Makes sense - if these people couldn't afford to pay the mortgage, they certainly couldn't afford to keep the house in working order. Another example of people living beyond their means. I have some friends who will go out and buy the latest, greatest toy...but it's gone in a month when they have to sell it to pay bills. I personally don't buy anything unless I can afford to pay it off, in full (and that includes a new $25,000 vehicle every 5 years).

How gullible these "victims" of the mortgage companies must have been to believe they could afford such nice houses when they were just coming out of a tiny apartment.

while i can understand why some people want a brand new, nicely done home, there's nothing wrong with a fixer-upper. A $660,000 home going for $350,000 seems like a steal to me. My uncle builds houses from scratch so a house in a nice location but with no kitchen or bathroom would not be very daunting. it just means i get to customize it exactly to what i want.

you are not going to spend $300,000 fixing up a place so to get that kind of discount off the selling price means you can probably turn it around for a good profit right away or in years to come.

Too true and too sad.

When I was looking for a home earlier this year, we saw houses with graffiti on the walls, ripped up carpet and holes in several walls. One home even had all of the walls torn up so they (former homeowners) could take the pipes and the copper.

The article says that the banks haven't been able to send clean up crews through the homes.
Does anyone hear actually think the banks will send crews?

I remember an earlier post about a court in New York requiring banks to take care of the upkeep of foreclosed properties. I really wish that other courts would tell the banks to do this as well.

That is SO true. I can't tell you how many homes I've looked at here in Chicago that are in piss-poor condition, yet owners still have the balls to ask for a quarter-million dollars for a rundown single-family home. You have to be KIDDING me - one that I saw last week had a dead mouse on the floor. No. Just no.

I read this article yesterday on CNN and it was titled, "These homes for sale stink." Overnight, someone changed the word 'stink' to 'suck'. It actually makes better sense in the original version.

@Meggers: Even worse, some people leave their animals locked in the homes. Not only do they ruin the home, and thus, the re-sale value which would help pay down the mortgage, the animals usually suffer and either die or have to be put down.

I have a friend who works at a Credit Union. He was telling me that the banks are actually giving homeowners something like $1,000 if they move out immediately when foreclosure is going to happen. They are trying to save the homes. No, I don't think the banks will be sending crews. Almost all of the homes I see in my area that are foreclosures say "As Is" no repairs, inspections (I think they mean they won't inspect) and you have to be pre-approved for the money.

The only thing I disagree with is the "lawns dry up" part and neighbors wanting them watered. My husband and I never water our lawn. I find it a waste of money and resources. I suppose if I was trying to sell I might but otherwise, I don't see the point. Our yard is clean and not overgrown, it just gets a little brown when we need rain.

@bravo369: The problem is that many people have been waiting for housing prices to come down to an affordable level. If they were waiting for those $600,000 homes to be in the $300,000 range, they probably don't have the extra money to put into paying for all the fixing up that needs to be done to a $330,000 house. And it sounds like a lot of it is fixing up just to make it livable, not just fun renovations.

@Git Em SteveDave displays attention-grabbing vanity: That is just horrible to me. I know that the MSM had discussed this before. I just can't imagine what could be going through someones head when they leave their animals in a locked up house with no fresh air and limited (if any) water and food.

I'm sure this may seem to be tied to the poor market conditions but honestly this is nothing new. (Well ok the deliberate damage probably is). Looking at homes even 10 years ago during the boom there were some that were positively disgusting. One had the entire kitchen counter full of dishes and take out bags (must have been WEEKS worth). They were moldy and gross and it smelled like someone died in there. That was just how the people lived because one of them was home, during the showing, passed out in their underwear in a bedroom. We backed out slowly and never looked back.

I'm currently looking for a condo to buy, and I was really surprised by the condition of a lot of places. One place had pots on the stove with weeks old caked on food in them. Another place reeked to high heaven of cat pee (I couldn't even make it down into the finished basement without retching). One, which I assume was a foreclosure, was completely stripped - faucets, showerhead, appliances, closet bars, light fixtures, outlet covers. Who the hell takes the outlet covers?

@mizj:

I'm with you on this one. Here in Tallahassee, people are trying to pass off really shoddy houses for more than they truly are worth, and the real estate agents are going along with a lot of it. There really are some gorgeous houses that are bargains, but, as far as first properties for people, nobody wants to move from a rental into a hellhole just to achieve ownership. The next level up most of the time is the mcmansion, which is overpriced also. The condo market is stable, but the association fees go through the roof when owners won't pay up. For some reason, our local real estate experts think our market is "safe" from all these nationwide conditions; in my amateur opinion, I definitely beg to differ.

We purchased our home while the bank was almost foreclosing on the owner and the real estate listing was almost expired. When we first looked at it we realized why no one had purchased what is a perfectly good home. I blame 1. the owner for being ignorant 2. the real estate agent for being horrible at her job (which she didn't do) The owner had not paid the electric or had it shut off (probably the former) and had left food in the refridgerator for months, over the hot greater Chicagoland summer. Corpses probably smell better. Also, he had left deep fryers filled with grease. Left food in the pantry, open food and left refridgerate upon open food in the pantry. Taken (stolen) appliances, left random furniture in the house. Was slowly taking things out. Stole the overhead garage unit by kicking the garage door in after we looked at the house. Tried to move the fridge when we were hashing out negotiations and the owner failed to tape the doors shut resulting in spillage of said "katrina style" fridge contents unto the kitchen floor and down the stairs to the backdoor. Granted, we got a good deal on the place and other then the mess and the lying on his and his real estate agent's parts there weren't any problems with the house. People need to realize that you can't do stupid things and dig yourself in deeper. The house would've easily sold months earlier if it weren't for the smell that hit you like a concrete wall when you opened the front door. Shame on the real estate agent for not checking the house since it was only semi/not occupied.

This is not a shock. Watch HGTV now and all the shows where people are buying a home seem to include foreclosures (because they are cheap) that are in terrible shape. People either abandon them as-is or make sure to take everything that's not nailed down (and some things that are).

And then, with the glut, there's no one to take care of these places. They send out a locksmith to change the locks and in most cases, no one from the mortgage-holding institution goes out to survey the house. At this point they're just trying to dump them. My wife believes that next great wave of people to get rich off house flipping is already starting to get their hands on houses very cheaply and when the market heats up again will start to rake in the dough with dozens of newly remodeled homes.

@NefariousNewt: I don't know about the next wave of rich people part.

If you are buying homes now as an investment property, then you need to have the cash for a down payment, the cash for all of the remodel work and the ability to continue paying the mortgage as we wait out the housing crunch. Those who already have money can do this but those who are buying one property with the hope of flipping it and making enough to buy more properties just won't be able to do it now.

The problem isn't that the houses suck, it's that the prices are still too high to reflect the true value of the depressed property. Prices have not yet hit bottom of the curve. When they do, even the lousiest piece of property will sell.

So the issue is, who or what is still not effectively pricing dumps to sell? Banks themselves? Hardly worth their time. My guess would be RE seller agents that aren't being honest, hanging on for the juice.

If I'm a dumbass homeowner that is way underwater, who am I going to take on as an agent-- the joker that lies and tells me my cesspool 'should' be worth $300k, just sign here!-- or the realist that tells me to clean the place up, slap some paint around, and list for $220k?

@Youthier: Amen. My front yard is "dead", but at least I can tell where all the weeds are.
My backyard is fairly lush, but only because the neighbor behind me uses water like it's going out of style. By the end of September when the rainy season kicks back in it'll all be back to normal.

@Meggers:

Based on our experience, no. We have foreclosed homes to the north and south of a investment property that we own. My husband keeps these two banked owned properties secured (to keep the homeless out) and tidy (mows the front yard grass and cleans up trash, etc.) and has not seen or seen evidence of a 'crew' (yard or otherwise) attending to either home. Both homes have green festering pools that are a health/safety hazard.

@lvixen: Typically, 'no inspections' means no inspections. At all. They won't let you in the house. I know folks who buy foreclosures and it's common practice to kick in the back door for an impromptu look-see before going to the sheriff's sale. Even then, all they are looking for is BIG problems - like burst pipes due to not winterizing.

@SadSam: Speaking of the pools, since they are a safety hazard (children, animals etc.) and a health hazard (I would assume that the water would be the perfect place for bugs to breed), could your husband perhaps call a local governmental agency (sanitation of health would be my best bet)? Maybe they would have the ability to get the banks to step up to the plate.

@hellinmyeyes: Yes, I totally agree, especially when you say: "...nobody wants to move from a rental into a hellhole just to achieve ownership."

That's how my guy and I are looking at this - we don't pay much in rent and aren't looking to pay too much for a simple single-family home. $260K is an awful lot to be asking when you are a pig to begin with and your house is messy enough to attract mice; and then, on top of that, the fact that you live in a downright dangerous neighborhood and the place is in foreclosure and falling apart? No. There's no way a house like that should be breaking $200K, in my opinion.

Check out this website, which is full of "poorly chosen photos from real estate listings." Amazing what people will try to sell.

[lovelylisting.blogspot.com].

@anatak: I think it depends on whether its a real sheriff's sale or if the bank is holding onto the property to sell on its own. If the bank tries to sell it, I think 'no inspections' means that while the potential buyer can see the house, the buyer can't arrange for a home inspection or request the bank to make repairs based on any inspection.

Even a well taken care of property needs to be cleanned and dressed for sale in any market. I can't imagine the asnine attiudes that go along with trying to sell a house that is a dump. Any serious Realtor will clean a house up they have under sales contract to some extent.

I had a little $100K house to sell myself, I Still put in $3K of clean up and upgrades to give it the best chance to sell as possible. Its just something you have to do..

Even if you dont have the money to do anything major, garbage bags, soap and a sponge are relativly cheap.

@SadSam:

Green Pool??

Go over there and dump 5-10 gallons of Clorox in the water and walk away. Should keep for a month or two.

Related hilarious site:

[url][lovelylisting.blogspot.com]]

At least some of these listings are not just foreclosures, and it illustrates how crappy of a job a lot of realtors do handling one of the biggest investments most people ever make.

Ugh, let me try that again:

[lovelylisting.blogspot.com]

For some reason I was thinking I needed to use BBcode.

@bravo369: You mean a $250K house that people paid $660K a couple years ago and is now "worth" $350K? Doesn't sound like a very good deal to me.

The rest of your post rings true- the last thing I want to do is pay a premium for a house that has been updated to someone's taste other than my own. Give me the fixer!

@Meggers:

Yes, yes, and yes. We have asked about mosquitoe fish [www.orlandosentinel.com] and we've reported the homes and the pools to code enforcement but the local gov is overwhelmed with these types of reports.

We (meaning my husband) could do more but its time and money for homes we don't have any financial stake in (except that they impact our rental property) and technically trespassing and could be considered property damage (since he is boarding up windows and tapping into concrete, etc.)

@JeffM: I guess we are reading it differently. I am reading it that if the house had the full kitchen, bathroom, and is being taken care of, that the value will be $600+ but the fact that it's missing everything has plummetted the value down to $300. i'm assuming that if everything is fixed again, you can get it back into at least a $500+ range which would make it an intriguing investment to someone with time and money and knowhow to fix it up.

I purchased a home with stained carpets, stained tile, horrible circus clown paint, torn window screens, and a feral lawn. I didn't have to hire any professional plumbers or electricians to rewire an entire house. Don't shy away from a fixer-upper if you can manage to do the work yourself. A few thousand off a purchase price of a home will save tens of thousands over the course of a mortgage. Spend a fraction of the money saved to clean, repair, and improve the house and you may be better off than buying a house in better condition to begin with.

Best piece of advice is still you buy a house because it's what you want to live in, and not invest in.

@mizj: not to go off topic, but is it just me or has Chicago just not come down in prices at all? I know we never got as out or whack as California and Florida, but let's get real.

@timmus: You just know the real estate agent doesn't care when they don't bother to "stage" the photos.

@bravo369: I'm going to side with JerffM on this one. The central issue with the "mortgage meltdown" is overvaluation. If the houses were really, intrinsically worth what they'd sold for, the mortgage holders wouldn't be taking it in the shorts when they foreclose, they'd be turning the houses around for resale.

A 1200-sq-ft house in a nice part of southern California is not magically worth 15x or 20x what a 1200-sq-ft house of equal quality in a similarly nice neighborhood in Fort Worth or Fort Wayne, but realtors will sure tell you it is, and mortgage brokers made a fortune selling you a loan from mortgage banks who saw packaging off mediocre loans as an easier business model than doing actual due diligence in the evaluation of the borrowers and properties.

Sure, that California dirt is worth vastly more to SOMEONE. PT Barnum was right, after all.

In my town banks or the agent MUST send crews to cleanup the house and lawn, otherwise they get fined by the city. We also have issues here with For Sale homes not shoveling sidewalks, but a quick note from the city usually resolves it.

One solution for most of these would be a change to the California law that prohibits mortgage companies from going after the home owner for the full loan value. In Colorado, if I owe $500k and they sell my house at auction (or to a private seller) for $300k, they can go after my assets for the remainder. This gives me incentive not to intentionally trash the house as I'm getting kicked out.

@Git Em SteveDave displays attention-grabbing vanity:

At that point the owners should be "put down".

Not to defend the over-valuation of real estate in certain parts of the country, but the reason why California dirt is more valuable than Ft. Worth's is because more people want to live in California opposed to Ft. Worth. Supply and demand. Real estate throughout California, in Chicago and the NYC area will probably always remain consistently high -- because these are the areas where many Americans (and non-Americans) want to be, simply put.

@savvy999: @TheStonepedo:

Amen to both of you. I am in the middle of a rehab on a foreclosure in Florida. I got the land and house for less than the value of the land alone when the owner got foreclosed on. I bargained hard on price and expected the absolute worst. Some things to keep an eye out for:

Desperate owners don't keep up pest control services. (why pay them when you're going to lose the house anyway ?). This exacerbates the problem of bug and mice when the house sits empty after foreclosure. My project house also had termite damage that needed to be repaired.

Bad news for homeowners sometimes equals good news for handymen/contractors.All of the guys that I have hired have said that they are quite busy fixing things that former owners destroyed before vacating.This has led to some price inflation for things like plumbing (when the assholes tear out the copper piping) and wiring (copper wires sold for scrap for pennies on the dollar).I had an electrician quote $6000 for a re-wire of my sub-1000 square foot home. I told him to stick it where the sun doesn't shine.I did the wiring myself because I know how.I spent about $1600 total and passed electrical inspection on the first pass.So be careful of people trying to take advantage of the situation (as if it wasn't bad enough).

Also, homeowners associations are usually last in line to get paid when the "owners" are going to scram. Check to see how far behind they are/were. The number may surprise you. Take that amount out of your offer.

I will finish my project house for less than $48 per square foot when all is said and done.But you have to be tough and willing to walk away from a bad deal or you will get burned.Just because a house was "worth " $600,000 to some dumbass in 2003,don't assume it's a bargain because it's "only" priced at $490,000 now. Find out what the damn thing is really worth by hiring an independent appraiser that works for you.Tune out the steady hum of bullshit that you will hear from the real estate agent that wants to get the deal done so she doesn't lose her own house to foreclosure...

@GearheadGeek:
"A 1200-sq-ft house in a nice part of southern California is not magically worth 15x or 20x what a 1200-sq-ft house of equal quality in a similarly nice neighborhood in Fort Worth or Fort Wayne, but realtors will sure tell you it is,........"

Umm, hate to tell you but it is. Real Estate is all about location (location, location, location!). There is more demand for housing in (what some consider) desirable locations then in less desirable locations. I just sold my late mothers house in a very desirable beach community in southern California and got at least half a million more than what that house would sell for in Fort Worth, Fort Wayne, Fort Smith or Fort Collins.
@savvy999:
Your guess is wrong. Realtors don't set the price, the seller or the market does. I remember reading an article several months ago in the LA Times (tried to find it to provide a link)where a bank had several foreclosures listed with a realtor, the realtor told the bank that he couldn't sell the house in this market unless they lowered the price. The bank refused, they wanted the full amount they were on the hook for. A few months later the bank finally did lower the price, however the comps were then lower again. The end result was each time the bank did lower the price, they were still behind the curve of the comps.

Referring again to the house I just sold. I wanted to list it a certain price. My realtor said it was too high, that the comps wouldn't support the price. I reviewed the comps and told her to list it at my price anyway, as we had a unique location. We sold the house in less than 45 days (from listing to closing) for $5000 less than my asking price. And the house appraised.

I'll admit that a lot of realtors aren't the sharpest crayons in the box, but a lot of them can do the math that 3% of $250k is better than 0% of $350k. Meaning that greed is not driving them to overprice houses. If anything it should be the opposite, lower the price so it'll sell and at least they'll make something.

@thewriteguy: I understand the mystical incantation "location, location, location." Parts of California are really beautiful (though I don't think much of the concrete-covered LA megalopolis qualifies.) The ludicrous overvaluation of property allowed lots of people to convince themselves and others that they could really live "the good life" because their home would always be worth more and more, and they borrowed against those fantasy valuations like they found Donald Trump's ATM card, PIN and all.

We live where we do because my partner's in medical school, but we might stay... it's a nice city, TX has no income tax, and our house cost about what a down payment would be on a house of similar quality in a similarly nice area in California. There are art museums and airports within easy range of the house (I can easily walk to several museums, in fact) and with what we don't throw down the California real estate toilet we can retire younger and move to Toscana. At least when I'm not spending every dime I can earn to pay for a McHouse in a McBurb an hour from my job, it's a valid dream.

@Sudonum: Uh, hate to tell you, but the fact that you found a sucker to pay you that much means there are still some of those people Barnum was talking about, not that there is THAT much more intrinsic worth in a house just because it's in an earthquake zone...er.. California.

Yes, I understand the concept of market forces, but I think that people who work themselves to death because they can't imagine living anywhere but LA aren't making rational choices... that's where economic theory starts to get a little rocky in its application to the real world.

My husband and I have been looking for a house in the Las Vegas area and have run into these foreclosed properties that are real nightmares. They are either sabotaged by the former owners exacting their revenge, picked clean for the same reason or have just been neglected for so long that they are now real fixer uppers. We have looked at probably 30 homes over the last 2 months and I would honestly say only two were in good condition.

Another issue that I am not sure if anyone has touched on or not is the fact that overwhelmed or not a lot of banks do not seem to be in any real hurry to sell a house. We put an offer in on one over 3 weeks ago and have yet to hear back, consequently we put an offer in on a different house last week and have yet to hear about that one either. I have been informed that this has actually become quite the norm since most of the properties now are bank owned.

Isn't in everyone's best interest to get these homes sold rather than taking weeks and I have even heard in some cases of short sales months to respond to an offer?

@billbobbins: The much more common scenario is that bank-owned, which are uninhabited, are degenerating into squalor.

@GearheadGeek:
3 suckers as I had 3 competing bids. And a couple of back up offers as well. You don't think real estate in CA is worth that much. There are SEVERAL million people that don't agree with you. But to each his own.

@GearheadGeek: Really, it just comes down to how you define "intrinsic value."

For me, a dwelling near (a) reliable mass transit, (b) arts and cultural events / institutions, and (c) a populace with an education average of bachelor's degrees or higher has value. For someone else, a dwelling near (a) mountains, and (b) picturesque cows has value. For my parents, a dwelling near (a) my dad's job and (b) my mom's choral organizations has value. And that's not even touching on one percent of the things that really create locational value to people.

Manhattan may be the most painfully inflated market that there is, but that's because millions and millions of people put high value on what Manhattan has to offer. Sure, some of them fit your Barnum mold, but others genuinely find what they're looking for. Right now, my bf and I are in a slightly more expensive apartment near the DC border in Arlington, as opposed to a cheaper one out by Fairfax, because Metro access has value to us.

No, the house in TX and the house in CA aren't made of different materials, but to think location doesn't have real value is to oversimplify the situation.

There are some homes around here that are taking awhile to sell in this market, but not many walk-aways, so I can't really take advantage of this opportunity, but I was thinking some entrepreneur should be pumping out the pools, then watering the dried up lawns.