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I made a lot of profit during the boom. I saw the market start to flatten and sold as fast as possible. I am still amazed to this day that so many so-called experts didn't see it coming. I'm by no means an expert but I do know that what goes up must come down. Enjoy the ride and know when it's time to get off because they all end.
For the past 5 years I've been amazed that individuals, banks, flippers, and friends have been holding onto and paying taxes on developed properties for "when the market bounces back." It was a bubble. It's not coming back on the national scale for another 25-30 years. That's a lot of property tax. There will be location specific boom and bust cycles of course. I saw Deming NM boom and bust in the 1960s, Houston had a massive boom and bust in the 1970s. Las Vegas was the first to boom in the national boom and the first to fall. Florida was right behind Nevada and crashed second. Right now there's a boom in parts of North Dakota because they struck oil just before the rest of the nation was falling off the cliff.
I think it's odd that the financial geniuses are just now starting to figure it out.
1. Most of these houses have been striped of the copper pipes and wiring.
2. Since the copper pipes have been striped the basement probably got flooded and filled the house with mold.
3. Taxes, A lot of towns and city's are nuts and still value empty condemned shells at there former values.
4. Liability. If some homeless people or kids break in and get injured the bank could be liable
Also there is the problem of "comparables". A house sold for such a low price might bring down the value of other nearby homes- severely- when values are already "under water" for many. Even those whose homes are paid for, or who have a low balance, would be affected with the lowering of equity.
Destroy the excess supply which will bring the values of the homes of people that were responsible back up which will increase property taxes which will most likely bring in more money than what it cost to demolition them.
Nobody would be forced into the situation but I bet a lot of people would jump at the chance of being able to do so.
The banks wouldn't be responsible if the "new" homeowner would accept responsibility and know ahead of time what they are getting into.
The situation out there isn't getting any better for people.
This is a perfect opportunity for people to get out there and help their fellow man.
Ok, let's assume you do this in Detroit and sell 100 homes this way.
SEVERAL of the homes the people won't repair the wiring or won't clean the mold.
Then they will sue. They will claim they didn't understand the paperwork (seriously, you haven't heard all the "I didn't know my ARM mortgage would adjust" people??????). They will then sue, especially in a city like Detroit where they can pack the jury with other impoverished people and portray the EVILLLLLLLL BIG WALLSTREET BANK gave them a contaminated home because it would have cut into their profits if they'd fixed it up.
Seriously, sorry if I sound jaded....but I've seen this happen over and over and over in the real world. Hell, you should see how many people turn down flood insurance, sign a separate form indicating that they've been told about the flood insurance and have opted not to buy it.....and then SUE when they have a flood claim that is denied.
Why not sell the house for $7500 and write off the difference as "charity"?
There are issues to that, though. Selling a house for $7500 could drive down the prices of other houses in the neighborhood, and neighbors could sue the banks for the losses they then incur. A vacant lot is often more acceptable to the neighborhood.
I didn't post here to spar with you Mathguy. I posted just to give my thoughts. Right or wrong they were my thoughts on the matter.
I get it, you are a money guy..I am a people person and believe everyone needs a break in life one time or another.
I happen to volunteer so that I can help others who just need an extra hand and in one town alone here there are 340 homeless children. They as well as their families live in one room hotels...they are not all scum just people looking for their break. Not everyone is sue happy either and would be grateful for that opportunity we are talking about. Unfortunately we live in a world where not many care about their fellow man and are quick to criticise
To think how much money that states would be saving if some were given this opportunity.
Also there is the problem of "comparables". A house sold for such a low price might bring down the value of other nearby homes- severely- when values are already "under water" for many. Even those whose homes are paid for, or who have a low balance, would be affected with the lowering of equity.
Good point, give away cheap homes...further tanking the market...causing more people to walk away from their mortgages....
Not to mention all the "good will" you get from the people who are PO'd that you sold the house cheap and devalued their house.
Really, the only way I could see this working is if it were part of some sort of charity program separating the bank from the property and then having it rehabbed etc. Just a giant headache for the business where no good deed goes unpunished.
P.S. Major companies can't fart in most impoverished areas without getting sued for discrimination, redlining, fraud and whatnot....and sure can't get a fair trial. For example, 1/2 the class action lawsuits in the US are brought in MS.....and a number of companies just refuse to do business in some states. A lot of insurers for example don't do business in Louisiana.
I didn't post here to spar with you Mathguy. I posted just to give my thoughts. Right or wrong they were my thoughts on the matter.
I get it, you are a money guy..I am a people person and believe everyone needs a break in life one time or another.
I happen to volunteer so that I can help others who just need an extra hand and in one town alone here there are 340 homeless children. They as well as their families live in one room hotels...they are not all scum just people looking for their break. Not everyone is sue happy either and would be grateful for that opportunity we are talking about. Unfortunately we live in a world where not many care about their fellow man and are quick to criticise
To think how much money that states would be saving if some were given this opportunity.
First off, let me apologize if I was overly abrasive here and worse, overly pessimistic.
I really do wish more people were like you and I 100% agree about needing a break in life. There are some truly wonderful groups out there doing a lot of good.
In some ways it's just a lot harder for these companies to participate given the potential pitfalls and let's be honest, atmosphere of demonization of such institutions.
P.S. I've donated cars to similar charities in the past and I know it does a lot of good. Keep up the good work.
True but what I was thinking was that at 7500.00 it was an opportunity for someone to come and fix it up at their own expense to make it habitable with a chance to revitalize a neighborhood.
I didn't say my plan was well thought out...it was just a thought. Not all homeless people are bums ~ there are a lot of families that have become homeless because of the economy.
Some people just need a break.
A few years ago I was homeless. Some of the people who came to the shelter were what I would call "hard core" who had adopted the life style. But MOST were not. Some had jobs, but a part time job wouldn't get you a rented room then.
And I understand the thought. Maybe instead of evicting people, and letting the places just rot, they could offer this kind of deal. As sale of say 10k. But you must bring it up to code and it must be occupied within x amount of time. If its just damage done for revenge, then it's one thing. If you let a house sit it gets stripped and all you have is a gutted house frame.
Next to me was a small house which the people were working on when the city kicked them out for not having utilities. But while it wasn't up to code, he'd put in wiring and pipes and drywall and insulation. When the house was demosished, there wasn't even a puff of insulation, or a sign of wiring. The drywall and paneling had been stripped. There was the broken end of a pipe. Living next door and being noctural, you'd thing I'd have heard something but it was done very quietly.
The cops drove by about every two hours at night as apparently meth was being cooked, but didn't see anyone. The neighbors nailed all the doors and windows shut to stop that part.
This house was build in the early 30's and was structurally stronger than the ones they build now, but new home comstruction isnt like that now. Houses which sit empy with no maintaince go quickly. Banks are also using the trick of starting a forclosure, then holding it unfinished. Residents are still there. Utilites are on, maintaince being done, grass cut, city not sending notices to the bank. They wouldn't be doing this if it wasn't a good thing for them since when they decide to finish up, there is a saleable house still standing.
Banks turn to demolition of foreclosed properties to ease housing-market
The banks have even been footing the bill for the demolitions — as much as $7,500 a pop.
Four years into the housing crisis, the ongoing expense of upkeep and taxes, along with costly code violations and the price of marketing the properties, has saddled banks with a heavy burden. It often has become cheaper to knock down decaying homes no one wants.-
"The banks have even been footing the bill for the demolitions -- as much as $7,500 a pop. Four years into the housing crisis, the ongoing expense of upkeep and taxes, along with costly code violations and the price of marketing the properties, has saddled banks with a heavy burden. It often has become cheaper to knock down decaying homes no one wants."
They wouldn't have to do that if they put them back on the market and sold them for a reasonable price and stop trying to keep propping up the real estate market. Then it wouldn't even cost them the $7500k.
Bankers aren't the smartest knives in the stack. They are given a HUGE advantage over every other industry with the fractional reserve money lending system and yet they stall manage to shoot themselves in the foot and WE and up paying for their stupidity.
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