July 24, 2008
Know When To Walk Away: 5 Trouble Spots (Know When To Run)
So you found the perfect starter home or upgrade, and you’re ready to move. It looks like a responsible thing to do — you’re not a gambler.
But things just don’t go the way you were told they would.
Sometimes, jumping ship is the only realistic choice you have. The following are inspired by true stories; only the names have been changed….
- Bank Owned Properties. Say you’re in love with a house — or even just a deal. Then you go to home inspection, and they won’t let you turn the water on…or the electricity…or the furnace. To my mind, once the bank has shut a property down, and there’s no way of verifying that the pipes aren’t split, that the furnace doesn’t leak gas, or that the house won’t burn to the ground when the electric company throws the main breaker — that house is worth its market value less whatever it would cost to fix all of those things. If your deal doesn’t leave you with enough money to address major issues, it may not be a good idea at all — it may not be much of a deal. Shutting down utilities is no way to sell a house, and is the cause of so many houses becoming derelicts. If enough people walk away in this market, maybe banks will stop doing this.
- Properties in foreclosure. I’m still bitter. We offered on a house, the seller accepted, and then we waited for her bank to approve the offer. Meanwhile, they charged her a pile of fees and interest and other made-up money, and she owned less of the house than she did when she accepted. She couldn’t or wouldn’t cover the spread (what incentive did she really have at that point?), the bank didn’t seem to care, and we sat in limbo for weeks. We even haunted open houses where the seller’s agent was sure to be, and the poor guy (he hadn’t sold a house in 6 months at that point) was at a loss. We had no choice but to walk. The bank sold the house, eventually, for about $50,000 less than we offered. Like I said: bitter.
- FSBO — For Sale By Owner. There’s nothing wrong with FSBO sales, and lots of people really can’t afford to reduce price AND pay a seller’s agent (that’s one way Redfin is making a niche for itself). But be careful. Once you offer, who is going to hold the hand money? What guarantees do you have? Real Estate agents and brokers are licensed for a reason, and that licensing buys you insurance. To do an FSBO right, you need a lawyer. That’s probably as expensive as a seller’s agent. And…well…watch out for kooks. A lot of FSBO properties are owned by people who live in a different universe, and you may find these places are more trouble than they’re worth.
- Dishonest Sellers. We looked at a house my girlfriend absolutely loved. They disclosed asbestos shingles, but I’d bet a shiny nickel they didn’t disclose all of it. I looked behind a dresser in the bedroom and saw a giant water stain that couldn’t have been anything but a leaky roof. When we asked we were told it was caused by varnish drying on the dresser. One lie makes another more likely, right? Pull the other one. See you later.
- Nearby Construction. We looked at one place where the water view was going to be temporarily obstructed by a new public works project. We weighed the information we got from the city engineer’s office, and the studies of traffic patterns, and decided that it was risky. I’m 82.4% sure that the folks who bought it will reap the benefits of a super cute property blocks from the commuter rail in Salem. But I wasn’t certain that I wouldn’t end up living near a freeway. So, with regrets, we walked.
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