A couple of weeks ago I had looked at a house in Poinciana, that the owner had just gotten back, due to foreclosing on the previous owner. The previous owner was his son. It seems Dad, being the loving father that he is, bought this house for his son and daughter in-law, to help them out, since they had just gotten married and wanted a home of their own to live in. They only lived there a few months before they stopped making payments and after a year or so Dad had no recourse except to foreclose on them. He got the house back or at least what was left of it. This place was trashed.
The house was severely damaged from hurricane Charlie in 2004 and from what I can tell, the son received money from his insurance company but never did the repairs. It is my understanding they just continued to live in the house and then after a few months just moved out and took the insurance money with them. It had taken Dad almost 2 years to finally decide to go through the foreclosure process and reclaim the house. So when I finally saw it, it was quite the mess. Holes in the ceiling, black mold, gutted bathrooms and some kind of a partially completed addition on the back.
Anyway, my analysis was that the house, in good condition, would be worth from $179,000 to $189,000 but it needs about $40,000 to $50,000 worth of repairs. It basically needs to be gutted and rebuilt from the studs up. Dad wants to sell it "as is" since he is out of state and it just doesn't make sense to throw good money after bad. He had paid $159,000 for it about 4 years ago. I'm not 100% certain how he had paid for the house but believe he pulled the money from his home and paid cash for this property, then held a mortgage for his son, thereby giving the son title. Since the son only made a few payments, Dad told me he was out of pocket on the house to the tune of $220,000! Needless to say, Dad got screwed.
My suggestion, to him, was to list he house at $95,000, trying to sell in the mid to high 80s. Even though he would take a big hit, he really didn't have a choice. The house cannot be mortgaged, in the condition it is in and an investor, willing to pay cash, is going to want a good return on his investment. So I figured, an investor may buy it at $85,000, put $45,000 into it and sell at $189,000 for a net profit of $40,000 or so. Not to bad. If we got lucky. Of course Dad, would still take a major hit. But this is his reality. It is what it is.
Well I didn't get that listing. Another Realtor listed it at $150,000!! I couldn't believe it when I saw it hit the MLS system. $150,000!! The remarks section in the MLS state: Good opportunity for a 3 bedroom house below market value. Fixer upper. Needs a little TLC. Can you believe that? A house, that will need to be gutted is marketed, as needing a little TLC! I feel for Dad. He has been given false hope and is going to end up losing even more money. I am now curious to see how this turns out. I truly hope he is able to sell it for more than I had suggested. Maybe I was wrong. In this case, I hope I was. But I don't think I am. What say you?
I think Dad has been blinded by False Hope.