What goes through someone's head who:
A) Lives outside this Metro Area and therefore can't manage contractors
B) Knows next to nothing about what is needed to adequately rehab a home
C) Thinks it's a good idea to put in just enough rehab for the home to sell to an owner occupant but not enough to justify a price comparable to traditional sales in the neighborhood
I've seen some bad rehabs from local fix and flip investors but their lack of skill drives them out of the market since their product is bad. Unfortunately, the worst rehabs I've seen have been the ones owned by a bank. And they won't be driven out of the rehab business.
Case in point: I went through a home today with an investor. Priced at $99K and I knew before I got there that bank owned in that neighborhood with that amount of square footage sold for $75K or so but I showed it thinking we could offer $30K less and see what happens.
When I got there I saw the bank had put in a new toilet in the 1/2 bath, painted the unfinished basement, and removed the 3/4 bath in the basement.
"It's cleaner" I said to the listing agent when I called, "but is that supposed to justify being priced 30% too high?" He sighed and agreed. "Not much we can do about it." he replied.
So what do banks think they're doing?
They won't get a return on their investment.
They won't have a positive impact on local home values.
As a matter of fact, if the home is properly rehabbed, it becomes one of the highest comps in the area. Selling a bank "rehab" maintains lower market values since no one will be turning around to sell it in three months.
Wake up banks! Stick to your strengths. The marketplace has come up with a solution and you're standing in the way. Please step aside.
Comments (4)Subscribe to CommentsComment