Cheap houses?

You can get a really cheap house in parts of Rhode Island, but for the most part, the saying still holds true, "You get what you pay for." I have a couple of buyers who have been lured into the market when they see houses for $50K. The description only says: "Sold in current condition - no warranties etc etc." You get there, and there is no kitchen, the pipes have been removed, and even the furnace is gone. The buyer was told that they could qualify for the mortgage with 3% down. They figure it will take $20K to fix up the house, so they go back to the bank. "We have a renovation loan program!" they say. "We will loan you money to fix-up the house!". They buyer is excited - then the catch: you have to put down 10% to qualify for that kind of loan. And, you have to have a licensed contractor give an estimate for the repairs, not your friend who hung some drywall in his basement once. Rhode Island Housing has a program that still allows the buyer to have a 3% down payment, and will loan up to $15K for renovations. However, the bank wants to have a home inspection, which requires the electricity and to be turned on. It's understandable; who wants to loan all that money to a marginal borrower if the plumbing leaks? The problem is someone removed half the plumbing. Very hard to turn on the water in such a case. In the meantime, the seller, who is most likely the lein holder, isn't going to do any work on the house and doesn't want to take the it off the market while waiting for the loan to go through when the lending bank wants inspections. Bottom line; educate your buyers beforehand to be realistic.