Even when we give to charity, we get screwed

Thursday’s advance had a story about the city buying foreclosures. Since I sell foreclosures I was very interested.
• City using federal $$ to buy foreclosed homes
STATEN ISLAND, N.Y. -- The city will embark on a $24 million emergency program to salvage foreclosed homes, including on Staten Island, where the mortgage meltdown has had a particularly profound impact

Well it turns out, according to the article, that a "not for profit" is buying the foreclosures, Restored Homes, and they bought two properties on Staten Island.

82 Blackford Avenue was first listed on the MLS on March 17, 2008, as a two-family detached, on a nice block in Port Richmond, for $234,900. The house was a real good price and it was accepted on March 20th, just three days later.

However, a few months later on July 22nd, the house was back on the market, and the price was lowered to $219,900. When it came back on the market, I showed it right away. The house was being used as a one family, but had two sets of utilities. Upstairs had a finished attic in addition to the two bedrooms, so it would have been good as a rental. But, you go down the basement, and someone had poured concrete, so much concrete that you could not stand up. The two boilers were in “wells” because they didn’t pour the concrete into them. Not having a full basement is not terrible, means that no one can live down there, and it can only be used for some storage. No biggie. But it was turning off all of my customers. This is when I realized that although foreclosures are sexy as a concept, the units themselves, the really good deals, aren’t. In fact a lot of the houses are just plain ugly.

But anyway, by August 6th, there was another acceptance.

But on October 6th, the house was back on the market, and the price was now lowered to $174,900.

So on October 6th, I sent out a Lasher’s List showing this house as time to buy, great deal, yada yada yada. By October 6th, I am an old pro at this, and I know when its “time for the vultures” - the customers with a lot of money, who make the all cash offers, who wait until the house has been on the market for a while, been accepted a couple of times had deals that keep dying, and know that there is a problem., and know that the bank is ready to make a deal.

So true to form, on October 7th, I submit an offer for one of my customers, a low ball offer, at $87,500, all cash, close in two weeks, as is.

A few days later when I call to find out about the offer, the broker tells me that there is a question about whether it is a legal one or two, but my offer is a little light, try to get my customer up a little, low 100's should do it.

Then on October 15th, before we resubmit our next offer, the status of the property changed to “HOLD”, and somehow the property had become a one family.

So it turns out that the reason for the hold was that the bank sold it themselves to the NFP, i.e. the City, with federal funds, (our tax dollars), and as usual, once again, we overpaid.

Moral of the story- use me to buy your foreclosures and you will get a better price.
Moral of the story 2- so that the banks don't get stuck with bad real estate, the government will buy them, and pay full asking price. Reminds me of an old Woody Allen Joke- the only sin in my family growing up was paying retail.

Good Night Irene.

……………………..to be continued