A tale of 3 foreclosed houses

When will the banks get a clue?

This past week had me working with 3 buyers on purchases. In all 3 cases the houses were for sale by a bank.

House 1 Had been priced at $79,900 and recently reduced to $49,900. The house was in a state of extreme disrepair. Inside sheet rock had been destroyed and floors were disintegrating. There was an area that used to have kitchen appliances and cabinets, but they were gone now. areas of the ceiling were coming down and the floors were rolling. My client crawled under the house and counted 23 joists that would need to be replaced. In other words the house needs to come down, even though it was not that old.

The MLS for this house had a comment that it was a nice lot. Not sure why it was a nice lot. Not overly large, or small, but definitely overgrown. The overgrown weeds and bushes did serve to hide the railroad tracks that adjoined the property.

Conclusion $25,000 lot with a $30,000 demolition job, makes this $49,900 house approximately $55,000 overpriced.

House 2 was on the market for $79,900 in a very popular area. The house was definitely dated. but had a brick and vinyl exterior and floors and walls were all sound. The average to large flat yard was entirely fenced in the rear. All interior surfaces would need to be redone, and the kitchen and baths would need to be updated. Add in replacement windows, a little landscaping and the investment to make this house desirable, would be around $25,000. 

This house was on the market for 2 days and garnered 10 or more offers resulting in a contract for more than list price and closing quickly because it is all cash.

More than likely the house will be renovated and placed back on the market for around a reasonable $170,000.

House 3 I already had under contract. My buyer had identified the house and neighborhood and it turned out to be on the market for $79,500. The house seemed to be appropriately priced, not a bargain and appraised for $82,000. The bank did not respond to the offer in a timely manner and then as a result of an even slower delivery by their agent to me and the purchaser was not really under contract until this past week. 

What was remarkable in this instance, is that while there are apparently 11 similar homes on the market in the area of this sale, only 2 have gone under contract since we made this offer at the end of October. In spite of this, the bank’s asset manager was constantly wanting to “kill” the deal. He couldn’t sell the house for any more than my client was paying. He couldn’t sell it any sooner, and yet he wants to “kill” the deal because it is closing late because his company returned the “contract” late and delayed the mortgage process.

I wish I could say these are isolated instances but they seem to be happening more frequently. So whether they are overpriced, underpriced or trying to kill a legitimate deal in a competitive market the banks don’t appear to be helping their investors, customers or vendors.