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Buying a foreclosed fixer upper farm house - *Good news!

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  • Buying a foreclosed fixer upper farm house - *Good news!

    I've been getting my stuff ready to start looking at "farms" and have just started to hear back about getting pre-approved and have another to do tomorrow. I've been browsing online and talking to a real estate agent, but haven't actually gone to see anything yet. Everything we're finding is quite a bit above my (pathetically low) price range and is not horse ready at all, just houses.

    I was browsing on craigslist a few days ago and found a 120 year old farm house in foreclosure that has 10 acres (4-5 cleared) and tons of outbuildings. After a pain in the butt trying to get in touch with the realtor, I went to see it a few minutes ago.

    I'm usually very negative, and it needs a lot of work, but I fell in love. The house is charming. It has hardwoods throughout. "Something" is wrong with the plumbing. The floors are unlevel. No fridge or stove. A few cosmetic, small dry wall cracks, peeling popcorn ceilings, etc. The HUD inspection lists the plumbing as the only broken thing. Roof was replaced about 5 years ago, electrical is good, foundation is good, etc. The pastures already have wood posts, but no fence. The 3 outbuildings are massive, could be used as a run in and huge hay storage, a huge chicken coop, one that could eventually be turned into a studio...amazing. The pastures need bushhogging and are quite overgrown, but seem to be in decent shape.

    The scary, scary thing is that bidding on this house closes Sunday at midnight. I'm a first time home buyer, this is the only place i've seen, but i've been doing a ton of drive by's and stalking properties on Bing's birds eye maps.

    The house is listed for ~$116,000, but the listing agent thinks that if you were lucky, you may be able to get it for as low as $100,000. Either price is well within my budget, even allowing for fixing the plumbing and the like. I can't imagine how I would get a home inspector out to check this place out between now and Sunday. I was supposed to be out of town Friday and Saturday!

    **Edited to add: Just called the realtor and she said that you don't do an inspection before the bidding. If you win, and have it inspected and find something that isn't noted by the HUD inspector, you can back out and get any money back. So apparently there is no heart pounding rush to get someone out to look at it. Whew!

    Please oh wonderful COTH, talk some sense into me.
    Last edited by Ihatefrogs; Feb. 16, 2010, 05:47 PM.

  • #2
    If you can't get a home inspector, it's a "sign" that you shouldn't do this. Seriously. I would never buy a property without an inspection. I'm in my 12th home since I was married 34 years ago, and it's saved me numerous times to have that inspection. When I was shopping for my current home/horse property the inspector turned to me at one property within 15 minutes and said "Run. Run very fast."

    I was in love with the place, but he was the cold voice of reason and he saved me.

    If you can't get it together to have the place inspected, keep looking.


    • #3
      You have no way to know how far gone the electrical is (read: fire hazard), or if the well water is safe, or if the septic works, or why the floors aren't level....

      Not such a good idea, IMHO..

      If you saw this one in the first stages of looking, there will surely be more. I'd wait.
      "As a rule we disbelieve all the facts and theories for which we have no use."- William James

      Proud member of the Wheat Loss Clique.


      • #4
        Unless you are cool with razing the house and building a different one I say no. I would be pumped to find the "right" 10 acres for $85k if the house was a "tip and burn": right location, mature shelter belt, on blacktop, good drainage, a building elegibility, and rural water hookup. If you can't get a home inspector out, I would not do it. That is an old house and probably a money pit x 10!

        Tons of old outbuildings is a bad thing in my book. They are always in the worst places and covered in lead paint.

        I'm just thinking of all the stuff that could be wrong under the surface. Ugh.
        DIY Journey of Remodeling the Farmette: http://weownblackacre.blogspot.com/


        • #5
          Unlevel floors and cracks in the drywall indicates serious structural damage to me...I would pass. Not worth the heartache.


          • #6
            If you are willing to take a risk for the price of a thorough inspection, I say go for it! DH and I are currently shopping short sales and foreclosures ourself (not farms- just houses) and we walked into one this past weekend that was the first place since I walked into the farm that we bought 5 years ago (which, incidentally, we bought WITHOUT an inspection- an admittedly big gamble that paid off!) and fell in love with instantly. However, unlike that farm, this place is severly damaged and what's worse it's very visible damage- every single appliance missing (clearly an angry foreclosure), water damage on the inside and outside of the house, big warning signs not to walk on the balcony off the MA BR ... but you walk out on the roof-top deck to a panoramic ocean view from Dana Point to San Diego. Un-jaw-droppingly-believable. It's a steal- IF the damage isn't too bad. IF. OTOH, it's a steal for a reason. Problem with this one is that you need to provide an estimate in your offer to the bank, so unless we just take a wild swing on our own and hope we are somewhere close, what are we going to do- pay to get an inspector in there BEFORE we even have an accepted offer?
            We just don't know if we want to take the risk this time. So we are currently hemming and hawing and hope someone else doesn't snap it up while we dither.
            I say go to the auction and see what happens! Maybe you'll get it for even lower than $100K. good luck
            ~Living the life I imagined~


            • #7
              It sounds like the house was inspected by a HUD inspector. Can you get a full copy of his report so that you know that the electric, well etc... was inspected?
              I grew up in a house that was about 185 yrs old when my parents moved in. My father had to jack up the center of the house and cracked the plaster a little in the process. Not really that big of a deal.
              Current house is 20 years old. Fixer-upper. Hubby jacked up 1 floor joist and rebraced it. Also cracked the drywall a little bit.

              If the original HUD inspection was pretty complete and you can back out after reinspection he your inspector finds something different- why not?
              Oh, well, clearly you're not thoroughly indoctrinated to COTH yet, because finger pointing and drawing conclusions are the cornerstones of this great online community. (Tidy Rabbit)


              • #8
                During one of the many dry spells these past few years out 30+ year old house settled a bit and caused some wall cracking. Settled about 3/4 inch. It happens.

                If the floors require block/tackle to go thru the rooms run very fast-Ive seen an old** house like that. But otherwise it sounds cool to live in a old** house.

                If you can get your $ back if something else turns up Id go for it but I have a DH that can and soemtimes will fix things.

                **college roomie married a man from England. He grew up in an old house--about 800 years old. 120 years old isnt bad.
                “Management is doing things right; leadership is doing the right things.” Peter Drucker


                • #9
                  Originally posted by saddleup View Post
                  If you can't get a home inspector, it's a "sign" that you shouldn't do this. Seriously.
                  Hold your horses there.

                  I assume since you mentioned bidding and HUD, this is a home listed by HUD, right?

                  If so, jump on it. That's how we bought our first home. The well was broken (and it needed gutting) and no one else could get financing. We sold it for 3x what we bought it for, 4 years later, did everything (except the well) by ourselves and with friends, and it was a lot of fun (and sweat). It allowed us to afford to buy another foreclosed property (this time through Fannie Mae).

                  Our current property needed a lot of work. We changed almost everything in the house, all the fencing, etc. Thankfully there was a 5 stall barn that was in great condition. It is a lot of work. You can renovate on a budget and learn to do it yourself, and it can be a lot of fun!

                  Unless something has changed since we bought our HUD house in 2002, you can get your earnest money back for any reason if you don't like the home inspection. You can't do the inspection until after they confirm you are the "winning" bidder. I think it only took $1000 in earnest money to allow us to bid on our first house. HUD payed 1/2 of our closing costs. They had all of our paperwork at the closing table. They were honest.

                  A lot of things play into bidding on a HUD house. How long has it been listed? Owner occupant only? What's currently going on in the market...etc...
                  BUT usually they are quite fair priced. Back in the day (2002-2006), HUD houses with a lot of potential or in a good area always went above their listed price. Even with a busted well, being listed forever, etc, we only got our at list price (we did try lower). Keep that in mind.

                  PM me if you want any other details!

                  GOOD LUCK!


                  • #10
                    Are these houses "free and clear" of liens? I'd go down to the local village hall and check to see what's been filed there .


                    • #11
                      Originally posted by Chall View Post
                      Are these houses "free and clear" of liens? I'd go down to the local village hall and check to see what's been filed there .
                      Yes, they are free from liens! HUD covers all of that!


                      • #12
                        I'd go back and ask the neighbors if they know anything about the house that you should know about it, and confirm the zoning. Nothing like buying a place and finding out the county dump is going in next door or some other interesting addition to the neighborhood. And look at it and the surrounding area on Google Earth. A friend was looking at houses in my town and saw a great house on a cul de sac, good price (actually a little cheaper than normal), very nicely updated-we looked on google earth and saw that across from his house about a hundred yards was this big artificial pond--yes, it was the city sewage treatment pond and it explained why the price was so reasonable (this state has no disclosure so unless someone mentioned it to him or by looking on Google we wouldn't have known about the pond until the wind shifted).
                        You can't fix stupid-Ron White


                        • #13
                          It'll either be the worst or best thing you do.

                          If you can get it well within your finances go for it. Even if you buy one in good condition you are always going to have a $1000 bill here and a $2000 bill there. On a fixer upper, they will just be more frequent and more urgent so you need spare income to deal with it.


                          • #14
                            Check out the county zoning website and make sure apartment buildings or a city dump are not about to go next door. Make sure the zoning permits horses.

                            Look at the 100 year flood plain. We once saw a lovely house that the realtor did not disclose was in a flood plain. The actual house was on the one tiny area that was not flood plain. We would have been marooned there, unable to get down the driveway, when it rained. About a year later, I found out that the area did flood after substantial rains. The map was correct.

                            I love old houses, but you need to be prepared for leaky basements, pipe replacement, new wiring, new heat and air conditioning, a new well, termites, mice, rotten wood, a new roof, and all of the other joys of a foreclosed or old house. Our current home was a foreclosure. It has taken us 20 years to get almost everything fixed. Every fix costs more money than you can imagine.


                            • #15
                              Put your realestate hat on here. Look at the likely cost to put the property in the condition that you could live there comfortably. Add that to the purchase price and make sure that the total does not exceed comparable properties in the area.

                              The agent can get the comps on this in a heartbeat. It is as easy as:

                              Purchase Price $100,000
                              Repair cost $100,000
                              Total $200,000

                              Now if the other properties in the area in saleable condition are selling for $350,000 you are in great shape.

                              Our house had not been lived in for years. It had a snake in the kitchen wall. Crappy, plumbing, heating, wiring. We did a new roof, new siding, new kitchen, new baths, new garage etc. We still have a home that appraises for way more than we spent.

                              Good luck.


                              • #16
                                I'd say it depends. We just finished purchasing a HUD property in the last few months, and got an amazing deal on it (house on about 25 acres). You place your bid, and once you get the winning bid, then you can get the house inspected. As someone else mentioned, if you are buying the house to live in (not as an investor), if there is something major wrong with the house that shows up on the inspection, you can change your mind on the property. However IIRC, it has to be something that is major (electrical, seweage, A/C, foundation, etc)- and I don't think the plumbing would count, since it has already been disclosed to you.

                                The issue I would see is the same as what everyone else said- the house that we purchased prior to the HUD foreclosure was an early 1900s model house. We got it for a song...and then ended up putting tons and tons of money into it (and it's still no where near finished- it's sitting, waiting for us to list it for sale- and we are going to be losing a decent amount of money on it when we finally do sell it). To give you an idea of what to look for- plumbing (we had to replace all of it- including the cracked main line that went from the house to the sewage pipe in the street), electric (all had to be replaced, and we had to increase the size of the service- wasn't sufficient to run all the appliances), foundation (ours was pier and beam, and there were a few rotted beams that had to be replaced, and it had to be leveled), fireplaces (need to be redone- the interiors of both are collapsed- even though they look ok from the outside), windows (if original to the house- most will probably need to be either replaced or repaired- rotten wood, cracked/missing glass panes, and missing glazing- this is something that takes a lot more time/money than most people think). Other than those things, it is mostly the same as other houses- flooring might need to be redone, walls, etc. The big thing is don't underestimate how much it will cost to fix things- we were told to plan on spending three times what we originally thought it would cost- I would say it almost ends up being 4x or more, as there are issues that you find as you are fixing the issues you know about.

                                If you are up for the challenge though- go for it! Fixing up old houses can be fun- you just have to have the right personality for it (DH isn't really into that sort of thing, which he didn't really tell me before we bought ours).


                                • #17
                                  Our first home was also a foreclosure, another angry one, they'd taken a hammer to every fixture in the house, torn out light fixtures, bashed a hole in the toilet tank and yanked out the free standing woodstove completely. And of course everything else was suffering from deferred maintenance or broken. We camped in the kitchen for two years, somewhere I have a picture of the kitchen with the campstove sitting on the (broken) electric stove top.

                                  Based on my experience, a fixer upper will cost you exactly as much as the same house fixed up, you'll just be paying for it in a different way.

                                  Our biggest problem was trying to work on the house and live there too. If you haven't dealt with a remodel before it can be incredibly stressful, things get lost as you box and stash, and inevitably you find something else wrong and have to spend to fix that too.

                                  All that being said, it can be a great way to get into a place that you couldn't otherwise afford. Just take a good hard look at it and your skill set, or willingness to learn, plus the time you will have available, and go from there.

                                  And I have a horribly cautionary tale about home inspectors. The house next door to my MIL was partially gutted as part of a remodel/repair. Right down to the floor joists in the back part of the house. On the market for $20K. A fellow bought it sight unseen, using the services of a home inspector, and the home inspector's comment was that the house was "appropriately valued". Fellow arrived expecting some fix-up work but was completely gobsmacked to see the two bedrooms with no floor at all. (Actually he would have fallen through the floor that was there but for some reason seeing a floor is less dauntingly immediate of a repair) Anyway, now he is renting.
                                  Courageous Weenie Eventer Wannabe
                                  Incredible Invisible


                                  • #18
                                    I buy homes to rent out, and I always look at how much I can do myself when buying. I love fixing them up and then renting them out But, when I look at a house, I know what I can and can't do, what my FIL can help me with and what I will have to hire out. That's how I decide if it's too much for me.

                                    The farm you are looking at sounds SOOO cool! I would probably fall in love with it in a minute. But, it is old. I have a house built in 1905 - the good news about old homes is they can be very simple. Electrical issues are one of the things I worry about - plumbing not so much. cracks etc... don't bother me as much in a old house - after all, it's still standing... Interior flooring, walls, not a big deal - for me, exterior problems - that's a big deal. If you have a chance, go look at it again, make a list of what you would absolutely have to do before moving, what you would have to do that is safety related, what you could do in the future, etc... It may help you see it clearer.

                                    Good Luck! I would love to see pictures.



                                    • #19
                                      If you are not into remodeling and rebuilding, walk away.

                                      In a house that old, everything needs fixing, sooner rather than later.

                                      Unlevel floors suggests the foundation needs to be worked on, the age alone suggests scary wiring - and you won't see untill you look into the walls! My current house is a 1950s/60s ranch...the wireing in half of it is adventurous...my previous house was 100 years old, it was downright scary in places.


                                      If you are no stranger to HARD work and getting dirty, that can be a diamond in the rough. I like older houses. ut you have to have resources to fix them up right.


                                      • #20
                                        I felt I had to pipe in a bit here since hubby and I purchased a home mid '09. We looked for a horse property for almost 5 years. We've seen it all. And after all of that we ended buying a newer house that didn't need anything. There are no horse facilities but we've learned its much easier (and prob cheaper) to build a barn and fencing than renovate, especially an old house. I'll add that our old house was built in 1890, we we completely renovated it.

                                        One thing that I don't think was mentioned is that there is probably no insulation in the walls so you will spend xtra cash trying to keep warm in the winter. Also, typical homes of that era have different dimensions. For example, door openings and windows end up being a custom order ($$) at the local home inprovement shop. Make sure the house has an actual septic system, and not a "cess pool". We looked at a beautiful farmhouse that had a "cess pool." Didn't even know what it was or that it really existed. No way we were getting a mortgage until that got updated. Septic systems can run into the tens of thousands.

                                        I'm not trying to dissuade you. There are plenty of people who love fixing up old houses, and frankly I'm glad they do b/c they do look so nice. Take a very close look at your finances, your free time and the reality of a fixer upper.