Tips for Evaluating the Lender Owned Property
So often when I’m out with buyers, we are looking at a number of homes and they tend to run together. Some are short sales, some are “normal” where there is a traditional seller and some are bank owned properties. All are in various states of repair and we tend to look quickly at the details as we concentrate on the floor plan, the kitchen area, the views, amount of storage, etc.
Sometimes, we miss a few things. Or, underestimate what it might take to make it work.
As a recent buyer myself, I had narrowed my list of possible homes down to a few. I had a tough decision to make. The short list included one property that was being sold by family members after the original owner had passed away – more of a traditional sale. Another was bank owned.
The traditional sale was smaller, but very well appointed. Although somewhat dated with brass fixtures and those bleached kitchen cabinets that give off a pink cast, it was built in 1996 and was very well maintained. The expensive items had been updated with granite in the kitchen and the baths. The flooring was acceptable but nothing to write home about.
The bank owned home was built in 1986 and was being billed as a complete remodel. It was WOW from the moment the Porsche [by now you know I'm kidding] pulled up to the curb. Offered at about the same price as the traditional sale home, it had great curb appeal with its adobe brick walls and tiled roof. It was spectacular on the inside, too. It was quite spacious with more rooms than the other home, honed travertine floors everywhere and a dramatic stacked stone fireplace. Cherry looking cabinetry in all the baths, brushed nickel faucets and hinges. It had an enormous lot with desert landscaping and a pool. The home looked like perhaps an investor had bought it to remodel, and then turn around to flip it. Not uncommon. As I ventured into each new room, I kept thinking to my self, “This is it. This is perfect”.
Put the emotion aside for a bit; peel back the blinders for just a moment. With pen and paper in hand, I followed the tips below to help make my decision:
Look under all sinks. Check for signs of leakage; evidence of repairs (or lack of repairs); age of fixtures; type of piping. Polybutylene is a big concern.
Look at and around all toilets. Can they be cleaned or are they so stained they will need replacement? Any visible water staining at the floor?
Jiggle the shower fixtures – turn them on if there is water to the home. What kind of life do they have left? Often times, a plumber will have to tear out the tiling to make any repair. Consider those costs.
Carefully look at the ceiling, especially the edges where it meets the wall, in every room, including the garage. Look for signs of staining which could indicate water leaks from the roof. Does the ceiling texture need correcting? Was all the popcorn properly removed, or are there still remnants at vents and in the corners?
Mentally calculate the cost to ready the home so it can be inhabited. Are there faucets, appliances, light fixtures, towel rods?
In the kitchen, open every cabinet and drawer. What condition are the cabinet boxes in? Is there evidence they have been repaired? Are the shelves adjustable to accommodate varying heights of bottles and other tall items? Is there a pantry for storage? [I was out with buyers recently who fell in love with a property – it was stunning in every way and very well done, with a remarkable kitchen. Guess what? It was missing a pantry. The buyers did not even notice this flaw as they were overtaken by the other features. This critical piece was the deal breaker on that home].
Consider all flooring. Does it need replacing? Is there cracking in the grout? Is the carpet in need of cleaning, re-stretching or more?
Evaluate all windows and doors. Are they single pane or dual pane? Do they need replacing now? Will they in the future?
On the exterior, evaluate the fascia and wood trim. Pay careful attention to the landscaping. Is it in need of trimming? Does the grade slope away from the home or towards it?
If there is a pool, is it empty? If so, it will likely need to be resurfaced as the sun and heat will (not may) crack the surface. Does the pool equipment appear in good condition?
None of the items above should be deal breakers – merely, be cognizant of the cost to make it yours. Write down all the items discovered and put a price to each one individually. Add them up.
These costs should be considered before you make an offer. When it’s all said and done, does the price plus the costs of repairs still represent a good value – or at least is acceptable to you? And, you will still get the home inspection done to fully understand what you are getting involved with.
In the end, the traditional sale needed nothing to be able to be lived in. It would definitely need the rose colored paint in the bedroom corrected very soon though. That was about it though. In time, the bleached cabinets could be refinished as the quality of the wood and the condition of the boxes was excellent. My mental calculations on the bank owned home totaled somewhere around $50,000. Money I would need to spend immediately just to be able to move in.
We all know there are pro’s and con’s to every home. I went with the traditional sale because it suited my pocket book and lifestyle at the moment. Is it perfect? No way. Does it meet my needs? Absolutely. Watch for details on the house warming party – but when you arrive, don’t look too close at the pink walls.
©2010 Tom Weiskopf, PLLC. Tom Weiskopf, PLLC is an AZ licensed real estate agent with John Hall & Associates serving the Phoenix area. For more information, Tom can be reached at (602) 953-4000 or via e-mail at phxareahomes@gmail.com.
