Wednesday, October 22, 2008

A Dollar Down Moves You In

It's a great deal. For one dollar, you can buy a California foreclosure (here is some paperwork forwarded to me by a friend).



This is a 3 bedroom 1.75 bath 1250 square feet and built in 1961. Zillow states that the previous tax assesment was $1765 for 2007. Indicating that it was valued at/or purchased for about $175,000. This REO was sold for $125,000, no down payment.




I could be wrong but it looks like Christmas came early this year.



So looking at the docs, it was purchased for one dollar. And the bank is going to kick in 25k for closing costs and repairs. Can you believe this? This beats the hell out of renting; you don't even have to come up with a deposit.

So if you want to buy a house in California no money down, have we got a deal for you! Isn't that how we got into this mess in the first place? Nah, it must be my imagination acting up again.

Copyright 2008 All rights reserved

9 comments:

Anonymous said...

I know investors here in Calif buying homes from banks (short sales, REOs and at trustee sales) for 30 cents on the dollar. It will get cheaper too because the lender's balance sheets are going to be hit with another tsunami of defaulted loans giving them even more inventory to choke on.
I know someone who just bought a 3 bedroom home in Hemet for $50,000. She has a $320 per month mortgage now. Beats renting, eh? And... we've still got another 20% of valuation decline in housing to go in order to approximate income/earnings. Chance of a lifetime to get yerself a house. Don't expect any appreciation for about 15-20 years though. Just buy it to live in. A home.

Jim in San Marcos said...

Hi Anon 8:55

Things are getting cheaper, but if you are not careful one dollar can buy you an awful lot of trouble. Especially if you lose your job.

I remember in the 60's there was a saying "A house will be the worst investment you ever make, but a necessary one." Funny how that changed over time.

Thank you for your comments

Shankar said...

If you come across any like this in the Central Valley, please let me know.

Any of your friends in Central Valley?

Boom2Bust.com said...

Reminds me of a piece I wrote back in August about Detroit housing deals. Looking at the "Go shopping!" link earlier today, I noticed $1 lots and $100 homes for sale. Don't expect the Taj Mahal though...

"Detroit Foreclosure Bargains"
http://www.boom2bust.com/2008/08/22/detroit-foreclosure-bargains/

Anonymous said...

shankar:
all you have to do is link up with investors that are buying REOs or buying at trustee sales in your area.

Jim in San Marcos said...

Hi Anon 17:00

I have to disagree when you suggest Trustee Sales (as far as California is concerned).

The amount I listed as previous property taxes indicates that the Bank note was for about 175K, so the bank got the house with a bid of 175K at the Trustee sale. They took a 50k loss on the transaction when they sold it for 125K

Plus the bank paid all of the closing costs 25K. I can't tell or not if some Realtor got a full 6% on the sale. The closing costs of 11,250 would more than cover that.

At a Trustee sale you need a cashiers check. With this, you walk in with one dollar and they give you financing and pay all closing costs. You also get some "Repair money." Plus you have a clear title on top of it.

The real amazing thing, is that you don't need a hand gun, it's all "above board."

Jim in San Marcos said...

Hi Boom to Bust

About 6 months ago there was a WSJ article on a woman from Europe who flew in to view some property in the Detroit area. The cab driver wouldn't let her out of the cab to go look at it.

That area, is living proof that you can get in a awful lot of trouble for just one dollar.

Thank you for your post.

Jim in San Marcos said...

Hi Shankar

I think this example give you an idea on how far you can push a bank. It looks as if qualifying for the loan is not the issue. The issue the bank has is that the property is not generating income. Therefore there is no increased risk in selling to anyone breathing. The couple that bought this house did qualify on earnings 30K per year. Presently both are unemployed.

I think if you pick 10 banks and mail them an obvious form letter of how much house you want and your top price and demand financing, you might get surprised by an offer. And as Boom2Bust suggested it won't be a dream home, but it could be a very good "Rental."

Shankar said...

Jim,

Thanks for your thoughts.

we'll be on the lookout. We currently rent and looking at the data, I have thought for some time now that we won't be bottoming out till 2011-2012.

Of course, there is a price point at which house purchase becomes extremely attractive.