Sarasota realtor Mike Payne’s buyers discover the trip wires associated with rushing head first into foreclosed “bargains.”
The price seemed “killer” or so my buyer Tess thought.
Tess believed a foreclosed property was a “steal of a deal,” just like many others who jump on the bargain bandwagon.
She wanted to rush into an offer with no contingencies on a foreclosed property (aka “REO” or real estate owned).
When it “sounds” too good to be true, it _________________________!
Click Read More below now for the shocking turnaround about a foreclosed property Tess believed to be a killer bargain!
TOO GOOD TO BE TRUE
I’m no expert in foundation cracks, but a quick glance showed me one helluva strange crack circling the back of the house.
Of course, I warned Tess, advising her to seek professional opinion.
Tess wasn’t concerned. She wanted to move ahead with a CLEAN (that is, offer with no inspection or financing contingencies).
WTH??????
As her realtor, I could have shrugged my shoulders and shut my mouth. I am just the Realtor.
In good conscience, I HAD to insist she s-l-o-w down and think about this house. Believe me when I say, I normally don’t sabotage my efforts to get paid for my hard work. However, I was really concerned. I don’t pretend to be a structural engineer but I do believe YOU too would have agreed there was something wrong (or not right) about that crack winding around the entire back wing of the house.
The odd-shaped lot sloped down from the main road with the house in the basin. To the east was a newer addition to a major road with what appeared to be several 14″ drains to relieve water from the major road.
My untrained eye couldn’t make sense of this:
- The house SAT at the bottom of a basin.
- Spill drains APPEARED to shoot water into the basin from a major road.
- Worse, all surrounding properties are on HIGHER ground than subject property.
Hmm, help me here. What’s wrong with this picture?
This was the 5th property on which Tess missed out. She somehow thought we were back in during the frenetic boom years…and she felt she had to move quickly and decisively.
Good sense
replaces haste
Finally, she chose to sleep on my recommendation to have (at least) a home inspector look at it.
As Fate would have it, that night (when it hadn’t rained in weeks) it rained…and boy did it rain.
Guess what, the property was a run-off. You would’ve thought it a retention pond. Water penetrated the garage, leaving an inch of YUCK!
Undeterred, Tess insisted I submit her offer with contingencies (whew!). Quickly, the bank accepted her offer. BIG surprise.
History of the property showed a LONG time on the market.
Good neighbors
spill the beans
Further, I went to all neighbors willing to talk to me about the house. At last, a neighbor recalled issues faced by a previous owner. Turns out, a previous owner had won a lawsuit against the Department of Transportation…something about pounding pilings in so hard the structural integrity of THIS house was affected.
Oh, it gets better (or worse). The DOT, according to the neighbor, set the spill drains to FLOOD the property (err, retention pond).
Thinking she could get an even better bargain, Tess moved forward with me (foolishly) investing more time. Tess and I met the inspector who insisted she hire a structural engineer.
Result: Structural engineer quoted $8o THOUSAND DOLLARS!!!!!!!!!! …on a property listed for $150,000.
The bank rejected Tess’ offer. Tess gave up her search in frustration and moved to North Carolina. I walked away a hero (to Tess) but with NO compensation for my months of professional services…..
Moral of the story: Foreclosed (bank-owned) properties might look like steals from the outside or inside or both. BUT, you MUST keep your head and perform due diligence. There are many good deals and dream homes out there. Don’t fall in love with a “house.” It’s just a house until you make it a home. Then it becomes your dream home.
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