THINK TWICE BEFORE PASSING ON THAT “FIXER”: That “Dump” Can Actually Be a “Diamond in the Rough” With a Little Vision

By
Mortgage and Lending with Los Angeles & Ventura Counties in CA

This past weekend, I went to a house-warming party for some former clients that closed escrow a few months ago.  I hadn't seen their home since the week they closed escrow and it was so nice to see the changes they have made since then.  It got me to thinking about how they almost didn't buy this home because it was kind of a fixer.  Amazing what a little time and sweat equity as well as a few professional upgrades can do for a home.

Here in Los Angeles & Ventura counties, our real estate market is absolutely saturated with run-down, dilapidated, dumpy properties.  While most of the properties that fall into this category are REO's, they're most certainly not limited to just vacant foreclosures but can also be short sales as well. 

Think about it, if you've got a homeowner who is not paying their mortgage, chances are they're probably not keeping up with routine maintenance matters either, especially if it's an investment short sale.

While I'm not a Realtor out there showing and listing these properties, I do see quite a few of the properties that many of my clients purchase.  So many of the properties that many of my clients end up purchasing have so much deferred maintenance that for some of my buyers, it's really hard to get past the "cosmetic" issues to actually get a good idea of the properties "bones"

It's just disgusting the way that some of these properties are marketed and are allowed to be shown.  I've lost count on how many properties I have walked into where it was obvious that the REO listing agent (LA) had not only never even been to the property before, but they obviously had no idea what the inside looked like and probably got that one picture in the MLS from the previous MLS listing. 

For many of my clients, because of the price range that they're in is in the low end of the market around here (400k<), these are typically the only types of properties that they can afford to purchase.  On that note, I try to prepare my clients (before they actually get out there looking at properties) of what they can expect to see in their price range.  I try to explain to them the differences between a "cosmetic" fixer and a "total rehab" fixer. 

It's usually at this point that I will discuss loan options for the "total rehab" fixer.  But mostly, I try to encourage my clients to have a vision and to try and get past some minor deferred maintenance that is just "cosmetic" and to try and really see the home without these issues.  It's amazing what a professional cleaning, trash removal, fresh paint, new flooring, new fixtures and some gardening and landscaping can do for a property. 

For some, vision does not come naturally and they become so completely turned off by deferred maintenance that it actually becomes somewhat of a hindrance to their home search.  They want that "move-in" ready home for that "total rehab" fixer price.  They're not willing to look over and/or consider some minor "cosmetic" repairs in order to get a home with a great floor plan in a wonderful neighborhood. 

The smart and motivated buyer though eventually learns to see the beauty under the beast (so to speak) or the "diamond in the rough".  For example, last year, I worked with a couple who purchased a totally run-down, dilapidated, dump that was so incredibly disgusting when I first saw it, I actually asked my clients if they were out of their minds or on drugs even thinking about buying this home. 

It was actually kind of bizarre watching my clients as they told me about their vision for the property and the plans they had if they could buy this home.  It actually stopped me dead in my tracks, either that or it was the unknown goo that was all over the floor that prevented me from moving from the spot I was literally stuck to. 

The property was absolutely filthy!  The seller's son had been squatting in it for several months with his dog and several friends and the only redeeming quality about this property was that it was on a secluded, beautiful, tree-lined street in an absolutely wonderful neighborhood. 

Don't even get me started on the stench that literally knocked you back a few feet just walking in the front door.  Once again, there were the floors (a combo of hardwood & tile) that we were literally sticking to with every step we took.  I actually lifted my pant legs up and walked on my tippy toes so that I had as little as possible actually touching that floor.  Needless to say, I touched absolutely nothing else in the house that day, including the punched out walls, hanging doors with no door knobs or the horrendous trash everywhere that I am positive I saw moving once or twice.  I'll leave the description of the yards to your own imagination. 

Anyway, we eventually closed escrow on that property but, of course, not without a lot of hassle and drama that wore every one of us out by closing day.  My clients were ecstatic and were so excited about getting started on their dream home.

It's been more than year since then and I have been to see my new friend's (they're in my hometown and we see them regularly) home on numerous occasions now and I have to admit, their vision is coming true.  I would have never imagined it but fortunately for them, they did have a vision and a plan and they now have an absolutely wonderful home.

Hubby and I have been invited to a Halloween party at their home in a few weeks and I am so excited about seeing them again and seeing all the new things that they've done to the home since we were last there.

MORAL OF THE STORY:  think twice before passing on that "fixer".  That "dump" can actually be a "diamond in the rough" with a little vision.

 

Photos courtesy of flickr:   imagemd    fhaoutreach   malts8

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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 Donne Knudsen

Realtor® - CalState Realty Services

DRE#: 01364050 / NMLS#: 249822 

 

805.2069123

 

E-mail   My Blog  

Serving low-medium income individuals and families as well as first time buyers with both their real estate as well as their mortgage needs including down payment assistance

Los Angeles County  --  Ventura County

© 2010 - All Rights Reserved

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Esperanza Butler Realtor ®- 10/12/2010 03:12 AM
Topic:
Home Improvement
Location:
California Ventura County
Groups:
1st Time Buyers
Advice for Buyers
Buyer Information - What Buyers Need to Know in Today's Market
First Time Homebuyer
Posts to Localism
Tags:
los angeles county
ventura county
fixerupper
fha 203k loan
short sale properties
reo properties
deferred maintenance
vacant foreclosures

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Rainer
76,033
Sherilyn M. Whistler
ERA Herman Group Real Estate-NoCo - Loveland, CO
Need a Referral, Call Me !

I am absolutely with you on this topic. Look beyond the "easily fixable items" and focus on the structure of a home that is a great buy!! If it can pass inspection and the appraiser, then you have a solid home to work with... With a little elbow grease and some well thought out plans - you can truly take that "house" and make it into a "home" !

Oct 11, 2010 05:40 PM #1
Ambassador
1,491,584
Liz and Bill Spear
RE/MAX Elite 513.265.3004 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Donne,  SSSSSSuperb post!  All too often, buyers can't even get past the color of paint or carpet and see the bones of the house.  Cosmetics bear way too much weight on decision making processes.  If you ever decide to cross the fence to our side, you'll make a great agent :)   And you don't want to know just HOW much house you can buy here for 400k!

Oct 11, 2010 05:48 PM #2
Rainmaker
598,882
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Sherilyn - It's true that sometimes the deferred maintenance on these properties can raise some valid inspection and appraisal issue, especially when it comes to health and safety issues.  For these particular clients, this property was priced accordingly (quite a bit below recent comps), the appraisal actually came in a tad higher than list price with just a few deferred maintenance issues that were noted by the appraiser.

Furthermore, the recent comps for the area have increased and even though they've put some money into it, they have nearly 100k of equity in the property now.  NOT BAD!!!

BLiz - For some buyers, deferred maintenance does have way too much influence on the decision making process.  Unfortunately, for some buyers, they simply don't have the reserves to make a run-down dump habitable after the close of escrow.  However, for the really motivated buyer who does have the reserves to do some work after the close of escrow, they can get some pretty decent homes in some great neighborhoods for a good price.

On another note, you don't have to rub it in how affordable other markets are.  Let me guess!  You can get a gorgeous ranch home on an acre of land over looking some lake or river on one side of the house and some gorgeous valley or some beautiful woods on the other side of the house for the same price that my clients are settling for some run-down, dilapidated, dumpy little house on a postage sized lot that backs up to the blvd and is across the street from the neighborhood mechanic.

Thx for stopping by folks; I really appreciate it.  Have a great week everyone.  :)

Oct 11, 2010 06:20 PM #3
Rainmaker
230,029
Ken Barker Realtor® GRI, E-Pro Certified
Dilbect Real Estate - Burbank, CA

Donne - I showed a home that stated in the MLS "cosmetic fixer, bring your toolbox. It was a dump. Literally water damage, sagging roof line, kitchen that we stuck to, grime in the bathrooms that I would blow up and start over. But yet a "cosmetic fixer".

Some of these agents. But all it takes is a bit of elbow grease and vision to make it their own.

Oops, and $$$$$$$$$.

Oct 11, 2010 10:47 PM #4
Rainmaker
1,264,164
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

It takes a trained eye, energy, and skill to see past the problems and what can be accomplished.  Many people tell the they want a fixer, then turn the nose up at homes with bad carpet and purple paint!

Oct 11, 2010 10:52 PM #5
Rainmaker
598,882
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Ken - I agree that some agents do stretch the truth a little.  I love the MLS posts that say "great home, just needs a little TLC" and the place is a total dump that needs to be totally gutted.  Then there are those that are truly just a "cosmetic" fixer and just need a little work and a vision.

Gene - It does take a certain kind of buyer who can see the "diamond in the rough".  Then there are those that just really want the "total fixer" price tag on a "move-in" ready property.

Thx for stopping by guys; I really appreciate it.  Have a good week too.  :)

Oct 11, 2010 11:41 PM #6
Rainmaker
996,108
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Donne:  I agree.  Sometimes a fixer-upper can really be a great thing for just the right buyer.  Too bad most Realtors don't agree.

Oct 12, 2010 03:18 AM #7
Rainer
30,260
Kay Horacefield
Simien Properties - Clear Lake City, TX
Houston-Clear Lake City-League City, TX

It takes a special kind of REALTOR to work with these properties.  It even takes a little stronger motivation to show properties that you known needs so much work.  Thanks for sharing.  I had to laugh at myself when you were talking about homes that have very strong odors...my nose, eyes and throat have a difficult time with that special touch that some rehabs have.  We do what we have to do for our clients.  Right?

Oct 12, 2010 04:05 AM #9
Rainmaker
598,882
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Karen - Not everyone has the ability to have a vision, buyers or Realtors.  As a long-time homeowner, I've never purchased the perfect house.  Every property I have ever purchased required a vision in order to make it a home.  I guess I have a knack for it but I have to say, I didn't see what my clients saw in their house.  That property took A LOT of vision in order to see a home.

Kay - Most of my clients really need to be able to have a vision.  Because of the price range that most of my clients are in, they are looking at a lot of fixers, cosmetic and total rehabs.  Don't even get me started on stench.  That's really hard to get rid of.

Thx for stopping by ladies; I really appreciate it.  Have a good week too.  :)

Oct 12, 2010 12:24 PM #10
Rainmaker
270,325
Jack Mossman - The Nines Team in Lodi
The Nines Team at Keller Williams - Lodi, CA
The Nines Team in Lodi

Donne - Fixer properties for buyers are a gold mine .... not a diamond mine!  Buyers agents that see these properties' potential are the key to having buyers see the same things.  Having a home inspector, great contractor, landscaper and designer ... these are priceless additions to your professional team.  If the agent can present what can be ... using the rehab financing tools .... the buyer's decision is easier ... it's the "will be" decision.  And the best part, if it's not the right property for that buyer, then you've already done the work for the next buyer!  Thanks for sharing ...

Oct 12, 2010 02:01 PM #11
Ambassador
1,476,563
Renée Burrows
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate - Las Vegas, NV
Las Vegas Real Estate Broker - www.urLVhome.com

Amen there sister - the creative ones could win in the end!

Oct 12, 2010 05:58 PM #12
Rainmaker
161,050
Ryan Case
SCA Real Estate - Anaheim, CA
877-828-0710

Fixers are great, I sell 1-2 a month, and my investors love them. They get a better buy, and sweat equity, what could be better!

Oct 13, 2010 12:28 AM #13
Rainmaker
598,882
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Jack - It's true that a "cosmetic" fixer can turn out to be a really great home with just a little vision, especially around here.  While there are a lot of buyers who have this ability to see past the deferred maintenance, there are so many others that either can't or won't.  Unfortunately for those, they are going to miss out on some really great properties.

Renee - ABSOLUTELY!!!  It actually takes a lot of creativity these days for many first timers to get into their first home.

Tom - I couldn't agree more, especially around here. 

Thx for stopping by folks; I really appreciate it.  Have a good day.  :)

Oct 13, 2010 12:11 PM #14
Rainer
39,820
Sheila Rasak
Keller Williams Realty-California Coast Property Group - Camarillo, CA

Donne,

My business partner had a client that only wanted a fixer as he and his wife really liked the older properties and weren't afraid to get their hands dirty...they welcomed it! Although the loan was a bit more complicated as construction had to be factored in, they managed to jump through all the hoops and the house is theirs! Had I known you before this transaction, you would have been my lender of choice as you appear to be a "can do" lender. Thanks for all the valuable information you bring to AG!

Oct 14, 2010 09:47 AM #15
Rainmaker
598,882
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Sheila - Thx for the compliment; I appreciate it.  FHA 203k's can be a little challenging depending on the parties involved.  Based on my previous 203k experience, the toughest transactions were the ones where one or more of the parties involved decided to be difficult and argue with everyone.  As long as all the parties are on the same page, these loan transactions don't have to get problematic.  JMHO

Thx for stopping by Sheila; I really appreciate it.  Have a good day.  :)

Oct 14, 2010 11:31 AM #16
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