What’s in a Foreclosed Home?

October 20, 2008 at 3:46 pm | Posted in Uncategorized | Leave a comment
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That’s a weird question. i’d like to think that a Foreclosed home has the same stuff as a non-foreclosed home. You know, doors, windows, toilets, carpeting, kitchen, lights. Well in most of the ones I’ve appraised, everything’s there. And everything is in decent shape- no different than any other house that’s sold. But we live in an age with a lot of foreclosed homes that are so because of the screw financial situation we’re experiencing. And with that comes a lot of anger. And with anger has come some very vengeful and destructive behavior that’s downright shameful.

Over the past 5 years or so, the housing market has been booming- particularly in places like Phoenix- where I appraise. The ridiculous rise in home prices wa fueled by cheap money, relatively inexpensive homes and the mindset that homes were ATMs. Couple those factors with the phenomenon of multiple investment homes for oftentimes out of state owners, and the “demand” was more a demand for investments- not the need for
owner occupied homes.As an appraiser, I can do a little research and have done so for an example. I live in a master planned community of about 1700 homes- surrounding a golf course, with a community pool, clubhouse, parks, school, etc. On my street alone of 34 homes- built in 2005, we have “investment” homes which are owned by people who don’t live there, and “owner” homes which are owned by the occupants.  I can break it down to the following:
  • 9 bought as owner occupied and still owned and occupied by those original owners
  • 2 investment homes subsequently sold to owners who still live there
  • 13 investment homes that are still investment homes
  • 1 investment home that was sold to an owner that was then foreclosed and was bought by another investor
  • 1 investor home that was sold to an owner that was then foreclosed and was bought by another owner
  • 4 investment homes subsequently sold to other investors.
  • 1 investment home sold to an owner which is currently in foreclosure
  • 3 that I categorize as unknown since tax records show that the mailing address is the same as the physical address.
I won’t even go into analysis of their mortgage amounts compared to market values. It’s quite depressing. So the point of my breakdown hopefully demonstrates exactly what the situation is in many neighborhoods- not just mine.But getting back to the topic at hand, as you can see, there are a lot of investment homes out there and a majority of those homes are used as rental properties. Now I don’t want to knock on renters as a group- after all, we’ve had a few great renter neighbors who were good people, took care of their rental and cleaned up when they left so they could get their security deposit back. But there are a LOT of renters who really don’t care that much.When renters pay their rent on time that’s great for the owner, but what happens when the rental income doesn’t cover the mortgage? And what if the mortgage payment is increasing each month because they got an adjustable mortgage- and the rent amount is the same? Well, you get an owner who stops making his mortgage payments, and unbeknownst to the renter, the house goes into foreclosure and then all of a sudden the tenant gets evicted because the bank now owns the home- the tenant who has been faithfully paying his rent each month. Sucks for him doesn’t it?

Well some of these upset tenants, and sometimes owner occupied residents all of a sudden lose their home, then it becomes a scene from The Jerk, where Steve Martin leaves his mansion with an armful of stuff. And how they leave varies depending on the type of person we’re talking about.

Neglect: The obvious is letting things go. Pools evaporate (after they turn green), weeds grow, black widows breed. Typically nothing intentional here. One extreme version is when a leak occurs and nobody knows about it til it’s too late. I had one of those recently where a toilet leak at the supply line seeped out into the bedroom and then you get what you see below- a virtual forest of mold:

Rapture: These are the sad ones. Toys in the backyard, clothes in the closet, food in the pantry, DVDs on the floor, pictures on the wall. Incidentally, I’ve always wondered what happens to all this stuff that is left behind. I recently did a house where some guys were putting in a pool pump and it was a company who does foreclosure home cleanup. According to them, they take that stuff to the Salvation Army as directed by the bank. So actually that’s reassuring. I’ve always wondered if these companies simply take whatever they want. (but I wouldn’t be surprised if some of that happens)

Messy: Everyone has different definitions of cleanliness. I’ve been in plenty of non-foreclosure homes that feel, look and smell like model homes. And I’ve been in plenty where I wished that I had a gas mask and some booties. so this is by no means a foreclosure phenomenom. But the most prominent thing I see is carpet that is covered with pet stains- and sometimes ones with actual pet droppings still there. You see that in a house, and you know you’ll see plenty on the outside as well. How about a shopping bag full of feces? Not sure what happened there “we’ll collect it, but we won’t put it in the trash can”

Removal: You buy a house, you add some stuff to it like ceiling fans. Well the foreclosure consensus is that those are yours to take. Technically those sort of thing are fixtures once attached just like over the range microwaves and garage door openers. But once they are gone then who’s to say they weren’t there in the first place? After all, garage door openers aren’t standard on many new homes. About 90% of the foreclosed homes I do have the exposed wires from where the ceiling fans were.

Destruction: Ahh, the good stuff. Some of it could be accidental, some of it could be intentional and in most cases I simply assume that it was due to a rushed exodus from the premises. We’re talking drywall holes, maybe a broken window or a stair rail that’s not mounted anymore. I’ll let you be the judge on the cause of these things.

But then there’s the obvious intentional destruction, and destruction doesn’t just mean damage. As you’ll see in the following photos, I’m talking about water heater taken, air conditioning system taken, kitchen cabinets, faucets and countertops taken. I’ve even seen examples of homes with graffitti inside the house.

So yes, these situations happen, and they happen in nice looking houses, in nice neighborhoods. It’s a shame.

Here’s the next question, which I’ll save for another article: Where does this stuff go?

Visit our website at www.advantageappraisalsllc.com, and if that doesn’t roll off the tongue, just try www.appraiserdude.com. Give me a call at 480-544-1217 if you have any questions. I look forward to working with you.

Sincerely,

George

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