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I'm dealing with the reselling dirt cheap scenario, here. They have it listed so cheap that people are afraid of it. It nixed 2 other home sales on the street earlier this year.
I know what you mean...there's a home in my community that has been on the market for over a year and a half. It looks really nice, but no one is buying it. And...asking price is really low...low $130s...when homes in my area all mostly high $100s. But our community is still building new homes..so there's heavy competition.
Location: The place where the road & the sky collide
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Quote:
Originally Posted by Samana
I know what you mean...there's a home in my community that has been on the market for over a year and a half. It looks really nice, but no one is buying it. And...asking price is really low...low $130s...when homes in my area all mostly high $100s. But our community is still building new homes..so there's heavy competition.
The house in my neighborhood was rehabbed in 2008. I know the person who did it. It was put on the market for $100K. People were looking & then the real estate market collapsed. The price was dropped to $70K & sold quickly. That person walked away & it went into foreclosure. It was bought & put on the market for $34K & when no one looked (other comps were listed at $55 -65 K & selling) they dropped it to $31,9K. Now people want nothing to do with it.
I'm dealing with the exact same thing with a house on my street. From what I understand, it does effect the worth of the other houses in the neighborhood.
Quote:
Originally Posted by Samana
I got the information from my county's website. It says Sales Price: $20,000. Sales Date: Sept. 24, 2010. Total Market Value: $176,000. I think those numbers are crazy too.
This is another great example of how ridiculously artificial and arbitrary the real estate market is.
Another example-a friend finished his home on Lake Norman about a year ago. Just before he started construction, the proposed home and property were estimated to be worth about $1.1 million. He hired a contractor to oversee the build on a cost plus basis, bought most of the materials at or below wholesale, and he and I and several others did a bunch of work on the house. It took almost 18 months to finish. When done, his construction loan was higher than the value of the home. I don't know all the numbers, but I know my buddy knows what he's doing. For instance, the roofing and flooring were bought from a builder who was going out of business, for half of what he paid for it. My buddy bought over $40K of high end appliances for $10K at a liquidation auction.
His mortgage ended up being about $750K, because that was the max banks would loan on the home based on it's final value.
How can new a home be worth less than it cost to build, when most of the house was bought at or below wholesale? Because the market is artificial, that's why.
An interesting note on NC foreclosure law: It is a non-judicial state that leaves people open to deficiency judgements, HOWEVER, original purchase mortgages are exempt from this. My understanding of this is that as long as the mortgage on the property is the one that was originally used to purchase the home the mortgage is non recourse to other assets. If the person ever refinanced or there is a 2nd mortgage on the property then there would be recourse to other assets. If my understanding is incorrect please let me know
An interesting note on NC foreclosure law: It is a non-judicial state that leaves people open to deficiency judgements, HOWEVER, original purchase mortgages are exempt from this. My understanding of this is that as long as the mortgage on the property is the one that was originally used to purchase the home the mortgage is non recourse to other assets. If the person ever refinanced or there is a 2nd mortgage on the property then there would be recourse to other assets. If my understanding is incorrect please let me know
This is the first I've ever heard of this - I can't confirm it's not true so hoping someone else can.
My next door neighbor abandoned his home on January 1st this year. They left the home to foreclose. Last month the home went up for auction and I saw that it was sold for $20k to a mortgage company. The home is worth way more than that...and I think they still owed about $180k when they left it. My question is...after getting $20k, does their bank go after them for the remaining $160K they owe? Or do they just call it even? Also, does his home being sold for such a low amount affect my home's worth?
Well normally what happens is the finance company holding the note will show up at the foreclosure auction to bid on the property. They will bid up to the amount that is owed on the property. In NC, the proceeds from a foreclosure, go first to satisfy any taxes, next to the primary mortgage holder, then to satisfy any additional liens. If, by some chance, there is any money left over, the owner gets it.
So the mortgage company will always go and bid at a foreclosure auction. This way they protect themselves. If no one else is there bidding then it really doesn't matter what price they pay. The money comes back to them as does the property. As I noted above, they won't over bid because any money bid that is higher than the mortgage and taxes will go back to the owner. They certainly won't do that.
Does it affect your property value? Maybe. It's never good for a foreclosure to take place because that means the houses are not selling for what is owed on them.
45‑21.38 is what I thought covered that, but there are A LOT of other questions that would need to be asked and I dont have relevant precedents to cite to support either way
BUT if the buyer sells the property the deficiency is between what he got and the debt. Either way the buyer is a parasite preying on the misfortune of others.
I do know that before they 'abandoned' their home, they had it on the market for about 8 months and not 1 person took a look at it. Then again, they listing price was something like $220K. They were trying to make a huge profit and it wasn't working out for them. We still have new homes being built in our community and they all range anywhere from $150s - $170s. Why would someone pay you $50k more for your house when they can get a brand new one, with their choices of upgrades for a lot less. They eventually lowered the price, but by the time they lowered it, they were already getting in a hole. I suggested to them to find a property management company, and at least rent it out until they get a buyer. Even though I am not crazy about having renters next to me, but I think that would've been a more responsible thing to do.
If you DM me the property address (or tax ID from the website) I can do a little digging into the note. The auctions done for most mortgage companies are done by substitution trustees that the bank chooses. I have NEVER seen an opening bid that was lower than the balance on the note. Usually this is because the bank does not want to lose the auction. The want to win it themselves (in most cases) so they can unload it back to a guarantee company like HUD. They know HUD is going to bail them out of the situation anyway so they don't always want to deal with someone off the street especially if that someone isn't represented by a broker.
They want to win the auction so they can quickly get cash out of a HUD or other government agency if applicable. Send me a DM if you want me to give you the details there if you can provide the tax ID.
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