My mother always told me, if something looks to good to be true, it probably is. This saying especially applies to bank owned properties. I can't even begin to count how many time's I have gotten a call or an email from one of my clients that have seen a property online and are demanding to know why I didn't send it to them. " This house has four bedrooms, three baths, and is on a 10,000 square foot lot. Everything else we have been looking at half this size". Well, I probably didn't send it to you for a reason.
Many of the bank owned homes on the market are not in the best of shape. Odds are, if a person can't afford their mortgage, they probably couldn't afford the upkeep on the home itself. Believe me when I tell you, I have seen some really hair raising properties. I have opened the door on a home and had to run and throw up because of the smell emanating from the depths of the kitchen. The reason, the owner never came back and when the power was shut off, their was a refrigerator full of meat, milk, eggs, cheese, etc. After it sat in the hot, closed home for three months, it wasn't pretty.
A good for instance happened to me yesterday. A new bank owned listing appeared on our MLS, at a very attractive price. The home looked great in the photos and is large and in a nice neighborhood. It seemed perfect for a family I have been working with lately. As soon as I saw it come up, I ran out to preview it so I could call my clients about it. As I pulled up, the first thing I noticed was the home had a shake roof. Bummer. Shake roofs are soon to be a thing of the past in our town. Due to fire hazards, they have already become a violation in parts of our valley. It is only a matter of time before any home with a shake roof becomes uninsurable. Due to the size of the home, I estimated it would cost at least $10,000 to replace it. Not to mention the hassle and inconvenience.
As I stepped onto the front porch, the wood gave slightly under my feet. Some lazy person had used T-111 siding instead of two by fours when they redid the deck. A definite safety hazard. Probably another couple of thousand to redo the porch. I hadn't even opened the door and was already looking at over 10k in repairs. When I opened the door, my nostrils were immediately assailed by a horrible stench. It smelled like a whole family had sat in the house with the windows closed and smoked cigarettes from morning till night for twenty years. The whole house was permiatted with the odor. Now we are talking about new carpets, drapes, and maybe even drywall.
Speaking of the carpet, it was in horrible shape. Stained and torn, and encrusted with dirt. Probably at least $5,000 for carpet. The walls were really dirty and stained from the smoking that had gone on. So, the whole inside needed to be painted. A couple of thousand at least.
Then, I noticed all the windows were circa 1970's and single paned. A big no no in Big Bear. The whole house would need new windows and doors. The repair bill was really racking up. This house was changing from a steal to a nightmare right before my eye's.
The next thing I looked at was the kitchen and the bathrooms. As I suspected, both were hopelessly outdated and in terrible shape. The appliances were around 30 years old and looked it. This house was going to need a whole new kitchen and two new bathrooms. I didn't even want to try to estimate the cost to get both of those areas up to snuff.
Unless the buyer is a contractor with the tools, know how, and time to get everything done, this house is way more trouble than it is worth. Plus, it is very difficult these days to flip houses for a profit. I'm not saying it can't be done, it is just a great deal harder than it was a few years ago and should really only be undertaken by someone who knows what they are doing. For my clients, this home would be an unending horrorshow. A pit that they just tossed money into at an incredible rate. Most folks tell me " Oh, we can fix it up". But, most folks don't really understand what that entails. It can be a very expensive, time consuming enterprise if you don't have experience doing it. Nothing to mention with contractors who are unreliable and don't show up, etc.
I guess the bottom line is you need to be working with a knowledgeable Realtor who understands the market and knows the inventory back to front. You don't want a housewife that sells real estate on the weekend, doesn't know what similar properties are selling for, and knows every property on the market, so she can not waste time showing you homes that should be burned down. Also, make sure that you are dealing with a full time professional. Somebody who does this as a second job can never do the kind of job a full time , dedicated professional can. There are a little over 300 Realtors on the Big Bear Board. I would categorize around 35% of those as full time professionals. Don't be afraid to ask questions and make sure you are getting a level of service that you deserve.