Possible home? (Long)

Lonesomelov · #1 10/19/09, 11:38 AM

http://www.realtor.com/realestateand...701_1112773683

Sorry if this is the wrong place to be posting this but here goes -

Question:
My husband and I saw this house on Thursday and it is totally gutted inside and the asking price is $135K...the sellers are a company that buys foreclosed homes, dresses them up and resells them. Fixed up, the asking price will be $185K. The sellers are saying there is a really good chance they will buy our existing home and put the amount left over on the note for the new house. My question is has anyone ever dealt with this? Is it legit? It almost sounds too good to be true...we know we will have to take a loss on our existing home due to the economy and the very sharp decline of our town and particulary our neighborhood (we have been robbed and had our first drive by last month). What questions should we ask?

Does that make sense? Please feel free to ask additional questions.
Thanks so much!

Katey · #2 10/19/09, 12:06 PM

My first question is, why was it gutted? Make sure there aren't any residual toxic issues like mold or a meth lab.

Also check to see if there are any zoning or HOA issues that would limit what you could do with your land.

Check for issues with well and/or septic.

Why doesn't the company want to continue with this renovation? Is it simply that they are having cash flow problems (doesn't sound like it, if they want to buy your house) or is there something else going on?

frogmammy · #3 10/19/09, 12:10 PM

The house was built in 1993...gutted already? Was there a fire? Toxic mold? Did someone come in and rip out all the wiring, plumbing and everything saleable?

Is there a driveway? Doesn't look like there is....

Mon

Cheribelle · #4 10/19/09, 12:17 PM

"we know we will have to take a loss on our existing home due to the economy and the very sharp decline of our town and particulary our neighborhood (we have been robbed and had our first drive by last month)."

Are you factoring in the "down" economy when you look at this?
What will it cost to finish?
Can you afford the monthly payment + the remodeling costs?
Has the original issue been dealt with?

Lonesomelov · #5 10/19/09, 12:20 PM

Driveway...remnants of a gravel one.

No signs of a fire but haven't asked.

The house is a foreclosure and there are TONS in this area...every one we have looked at was gutted or needed to be due to people trashing them. The electricity works because all the lights were on Thursday when we went to look at it.

The company always offers their homes at a discounted price before starting the "fixing up" then goes ahead with the remodel, then offers for sale again.

They currently have 35-45 homes for sale right now, but this is the only one on acreage in our price range.

No HOA's...that is the first question I always ask...the homes on either side are sitting on 5 or more acres. No housing developements planned. Was told hogs were okay.

Lonesomelov · #6 10/19/09, 12:28 PM

"we know we will have to take a loss on our existing home due to the economy and the very sharp decline of our town and particulary our neighborhood (we have been robbed and had our first drive by last month)."

Are you factoring in the "down" economy when you look at this?
What will it cost to finish?
Can you afford the monthly payment + the remodeling costs?
Has the original issue been dealt with?

No sure what the original issue was?

3 years ago our home was appraised at $116K. In the last year, both homes on each side of ours have sold for $50K...Our payoff is mid 80's. It seems that all the homes being sold in our existing neighborhood are being turned into section 8 and in the last year the number of times the police are called out is downright scary...so we are not in a great situation...I don't want to say that we are desperate but well we pretty much are...we can't rent our home out (we don't want to have to handle the headache) but it has a VA loan on it and we would have to refi under someone new just to use the VA again. VA won't allow for rental properties.

We did consider remodeling the new home but since my forte is gardening and animals (never painted in my life) and my husband is fixing to start 70 hr work weeks for the next two years, we would rather the company fix it up, which they said they would even customize for us.

As far as affording the monthly payments , yes we can even on both houses but would rather sell the existing one.

Again, thank you so much for your help!

mnn2501 · #7 10/19/09, 12:31 PM

Quote:

Originally Posted by Lonesomelov

The sellers are saying there is a really good chance they will buy our existing home and put the amount left over on the note for the new house.

So you'll be starting upside down and will have to remodel the house, can you reasonably afford that?

So many people stretch themselves so far that if anything at all happens they lose their house. If you can afford it, I would go for it just to get away from the driveby's robberies.

copperkid3 · #8 10/19/09, 12:41 PM

Need to elaborate a bit more.......you state that the place is totally gutted, but what exactly does that mean?
Holes in the sheetrock, electrical/plumbing ripped out? Studs missing? Are you planning on doing the repairs
yourself or having the company finish the renovations? Is it a place that is close to work/schools/groceries, etc.
and that you can envision yourself being in for the long haul? What are your short and long-term goals;
that have nothing to do with another house/mortgage? Once you have a handle on what you are looking for
and what you actually need, then you can more easily move on from there. Personally, with the market the way it is,
they'd be lucky to get even half of what they are asking.....maybe even less depending on the actual condition of the property.

There was a recent auction in a upscale Chicago neighborhood, that featured a 7 bedroom, 3 bath in a nice neighborhood
and it didn't even get the minimum bid of $7000.00!!!
Not $70,000 or $700,000.00, but just four figures.....no interest even from slum lords.

Lonesomelov · #9 10/19/09, 12:41 PM

So you'll be starting upside down and will have to remodel the house, can you reasonably afford that?

Sorry for not clarifying...we have pretty much already decided to let them do the remodel for us if we decide to buy it. I do not want my husband to have to deal with remodeling and working long hours. Neither one of us has alot of confidence in my abilities to remodel. LOL

Lonesomelov · #10 10/19/09, 12:51 PM

Quote:

Originally Posted by copperkid3

Need to elaborate a bit more.......you state that the place is totally gutted, but what exactly does that mean?
Holes in the sheetrock, electrical/plumbing ripped out? Studs missing? Are you planning on doing the repairs yourself or having the company finish the renovations?
Is it a place that is close to work/schools/groceries, etc. and that you can envision yourself being in for the long haul? What are your short and long-term goals; that have nothing to do with another house/mortgage?
Once you have a handle on what you are looking for and what you actually need, then you can more easily move on from there. Personally, with the market the way it is,
they'd be lucky to get even half of what they are asking.....maybe even less depending on the actual condition of the property. There was a recent auction in a Chicago, that featured a 7 bedroom, 3 bath in a nice neighborhood and it didn't even get the minimum bid of $7000.00!!! Not $70,000 or $700,000.00, but just four figures.....no interest even from slum lords.

Okay, the electrical works, I didn't test the plumbing...the floors are intact although rough (they were hardwood and looks like they drug heavy objects across it) as for the walls...you can see through to all the rooms...I think the studs are up but no sheet rock. Steps going to the basement are shaky. No counters, nothing in the kitchen. There are two brand new toilets in two of the bathrooms....
As far as location, it is perfect. They are moving my husbands plant further south and there are already several families looking to move closer to where it will be, so we are planning on some competition. We wanted at least 10 acres but we can do alot I am sure with six.
Harrisonville, MO has a walmart and all that good stuff and is still a pretty small town. This home meets all short term goals and some long term as well. We have just never heard of someone buying the current house and adding any leftover onto the new loan....don't want to get our hopes up if this is a scam....

mnn2501 · #11 10/19/09, 12:56 PM

The question still stands, can you reasonably afford it? if so, why not?

I'm upside down in my house due to the housing bubble , but I can afford it and I like the house, being upside down is not always the end of the world, by the time my house is paid off hopefully it'll be worth more. The problem comes when you are upside down and you can't make the payments and/or you have to get rid of the house..
Keep in mind this business is not going to give you top dollar for your current house - they are in business to make a profit, they do that by buying low and selling high.

marvella · #12 10/19/09, 01:06 PM

135 sounds awful steep for a house that is basically a foundation, roof and studs.

also make sure you get an answer about WHY the place is gutted. it makes no sense to gut one that is only 15 years old. it sounds like mold or meth. ask a neighbor??

mellba · #13 10/19/09, 02:23 PM

I agree with marvella; the price seems steep. Don't know about there, but around here people are still asking high prices for houses, but nobody is buying those houses because foreclosures are available at fire sale prices. Here is a link to a house and five acres that was for sale about 50 miles north of Atlanta. The asking price was $189,000. We weren't interested, but I love to look at houses, so one day when were down that way we drove by and looked in the windows. It was very nice. Don't know the selling price but is no longer for sale, so I guess someone bought it. http://www.neighborcity.com/property...32248-4101360/

Wisconsin Ann · #14 10/19/09, 02:42 PM

For those wondering about it being gutted...since it's a foreclosed on house, I'd STRONGLY suspect that the former owners simply took out all the wire, plumbing pipes, electrical...anything they could remove. It's quite common with many of the current foreclosed on homes. Sad...but true.

I would talk to a neighbor if you can find one, tho. See what went on there.

BUT...6 acres. it has water and electricity. It's in the area of your work. No restrictions from an HOA. So far, it all sounds good. AND there's a largish shed already up.

Unless you go into deep debt with it, or you find out that the company is a flimflam bunch...sure would be worth looking twice at. Get the bank to take a look at the finances..see what they say. Get your OWN buyer's agent, btw. It's their job to make sure you don't get taken to the cleaners.

Lyra · #15 10/19/09, 11:10 PM

There may be problems if it isn't city water or sewage. From what you described, the remodeling is going to take a lot of time and money. Also, you really need to check from the county courthouse about zoning and the history of the property.

Loriann1971 · #16 10/20/09, 04:30 PM

I know that you don't want to rent your home, but since you have lived in the house, VA doesn't care if you are renting it now. It isn't like you purchased it solely to rent. On two occasions we have owned houses that we had to rent when we PCS'd and VA didn't care at all.

Because you owe so little on the current house, depending on what you qualify for, VA might even let you use your certificate on the new home even though you still own the old one. If you give them a call they will let you know your options.

ET1 SS · #17 10/20/09, 07:42 PM

$135k is a lot of money even before the housing crash.

Homes around here start at $40k if they only have one acre of land.

Anything over $100k for a gutted house, is way too much in my mind.

willow_girl · #18 10/21/09, 07:36 AM

Go to your county recorder of deeds office. Find out when the home was last sold, and how much it sold for. This will be a great bargaining chip in any negotiations!

I'm not familiar with your local real estate market, obviously, but I'd guess the company you're dealing with bought it as a bank foreclosure for about 1/2 the asking price. Why do I suspect this?

Quote:

The sellers are saying there is a really good chance they will buy our existing home and put the amount left over on the note for the new house.

Suggests the sellers have a LOT of "wiggle room" because they paid so little for the house to begin with.

Now, you can give them a nice profit ... or you can figure out how they got their hands on that house, CHEAP, and do the same yourself, with a different house.

ChristyACB · #19 10/21/09, 07:53 AM

To me that doesn't sound bad at all.

Given the prices of good land in that size parcel with services already and already zoned for what you want AND no HOA; to me that is awesome pricing.

In fact, the fact that they left the house at all works to your favor because then you aren't getting a land mortgage but rather a home mortgage.

One of the big questions with rural homes is often do they have hidden termite damage or hidden mold damage. Well, you can sure tell with that place since it is all hanging right out there.

I would definitely try to find out WHY the place was gutted to that extent though. It could be that it was simply be that the renovation people were doing a complete overhaul after an animal hoarder left or it could be much worse like a widespread mold. I'd find out.

Seriously, they are charging you 50K for the remodel? Find out what level of remodel that is. Baseline, high quality or luxury. Because the pricing is obviously very different for each. THAT is where I'd dicker with them. Get more quality and lay out in detail what specifics will be done like what kind of counters (go for Corian) and all of that.

foxtrapper · #20 10/21/09, 09:19 AM

Wow, $135 for land with a foundation is mighty expensive. But, it also sounds like you're in a lather to get shut of where you are now. That makes you "motivated".

Myself, I'd pass on it. I don't see anything about it that would make my heart go pitter-patter. I will not lay out that kind of money based on "they said I could".