what's it worth?

happymary45September 22, 2009

Hello all. Here's the situation. There is a house we are looking at that has had the demolition work done to it. I guess the rehabbers ran out of money. It was listed a couple of years ago for $60K about. Someone bought it, took off a whole bunch of rotten wood and a lame addition, stripped it down to the studs inside. All the windows are boarded up and it caught my eye in the real estate listings when I was surfing them the other day. It is listed for $75K. I looked it up on the county tax assessor's site and it's appraised at $41K. I was thinking it is a definate advantage to buy an old house (built in 1940, I know, not old like some of you guys, but plenty old for me) that has had all of the ick stripped away. It's all gone from the property and the inside looks pretty clean, too. Just stripped. Is this an advantage if buying an old house that would have needed work (obviously) anyway? thanks for any advice.

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mike_kaiser_gw

Having it stripped back to the studs is certainly an advantage when it comes to evaluating the structure. There's obviously no way for anyone on a forum such as this to make an estimate of the home's value.

What are your plans? Of the top of my head:

  • Assuming you are not doing to live in the home during construction, can you afford to pay two mortgages during the construction process and whatever
    times it takes to sell this home or your old one?

  • Can you get a construction loan (or have the cash available)?

  • Are you planning on doing the work or do have a contractor and has he looked at the house? If the former, what kind of construction experience do you have?

  • Have you talked to the local building code folks? Because the walls are stripped to the studs, they may want mechanicals (electrical, plumbing, HVAC) brought up to current code, which can get expensive.

    Bookmark   September 22, 2009 at 10:06PM
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worthy

Any house that is sitting boarded up and empty is open hunting for all kinds of trouble--from frost damage (not in Texas, I suspect) to pesky critters with hungry probocises and two-legged varmints hunting recyclables or just a warm place to crash and rut. Demos--especially those that fly under the radar of hazardous waste precautions, i.e., asbestos and lead, come cheap. So that fact that it's stripped to its bones, actually doesn't mean all that much.

But as usual, everything depends on the price.

    Bookmark   September 22, 2009 at 10:09PM
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happymary45

thank you. I guess I shouldn't have said, what's it worth? I was just thinking about opinions on this sort of state-of-the-house. If we could offer them around the appraised value, we might be able to buy it outright. I haven't talked to the realtor yet, so I'm not sure exactly what the situation is with it right now. I do know it's boarded up tight and so I don't think anyone has access to it...the two-footed kind, anyway! We would have to hire out some of the work and do some of it ourselves. I'm not even sure what would need to be done to make it livable. It might not even have electricity! Again, thanks for the input.

    Bookmark   September 23, 2009 at 11:10AM
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mike_kaiser_gw

It's a little hard to offer specific advice without seeing the home. As I said, I think you should get an experienced contractor to walk through with you. Remember that projects of this sort tend to run over budget as surprises come up, so you'll want to make sure you budget has some extra money and time in it.

    Bookmark   September 24, 2009 at 6:19AM
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Billl

As a general concept, this could be a good way to get a deal. Someone who starts a rehab and runs out of money is definitely a "motivated seller." Of course, there is always the possibility that the previous rehaber discovered some MAJOR problems and decided to cut their losses. The only way to know is to get a good inspection from someone who specializes in these type of properties. You'll also want to bring in some contractors to get an idea of the costs you may be facing - then double their estimates.

    Bookmark   September 24, 2009 at 9:35PM
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karinl

Demolition is messy and tiresome and not a bad job to have out of the way.

But my sense it that it is more of a burden for DIY than for contractors. So if you are DIY, this is probably a significant advantage. If you are hiring people anyway, they are so quick and efficient and unemotional about this kind of stuff that it might not be a significant saving.

Which brings up a disadvantage, namely that original features like woodwork will be gone. But you can get good stuff nowadays, and source from far and wide.

And an advantage is that in the 40s, I think they were building pretty solid structures. You can even check joist size and spacing, stud size, and so on.

Another disadvantage is that you can't choose to leave some things intact for later. Take windows, which you say are all out. We decided to stay with the 70s aluminum replacements crammed into the frames in our house, and replace them gradually as time and money permitted. You won't have that luxury! But then you also can't get stuck by inertia into the status quo... which in our case is still most of the windows unreplaced :-)

If you are DIY, paying for advice in advance might still be a good step. Inspection, definitely.

But I like the idea.

KarinL

    Bookmark   September 25, 2009 at 12:42PM
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igloochic

Remember when trying to bargain not to use the wrong terminology. An appraisal is not the same as a tax assessment. If you offer "appraised value" and it appraises for 200 million, you've got yourself a problem. Instead you are interested in "assessed" value (nothing near the scope of an appraisal).

If you buy it outright...how will you finance the rebuild? Most banks (particularly now a days) won't finance this type of thing, which is why it's probably vacant...

    Bookmark   September 27, 2009 at 2:59AM
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missouri1

I'll tell you the thing I dislike about rehab houses stripped to the bones. Unless the person doing the work has saved the items from the house such as trim, fixtures, window frames, hardwood floors, any linoleum that might have been salvageable, original doors and hardware, you get the idea, it's less old house than I am looking for. I want the old special stuff still in the house.

It may be just me but I really hate to go to see a gorgeous old looking house on the outside and then it looks like a modern cooie cutter inside.

I hope they saved the good stuff for the house.

    Bookmark   September 29, 2009 at 12:14AM
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