Market Conditions in Florida>Question Details

Gabriel Palo…, Real Estate Pro in Pompano Beach, FL

Should all foreclosed properties be sold as tear downs and sold for land value only?

Asked by Gabriel Palotas, Pompano Beach, FL Sun Jan 23, 2011

The risk may out weigh the value. "Sold AS IS" In most cases may create a greater expense for purchaser to fix than the value paid. It would accelerate sales and create jobs.

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No. Ignoring for the moment that it's environmentally unfriendly, the bulk of the problems associated with slow sales is with banks dragging their feet. The price of these foreclosed properties reflects the risk involved with buying a home with uncertain damage, and I think leveling these things will wipe out value a lot faster than it could build it.
1 vote Thank Flag Link Sun Jan 23, 2011
I must agree with Alma and Ron & Debbie. While some should be, there are still foreclosed properties in good condition. I recently saw one condo, that I could not believe it was in such an excellent condition ( you could tell, that bank hired contractors to have the carpet changed and walls painted), but the previous owner must have kept it immaculate.
I know it is seldom but there are some in a need of little TLC and of course, the ones that should be sold only for land value.
1 vote Thank Flag Link Sun Jan 23, 2011
Depends on the property and the cost to repair.
1 vote Thank Flag Link Sun Jan 23, 2011
Well some of them should be~ however, not all of them.

We have seen some foreclosure properties that just need a little cleaning and they are ready to go. Some are severaly damaged and have missing plumbing and appliances. Some of the banks who own the properties are going after the owners for stealing the banks property. After all...those items were in the mortgage and belong to the bank.

It is a case by case... house by house...decision

Debbie Albert, PA
Keller Williams of the Treasure Coast
Web Reference: http://www.ronanddebbie.net
1 vote Thank Flag Link Sun Jan 23, 2011
It would also add a demolition charge to the cost of the foreclosed house and adding $10-30k on top of the expense. If the new buyer wants to figure in the cost to tear down he can do that, if he wants to rebuild he can do that as well. The foreclosed homes here in my coastal vacation resort area are not in need of tearing down, but many do come down since the lot is always worth more than the house on it, but that my market and they are all different.
I can see where tearing down homes in the urban parts of a big city might be worth the effort since they are crime infested some times.
1 vote Thank Flag Link Sun Jan 23, 2011
The more I think about it the more convincing is my argument that they should. Properties of a certain age earn the distinction of being obsolescent .The cost of repairs of their components are beyond replacement cost.
In Florida where our homes are tested each year with a new and stronger hurricane this is a viable alternative for building better and safer homes.
Several states are examining their laws in implementing eminent domain and offer tax payers the benefit to replace more values in their communities that serves them in preserving and increasing their equity.
0 votes Thank Flag Link Sat Sep 24, 2011
I thank you for your generosity in answering a question that may be more regional and may have more implications for Florida, California or areas where compliance to weather conditions have a great effect on both safety and costs. As you know Florida is constantly living with the threat of hurricanes. Over the years I witnessed insurance as a negative component to our industry. With little participation from cities or state to regulate and change the way homes are built. Year to year we are in threat of insurance companies withholding coverage or end up with constantly rising cost for risk. In tis new century where we realtors can contribute from our experience we should demand the oversight of overcoming these problems with ideas that may demand drastic changes.
I am surprised to see Florida which is blessed with all the components to offer a boom to the industry is on the top of the list of the states having the greatest problem of foreclosed homes.
One of the reasons is the cost of up keep . Taxes, Insurance etc.
Looking ahead I see no change if we keep inventories of properties and selling them for values that do not compute with reality. I am discussing homes that are over 30 years old which are as outdated as a model T.
The opportunity to tear them down is now. Replace them with new homes that meet the challenge of weather, with all the components that are available to us in the market place. Innovation in housing has met a new challenge. The consumer has needs and this is a perfect opportunity to design and rebuild Florida.
Since insurance is a requirement why not build homes that meet those requirements and beyond to reduce cost and to make Florida lead in the construction industry with the of most advanced homes that technologies can offer. People are looking for intelligent homes both in size an design. Let's face it 75 % of our homes do not cut the mustard. Not so long ago the state of Texas was experiencing difficulties with owners unable to unload their homes . To save the high assessments of taxes and insurance they rather demolished their homes , than to continue their maintenance and expense. We realtors need to have a voice in practical change. Selling a home with all their faults using the caveat of buyer beware AS IS has run a gambit that keeps us from progress and creating respect in an industry where the consumer pays the price. Home inspectors have long time learned to stay away from giving a 20 year roof a pass when the cost of repairs is far beyond guaranteeing additional life to the component. The cost of replacements are indeed costly and in many cases puts the homeowner in greater debt than they can afford.
0 votes Thank Flag Link Thu Jan 27, 2011
Must be kind of a probing question, but some REO properties are in better conditoin than short-sales/traditional sales. Properties that are in such poor shape are generally priced for land value only (or land plus repairs plus return).
0 votes Thank Flag Link Wed Jan 26, 2011
Hello Gabriel,
I have seen many foreclosed properties that are still in very good condition in my territory so my response to you would be "no". However; I do agree that if the property is in poor condition then the buyer should give weight to the land value vs. cost of repairs.
I like your creative thinking about creating jobs though!
Thanks!

Laura Feghali
Prudential Connecticut Realty
0 votes Thank Flag Link Wed Jan 26, 2011
Hi Gabriel,

I have seen perfectly good property , NOT in forclosure, torn down in place of a new one. But you're right, some foreclosed property should be torn down. If you're buying "as is" you need to understand the value, which may be land alone and negotiate the cost of the tear down in the purchase price.

Ray Garcia
617-942-0447
rghomeowners@gmail.com
0 votes Thank Flag Link Wed Jan 26, 2011
Many foreclosures are move in qualify. I if you don't understand the mgrs. who represent the lenders they have approx. 5,000 or more properties they handle

AS IS - eliminates all the paperwork that the back and forth of repairs and etc.

I toured with clients sooooooooooooooooooooooooooooooooooooooooooo manyyyyyyyyyyyyyyyyyyyyy foreclosures home in quality WHY would they be tear down.

Requires city permits and etc.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Sun Jan 23, 2011
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