Hi everyone! My wife and I have recently been looking to purchase a new home to move into with my parents. Because the four of us will be living together, we have looked towards forclosures.

We found one home with great potential at a very good listed price at $ 450,000, and I feel like this home can reach up to $ 750,000 if everything’s right. It is an “as-is sale” by the bank and I believe several attempts by others have been made to bid into this home. I was informed by my realtor that the reason this house keeps coming back out into the market after a verbal agreement is because the Bank (Owner) wants an “ALL CASH” purchase. The reason for this is because there is a violation on this home because the previous owner constructed the 2nd floor without a permit. The city public records states “Obtain Permit or restore previous conditions”. These words to me sound like it is possible to get a permit and keep the 2nd floor. I understand that it might be difficult process, but we are willing to go through any difficult process as long as we can purchase this home at this price.

While we really feel like this is the perfect house for us to live with my parents, I feel so helpless because I don’t know how to go about any workarounds to convince the bank to accept us. We can only make about 40% down payment with all of our savings. No more than that.

Me and my wife’s Credit score is good and our income can safely get us $ 400,000 in mortgage loans.

We are from NYC area, and this will be our first home purchase. While I’ve seen recommendations for first time homebuyers to stay away from forclosures, I feel like we’re ready to tackle any challenges as long as we know exactly what to tackle.

Thank you for bearing with my question and I’d appreciate any form of assistance. Thank you.

1 Comment
  1. Reply
    April 30, 2011 at 12:37 am

    BEFORE you move one step further towards attempting to purchase this home, contact the municipality involved to see exactly what they will require in order to grant the permit. Understand that they may well require considerable destruction of that second floor so that they can inspect that framing meets code, we well as plumbing and electrical. Chances are VERY slim that you will get this permit by simply paying the $ 100 or so required. It is’ more probable that this ‘destruction and repair’ will run into the $ 100,000 range.

    If it was as simple as you seem to think it will be, the owning bank would have applied for and obtained the permit, at which time it would sell the house for as much as it could get.

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