such low price houses in Ohio? scam or what? (Cleveland: for sale, real estate)

[pearlish]

So I have been visiting Craigslist and other real estate websites lately, and I feel so overwhelmed by low price on some of them. (Like 25k for 3 bedroom house?!)

My parents think it's some kind of scam or something, but still what do you think could be the catch? I agree some of these houses seem bad in condition, but some of these seem very normal and attractive.

I do not know how real estate works in U.S., but do you think a person is likely to sell his/her house at 25k when my father thinks a 3 bedroom house costs around 100k?

[gobucks86]

Our economy up here has tanked badly. I don't know why some houses may be that cheap exactly, but I do know that some people desperately want to leave this state and the only thing stopping them is not being able to sell their house. Some houses have been on the market for years and the asking prices are going down just so people can sell their house.

But I'm sure someone has a more technical answer than mine.

[Robhu]

Some are foreclosed houses that people bought from the banks, fix them up a little bit and then put them up for sale.
There was a thing on the Cleveland news a couple months ago where some people buy these houses and then sell them at about what they have in them but they do seller financing at a higher interest rate than the banks. I guess it's a land contract type sale. They get their profits from the higher interest rates rather than from the price of the house over time.
If the buyer don't make the payments the seller evicts and resells the house again at the same purchase price and the same interest rate. He loses nothing except maybe for some repairs. It's kind of like a rent to own deal with interest. The seller didn't loan a mortgage. If the buyer defaults, the buyer loses all money paid and the seller still has the house to sell again at the original price. Sort of like a buy here, pay here thing between buyer and seller or lose it.
It isn't illegal and the interest rates weren't out of this world. The sellers are trying to make profit from a little higher interest rate rather from selling the houses at big profit purchase prices.
Some buyers were interviewed and said that was the only way they could buy a house.
Example; A person buys a foreclosed house at $40,000.00 that may actualy be worth 80 or 90k but the bank sold it for what was owed on it just to get their money and unload it. He sells it for 45k and charges 10 or 12% interest rate instead of 5 or 6% bank interest rate. So the buyer thinks they may get a home for 45k that might be worth twice as much in a few years if the housing market rebounds.
All I know about this is what was said on the news.
A nice older house close to me sold for 45k recently at a foreclosure auction and I live in a good neighborhood with a low crime rate and well maintained homes and properties. I live in a house that I bought in 1989 for $47,200.00. It's appraised now at 115k.
Most of the homes in my area are older ones that have been updated through the years and the appraisal on mine is typical for the area. My house was built in 1914. It is 2 1/2 stories, 3 bedrooms, one and 1/2 baths, a finished attic, a detached 2 car garage on 2 and 1/3 city lots. A big yard for in town.
Each particular house for sale should be checked out as far as neighborhood, circumstances for the sale, etc.
There are some good deals and some shyster deals.
Anyone buying should do some research on any particular property and the seller.
Banks aren't real estate agents. They just make loans. If a person buys a 100k home and pays the mortgage down to 30k and then loses their job and can't make the payments the banks just wants the remaining 30k. If someone buys the house for the remaining 30k the bank gets it's money and the person who bought out the remaining mortgage owed has a pretty nice house to resell at a cheaper price and still make money.
There was one guy on this news cast that had bought over 50 foreclosed homes at the remaining mortgage price from banks or auctions in Ohio and was reselling them.
Of course he had to have the recources to do that. He had some pretty nice properties for low purchase prices but charged a little more interest to make profit.

[South Range Family]

Location, location, location. The cheaper a house goes, the less desirable of a location it is in. A 25k house is most likely within city limits. It could be any city, but they are all the same. The cheaper it gets, the more dangerous part of the city it is in.

You should see the beautiful three story house with fancy woodwork, and stained glass windows that my brother owns. The house on one side of him is empty. The house on the other side just sold for 5k. They are both future crack houses. I tell him that it's time to move, but he owes more than it is worth.

He has only been robbed when he isn't home. I'm sure that when they kick in his door while he is watching TV, he will finally be ready to move. That is, if he survives.

[CortlandGirl79]

^There are also cheap houses in nice areas, but they need total renovations, have major damage and/or mold problems. There is a ranch house in Cortland for sale for in the $20s (most homes are above $150k), to me it should be torn down. I'm sure the land is worth more than the house. You can buy a lot around here for 20k!

[YaFace]

Yeah. Last May was probably the ultimate bottom for Ohio houses, but you can still get in now. In two years people are not going to believe me when I tell them how much I paid for my house.

[Tenzo]

Doesn't sound out of the question.
I've seen three story homes on lots go for $60,000.
And they didnt need to be torn down.

[CortlandGirl79]

Originally Posted by CortlandGirl79

^There are also cheap houses in nice areas, but they need total renovations, have major damage and/or mold problems. There is a ranch house in Cortland for sale for in the $20s (most homes are above $150k), to me it should be torn down. I'm sure the land is worth more than the house. You can buy a lot around here for 20k!

I meant you can't get a lot around here for 20k.

[pearlish]

so how do I check if a neighborhood is safe? Driving by the place over and over may not be a feasible option for me.

[JR_C]

Originally Posted by pearlish

so how do I check if a neighborhood is safe? Driving by the place over and over may not be a feasible option for me.

That's what we're here for! Although, people on this site are generally more afraid of the inner-city. So, if you're looking at houses within the city limits of one of Ohio's cities, you might also want to ask about the neighborhood on UrbanOhio.com.