Purchasing a foreclosure home that needs LOTS of work - Page 2 - Mothering Forums
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Frugality & Finances > Purchasing a foreclosure home that needs LOTS of work
shelbean91's Avatar shelbean91 02:59 PM 01-13-2008
I haven't seen the house in person, haven't even been to the town- just found it while looking at houses in the area. This is ALL just hypothetical at this point.

shelbean91's Avatar shelbean91 03:02 PM 01-13-2008
http://www.realtor.com/search/listin...rcnt=11#Detail

link- hope it works. It doesnt' give much detail, though.
KariM's Avatar KariM 06:40 PM 01-13-2008
That's a good price for that size/age home in Deerfield, but the fact that it's still on the market would REALLY have me worried. Homes in Dane County tend to move pretty fast and Deerfield is a desirable location.

I suspect the mold issues must be severe for it to not be selling.
shelbean91's Avatar shelbean91 07:16 PM 01-13-2008
That's what I was thinking, also. Honestly, this really is a hypothetical- as in- how low would you have to go to make a headache worth the $$. I mean, even if it needed 100k worth of work, at that price, it's still under market value. I'd never buy a house sight unseen and have no idea about the area, and live too far away to check it out. My sister could drive up for me, but still.

I do think the mold must be huge and any amount paid for the house would be basically just paying for the land, as most likely, the house would have to be torn down and a new house built in its place.
Maddy123's Avatar Maddy123 09:04 PM 01-13-2008
A plumber who works on our house sometimes once told me "Mold is gold!" (Meaning that it costs BIG bucks for the homeowner to deal with it and means $$ for the plumbers.)

I realize that there are all sorts of mold issues, from the minor to the big. This house sounds like it may have a big problem. So...I'd think, "Mold is gold!" (for the plumbers) and stay away from it.

But, for the record, I've bought fixer houses also. Not any with mold, but some that needed a lot of work.
phatchristy's Avatar phatchristy 01:48 AM 01-14-2008
My sister wound up renting a home with mold issues...she and her husband had SERIOUS health issues as a result.

I would not consider purchasing this unless it was a tear down.

(and she is NOT a typical person that is allergic to stuff...this was severe mold...some mold is just flat out a respiratory toxin)
shelbean91's Avatar shelbean91 02:32 AM 01-14-2008
I think that's the thing- even if you get it cleaned up, it either comes back or is never really all the way gone. My guess is that for the price to have gone so low in a desirable area, it's got to be very bad. Maybe I could talk the bank into giving ME money to take it off their hands Still not sure if it would be worth it.
lalaland42 03:13 AM 01-14-2008
To answer your previous question, how low does it have to go before I would buy something, it obviously depends on the situation. I probably wouldn't do it if I was out of state and didn't have contractor contacts in the area of the house. There are also certain problems I wouldn't touch with a ten foot pole, mold being one of them. Recently, I was offered a house where the owner was divorcing and she didn't have any money to deal with the issues. I looked around and a lot of the work was cosmetic but when I looked in the closet, I saw mold. I don't want to cause respiratory problems for DD and I knew I didn't have the time or financial resources to deal with it, otherwise I probably could have got a great deal on the house.

I do have a friend who is a contractor and he and his ex-DP went around the big island of Hawaii making offers on for sale houses. He offered approximately half of the asking price. He made enough offers that he had a couple of takers. He made some great deals that way. Their kids are grown though and they did the work themselves.
velochic's Avatar velochic 11:00 AM 01-14-2008
Something that jumped out at me: it says that the pool is "partially" finished. What in the world does that mean? Maybe that is the cause of the mold problems.

This place sounds like a money pit. I personally wouldn't do it.
D_McG's Avatar D_McG 11:04 AM 01-14-2008
Quote:
Originally Posted by velochic View Post
This place sounds like a money pit. I personally wouldn't do it.
Totally.
SleeplessMommy's Avatar SleeplessMommy 02:52 PM 01-14-2008
Check out the aerial picture here:
http://www.zillow.com/search/RealEst...St%26loc%3Dmap

The home is still on the market because it backs onto a HUGE shopping or industrial complex - the loading dock is right behind the house. Zillow puts the "estimated value" of the property at $140K. (not counting interior condition issues)

I would not touch it with a 10 foot pole:
1) The "bad" type of mold can cause neurological issues that could be permanent.
2) Even if you tear down and rebuild, you still have the loading dock in your back yard...impairing resale permanently.
3) I see no evidence of a basement. IF this is a slab-built house in WI, you will always have cold feet.:::

One of the other houses in that zip code is listed as "$20K below market" .. I think the resale market is very soft right now, you could probably move there then take your pick of several houses.
ABrez's Avatar ABrez 03:01 PM 01-14-2008
I didn't have time to read all of the replies but I would never buy a foreclosed home. DH used to work for Chase in their foreclosure department and the foreclosed homes were always WAY more destroyed than it first appeared.
Sharlla's Avatar Sharlla 06:19 PM 01-14-2008
We bought a foreclosed home that needed a lot of work for $4,500.00 We just paid the asking price since it was so cheap. Depending on the area and if that was a good deal or not I might pay 60k for a house with mold but I would be prepared to spend money on gutting it and replacing all the damaged floors, drywall, insulation etc. DH and FIL could do all that so my cost would be for supplies only.
shelbean91's Avatar shelbean91 11:41 PM 01-14-2008
My parents bought a house that was a foreclosure and still live in it 25 years later. Theyr'e not all bad.
SleeplessMommy's Avatar SleeplessMommy 04:52 PM 01-16-2008
They are not all bad. There are probably tons of foreclosure deals out there right now, many of them good ones on very new homes.

Just IMHO, the pool house with view of loading dock is not the one for you. Have you asked the real estate agent for pictures of the inside? Is it being kept heated through the winter to prevent pipes from bursting?
shelbean91's Avatar shelbean91 12:39 AM 01-17-2008
On earlier listings, there were pictures of the inside. It looked dirty, but nothting that couldnt' be taken care of. The view of the loading dock is a different matter, though. I couldn't tell what it was when I was looking, but it makes sense now.
CathMac's Avatar CathMac 01:01 PM 01-17-2008
Quote:
Originally Posted by SleeplessMommy View Post
Check out the aerial picture ...
The home is still on the market because it backs onto a HUGE shopping or industrial complex - the loading dock is right behind the house. Zillow puts the "estimated value" of the property at $140K. (not counting interior condition issues)

I would not touch it with a 10 foot pole:
1) The "bad" type of mold can cause neurological issues that could be permanent.
2) Even if you tear down and rebuild, you still have the loading dock in your back yard...impairing resale permanently.
3) I see no evidence of a basement. IF this is a slab-built house in WI, you will always have cold feet.:::
...
SleeplessMommy,
This could partially explain the funny distance shot on the picture but I'm guessing something else is being glossed over with that.

There are some things you just can't fix up, at least not by yourself. The neighborhood is one of them and the size of the lot is another.

Oftentimes slab foundations have radiant heat with water pipes in the concrete but heaven help you if the pipes break.

Quote:
Originally Posted by shelbean91 View Post
My parents bought a house that was a foreclosure and still live in it 25 years later. Theyr'e not all bad.
shelbean91,
No, they aren't all bad but there is a certain element of luck involved even with a thorough inspection. And in those days buyers were less aware of black mold and lead paint and it wasn't as big a deal if the house had 100 amp electrical service. And the longer you plan on staying in a house the more time you have to do any purely cosmetic work and defer smaller, non safety related projects.

If you really want to know what you could be in for even with a structurally sound "fixer upper" try watching one of those shows on flipping houses.

I remember browsing for a house about 14 years ago and DH would say things like it needs new windows, or doors or a roof. Being unfamiliar with the kind of work that older houses might need I'd have a very literal response and think that it had windows, doors and a roof. What he meant, of course, is that the windows and doors were outdated and probably poorly insulated and that the 20 year roof looked to be about 30 years old. I finally got a condo and when we started looking for a house together about 6 years ago I was a little more knowledgeable.

Because the market was starting to heat up we couldn't afford something that didn't need work so we looked for something with "good bones" in a good town. I can't tell you how many houses we looked at that I thought we could defer some of the bigger jobs on; and DH would explain to me exactly how much work each one of them needed.

We finally saw a cute little cape with a beautiful cherry blossom tree in bloom. Of course it was 50 years old and desperately in need of updating. It needed a new roof, it had aluminum siding, it had termite damage in the middle of the kitchen floor, the landscaping was horrible, both the kitchen and the bath were "original" to the house, etc., etc., etc.

We had a thorough inspection and renegotiated the price from $10,000 over asking price to $5,000 under ... the offer was contingent upon passing inspection so it gave us some leverage. Since then we have spent about $8,000 on the roof and $5,000 on the insulated windows. We have put a lot of "sweat equity" into pulling shrubs, grinding a huge stump, and re-grading a small hill in the front yard. DH did the termite remediation for about $500 or so but if we had to pay someone it could easily have cost $3,000. We were darn lucky the damage didn't extend into the corner of the sill otherwise it would have been a serious structural problem.

We are way ahead of the game since it has appreciated in value by about $80,000. It was probably a little more than that at one point but has levelled off due to the softening market. But finding the right contractors at the right price, even with DH's expertise as someone who used to work with contractor, is a huge pain. We still need to replace the aluminum siding and add some insulation and renovate the master bedroom. We painted &/or papered the livingroom, dining room and second bedroom, but we are deferring the bathroom, kitchen and uninsulated breezeway until the girls are older. Also, we need to re-finish the hardwood floors.

Getting a fixer upper was the only way we could afford to get into a good town with a reasonable commute but it has been a lot more work than I could have imagined.

I would strongly encourage you to rent in the area you are interested in. Become familiar with the neighborhoods. Become a "looky lou" and go to a lot of Open Houses. "Kick the tires" and know how to look for signs of damage or abuse. Look under the sink and see if there are water spots. Look for small piles of sawdust that might suggest termite damage. Here is a link to a sample inspection check list. Note, this is a very abbreviated version of what an actual inspector should use but is a good guide for things you should be looking for. http://www.askthebuilder.com/B248_Ho...hecklist.shtml

Get a sense of what these neighborhoods and houses are going for. And get a sense of what new windows, doors and roofs go for and how that might affect the value of the house.

Avoid anything that has been "remuddled" (poorly remodelled) since you have the additional aggravation of having to "undo" before you can "re-do". We once looked at a house where the seller had obviously tried to freshen it up to sell it. He had put mirrored tile with gold flecks (very 1970s) in the foyer and put plywood on the kitchen floor so he could put ceramic tile down but then the kitchen floor was half an inch higher than the hall floor leading to it, creating a trip hazard. The house would have been worth more if he hadn't made the improvements that would have had to be taken out to paint the foyer and re-tile the kitchen properly.

Make sure any offer you make is contingent upon passing inspection and be prepared to pay $500.00 or so for a thorough inspection. Do not use an inspector recommended by the Seller's Agent since you cannot rely upon them to be unbiased. Ask friends and family to recommend an inspector. Be there at the time of inspection so you can make sure it is thorough.

Between the condo purchase and the house purchase I think I paid for 4 or 5 inspections which easily cost me $1,500 to $2,000 but he was worth every penny. He spent 4 or 5 hours on one bank foreclosure. He did one system at a time and went all the way through the house doing that one system and then returned to the top floor to do the next system to make sure he didn't get sidetracked and miss anything (e.g.: electrical, plumbing, etc.). He had a "telescoping" mirror to check under things like the siding of the house.

One agent referred to him as the "dealbreaker" after he commented on the parking spot for the condo. The agent on the foreclosure thought he was kidding when he said he was going to check the mailbox; you should have seen the look on her face when he actually walked towards the mailbox, looked it over and then checked of the little box on his form. He even got up on the roof of any house he looked at for us, which I understood was relatively uncommon at that time in my state. However, even very good inspectors can miss things which is why it's a good idea to be there for the inspection.

Of course inspectors like that have a tendency to offend the Seller but that is more of an issue in a Seller's market.

Anywhoo, JMO. Good luck.
~Cath
mnnice's Avatar mnnice 04:25 PM 01-17-2008
I would also wonder what it was zoned. I personally think the likelihood of the current price reflecting is what the realator thinks it would be worth as a teardown and rezoned industrial.

I know many of lots in my part of WI are more than that house and we are about 1/3 cheaper that Madison area.
shelbean91's Avatar shelbean91 03:23 PM 01-19-2008
Update- the house is no longer listed.

We're still looking at a move, (and I'm looking at houses online) but we will likely end up renting while looking at deciding (that was the plan all along)- maybe live in a trailer at my mom's house. It's fun to think about the what-ifs.
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