I see lots ot houses that look to be in fair condition to the untrained eye that have probably been inspected 5 or 6 times and actually need over $40k in repairs.
Are the banks just waiting for an unsavvy person to come along since they do not have to disclose anything?
Most of these seem priced around the range where you would have zero equity even after putting in the $40k so you gain nothing for taking on a huge risk and labor to hire contractors to make the repairs.
The low price is attracting all sorts of buyers, luckily they are getting inspections.
I have done many of these and presented the client with the results. Many times, and especially with young couples who have watched too much “This Old House”, they just go ahead and buy the places. I even ran into a lot of “less-than-professional” contractors who convince these buyers that the repairs will cost way less than I believe they will. I have also had many past clients call me back, months or a year later, and complain about the work these clowns did for them. Kinda sad when you have to explain to the client that the $40K they just put into a 3 flat, for cosmetics, was a waste of money and there are still $50K worth of structural and infrastructure work to be done. Kinda like telling peiople that they have cancer.
As Barnum said, “There is a sucker board every minute”.
The problem is, and what the banks want to have everyone believe, is that the only houses out there that are “deals” are the forclosures. Problem is, around here, that there are only about 5 agents who handle all the forclosures, and they notify their rich “invenstor” clients when they come on the market, but before they get listed. This leaves only the “less than standard” properties out there, and there are always some “sparkle in their eyes”, wild-eyed and inexperienced people out there who want to believe that this pile is really one of gold.
Around here, the listing agents don’t look at the report, don’t negotiate and never learn what the inspection found, therefore they don’t have to disclose what they don’t know.
These places are sold, “as is”, and the so-called “disclosure” rules are gotten around this way.
Rules only work when dealing with ethical and honest people.
Mr Decker, got that right… “as is where is” seems to be the rule of the day and “the bank” is somebody that may or may not exist on the other end of a fax. I did one that was actually in pretty good shape, a really good price, “as is”, offer in good faith by the buyer, then the offer was withdrawn after more than 60 days of “the bank” not being able to find anyone that could sign the deal. Amazing but routine these days.
I find, many times, that banks do not have a clue how to buy, sell, manage or deal with maintenance of residential (or commercial) property. Therefore, if the property stands vacant for more than 2 years, and is in a “mixed” climate, it falls to s**t.
I find, also many times, that the bank thinks it will sell for one price, the buyer enters into a contract, the inspection finds it is a pretty good property, cost and condition wise, then the bank sits on the deal for a month and backs out. Then, funny to see, the property goes back on the market for 5 - 10 K more selling price. I wonder why that is? :mrgreen:
Banks are clueless when it comes to home sales. All they see is money. Thing is that they think they are smart to sit on these forclosed homes for months waiting for the market to return. With lack of maintenance and no utilities, most are falling into poor health. I have heard that some banks are “selling” some homes to other banks, and reporting the home “sale”, inflating home sale figures. And, it is the banks and the investors that are holding back lending money to the honest buyers. Go figure.
In this area, there are about 5 agents who are handling about 90% of the forclosures. The bank pays then $400 per property (as the banks release them for sale) and all they do is list them on the MLS and field phone calls from other agents to see the property. The listing agents will never actually attend the inspection or do stuff like have the utilities turned on.
In this way, they are insulating themselves, and the banks, from actually ever finding out anothing that would have to be disclosed.
I have done a number of inspections, for local municipalities, who wanted a report as to the condition of such properties. Many turn to mold farms and the villages want an independent report so that they can have the courts order the houses torn down. 3-4 year old McMansions, never sold, and they are now being torn down.
Are the banks smart? Here is a short story. Talking to an insurance person. 2008 a home basement flooded with sewage back-up. Homeowner thought he could pump out and clean himself. Did not submit insurance claim. The bank foreclosed on property recently 2011. A local home inspector inspected home for bank. Inspector detected mold in basement. Bottom line. Bank looked in to the foreclosed owners insurance from 2008. Bingo. Insurance paid the bank $10,000.