Hi guys, this is not for investment. I'm helping my parents buy a new home. This if for living in, no investment. Apologies if these are dumb questions. First time poster and new to the forum and real estate game!
Facts about this property:
- In a fantastic neighborhood in a diverse beach city in SoCal. The city itself is very mixed in terms of quality (think San Pedro, Long Beach, Seal Beach, Huntington Beach, Costa Mesa, etc). It is in a prestigious condo complex. Recent sales in that complex are $600-700k. Surrounding homes are about $900k - 1.2m. Close to country club, 1 block away from fantastic park. 7-8 scores on schools (out of 10).
- Redfin lists it as a regular sale. Zillow lists it as an REO.
- It has been listed for 120 days on Redfin. List price $575k. Redfin estimates value at $565. Zillow "foreclosure estimate" is $620k. Zillow's "home value" estimate is $680K.
- Lots of pictures of the property. It looks dirty, dingy, with dark old shaggy carpets, ugly wallpaper, and old kitchen bathroom.
- According to Zillow, this home was in a foreclosure auction in mid 2016. Bank assumed the debt for $580k. Four months ago the bank listed this property for sale.
I'm scared of pursuing this because:
- I don't mind remodeling or cleaning the place up. But I'm afraid I won't be able to catch some hidden catastrophe like molds, termites or some other thing I don't understand. I assume these REO is sold "as in" with no warranties.
- This listing has been on for a while. Surely other more savvy investors have looked at it and passed. Why did they pass?
- I'm afraid maybe other people know there's a housing crash coming and therefore not excited about this property.
My "fantasy" scenario is that maybe people passed on this property because the pictures looked so bad. Everything looks old and the pictures looked blurry and badly-lit. It almost indicates whoever is in charge of selling doesn't give a fudge.
This is a home my parents would grow old in. So I really want to get this right!
Given my lack of experience, my questions are:
- What are some problems I should look for, given the surprising low price of this property? What are problems that can be detected and what are problems that can never 100% be caught regardless of my due diligence?
- What is best way to do due diligence here?
- If I do want to go forward what do I do? I have a real estate agent I like and TRUST, but he admits he doesn't do many foreclosures. Should I stick with the guy I trust, or get a foreclosure specialist?
Also of course any other advice would be greatly apprecaited!
why don't you take a look at it with a realtor and find out 1- if its even available 2- the condition 3- how it compares to other units 4- if your parents would even like the complex
You are saying its $100M below value but, if you need to spend $100M to bring it up to par with the comparable sales then...you are probably seeing it being sold at current value, not future as repaired value. While you should be suspicious, looking at it and assessing it with your own eyes will kind of negate the necessity to do all of this what if stuff.
it's not a foreclosure, it's an open market sale that happens to be bank owned, or OREO so, you treat it like any other sale with any other agent. It has a couple of extra addendum but beyond that, take your agent and contractor and have a field day.
Hi @David Stuart , What did you do?
If you havent done anything, I'd suggest getting an agent to walk through with you.
If the amount of work doesnt frighten you off, get it under contract with long inspection period. Instead of getting a typical home inspector, get a good general contractor to do the inspections and get real estimates of the costs to repair. If they come in below the $100K, you may have found a good deal.
You also have to ask yourself if youre willing to go through the months of managing a general contractor, and sub contractors, to get this fixed up the way your parents will want it.
After you get all the details, you can make a decision. Its intimidating to try to guess looking at it from a distance.
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