Fixing Up A Foreclosure
When You Unlock the Front Door of a Foreclosure
Published on January 31, 2012 by guest author: Adam Rust

When you unlock the front door of a foreclosure, you never know what you are going to see.

I know that my hyperactive son wants to run in headfirst, but I hold him back because sometimes things are not right. The door turns out to be ajar – never a good sign – and so it turns out that knowing the key code does not matter.

This home is nice. Nice because there is no smell. Nice because nothing is broken. Nice because I think I would live here myself. This home has been empty for at least four months. No one has broken into it.

I know what is not nice. Not nice is when people take a sledgehammer to a wall. Not nice is when carpets are riddled with awful stains. Not nice isn’t just an old appliance. Not nice is when the dishwasher is missing and so are the toilets. Last month, I went to a not nice house where homeless people had been living. The floor was covered with needles, human excrement, and diapers. The graffiti on the kitchen cabinets offered a warning: “Don’t cook here, fool.”

I have few requirements when it comes to the design of a house. I am not interested in owning any home where the driveway is in the front. I will not buy a home with Masonite siding. The more the home needs to be fixed the less I want to buy it. Replacing the windows in a $50,000 home still costs $5,000.

This home has an open layout. There is a staircase across from the front door that leads upstairs. You enter to the right of the house. The formal sitting room has a white built-in bookshelf and chair rails. There is a kitchen and family room just beyond. I have lost track of my children. I can hear Rosie. “See if you can find me!” she saysThe yellow-and-green plaid wallpaper will need to be replaced. This home was built in the 90s. No one has liked wall paper for twenty years. The previous owners were named Ortiz. Maybe they were Latinos of Scottish descent.

I hunt for foreclosed properties. I spent many afternoons with my granddad looking at houses when I was a kid. He owned a company that sold windows and doors to builders. He loved houses. I hated them. To me, we were touring through endless sprawl. I remember sitting in the back seat of his Cadillac while he went on and on about the window frames in new developments.

“This is how people make a lot of money,” my Dad said to me during one of those trips.

“This is why people drive all of the time,” I said.

I am the last person in the chain of events in the process of foreclosure. Maybe you are one of those people, and I know there are a lot of them, who might have an issue with people like me. I admit that, just like Mitt Romney, I am out to make some money. If I do it right, one of these homes will pay for two years of college for one of my children. But it is a foregone conclusion that someone is going to buy these homes. The National Association of Realtors says that one in five home sales is a previously foreclosed home. Investors are buying most of those homes. That is the broader story and some iteration of it is published in the press every day. What you won’t hear as often is how each transaction actually takes place.

The first thing to understand is that all of the rules are different. Buying a home from the U.S. Department of Housing and Urban Development is not easy. Once the home goes on sale, investors rush to get the properties because they are priced so low. This home sold for $160,000 five years ago and the County appraised it at $196,000 the following year. Housing prices never dropped in our town because housing prices never really soared here in the first place. HUD is asking for
$104,000. Even with that, I am inclined to make a low offer. My broker is skeptical.

“If you offer $85,000, you are not going to get it,” says my broker, Reneta. “There are too many people out there calling for it, and HUD has already dropped the price. They sell the homes as fast as they get them.”

“Let’s offer $93,600.” That is a low offer, but it is ten percent off the asking price. It helps to have some kind of logic for an offer. “Ten percent is a fairly standard discount, right?”

She submits the offer that morning. The home will be open to other bids until midnight. By tomorrow, HUD will give the home to the highest bidder.

To Be Continued ...

Adam Rust lives is a father and husband who lives in Durham, N.C.

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