Probably the one thing that I liked about the offer more than anything was the fact that the buyer was using a conventional loan and they were already pre-qualified which is not the same as pre-approved.
So what? You might ask…
This makes a big difference. First off, a conventional loan does not have the same requirements as an FHA loan, which is the type of loan almost every buyer for my houses has used. This means we don’t have to worry about the FHA 90 day rule, where if the house has been owned for less than 90 days it requires another appraisal and inspection plus some lenders will flat out not do a loan on properties owned less than 90 days.
Second, the fact that they are pre-approved means the lender already checked their income, credit, tax returns, etc. and the buyer has a much higher probability of being approved for the loan.
They have done their inspection on the house and asked for a few miscellaneous repairs. They want me to seal some vents in the roof, replace a rotted piece of trim outside (which I missed during repairs) and change the electrical box on the AC condenser outside because it’s rusted. These repairs should be fairly simple to make and I agreed to do them.
The appraisal has also been done. Since there are some good comparable sales nearby and the house is in such good shape the appraiser told me he felt the house should appraise fine. I, of course, met the appraiser at the house like I always do and provided him with a list of repairs, comps and a copy of the contract.
Since I have not heard anything back from the buyers agent or lender on the appraisal I have to assume the appraisal went fine otherwise I would have heard about it already. Nevertheless you know what happens when you assume...so I will check with the lender.
Rehab Budget Recap
Now that everyone has been paid and all the returns have been made I got around to calculating my rehab totals. Drumroll please …
It looks like my total cost for the rehab work is $34,700. You can look at the budget for this house so you can see item-by-item detail. You will notice that I had projected a rehab cost of $32,549.
Here is a recap of the items that put me over budget (as best as I can tell):
- One of the AC units in the house decided to quit on me after 2 weeks of working fine. The problem was the coil in the furnace so I opted to put in a new coil. That set me back $1,000.
- I also ended up paying about $700 more than I estimated on cabinetry since the bathroom vanities on this house were an odd size and they had to be special ordered.
- Had to replace the pressure regulator valve to the house since we discovered a leak in it after the rehab was done.
- I underestimated the cost of all the tile work we did. Not only labor but materials also because we opted for expensive granite tile for the fireplace. However the results were well worth it.
We are scheduled to close by the end of October so knock on wood we will take this to the closing table in a couple of weeks!
Question: Do you think it was smart to take the first offer we got or should we have waited a bit more?