Hidden issues with foreclosures

Why You May Not Want To Buy A Foreclosure

November 17, 2013 by Michelle

I haven’t written a ton about it, but my family is in the process of moving.  The good news is that once we listed our house, it sold relatively quickly – of course while I was out of town.  We hadn’t looked for a house seriously until we were under contract, knowing that the market where we want to live is pretty hot, and we would never have a shot at those with a home sale contingency.

Once we had a solid contract, I looked at every house on the market where we want to live, but the “good” houses were already gone, and it was late enough in the season that new houses simply weren’t coming on the market.  We receive a potential new listing only once or twice a week, and most of those are price changes now.  A few weeks ago, a house came on the market that sounded promising.

It was within the area where we wanted to live, it had a huge yard, it had a circular driveway (ok, that was just fun – not part of my criteria), and it had a ton of potential.  The fact that it was in foreclosure and therefore pretty cheap made me call our agent quickly to get us in there to look at it.  I saw it, and I brought my husband to look at it the next day, when we wrote an offer.

Neither my husband nor I were in love with the house (thankfully), but we saw its potential.  The kitchen needed to be completely gutted and expanded.  There was a ton of redecorating to do in addition to replacing every bit of flooring except that in the master bedroom.  We knew we needed to remodel the bathrooms.  Given the price of the house, all this was in our budget with some wiggle room for some of those unexpected expenses.

Because it was a foreclosure, we knew it would be sold as is and wanted to be sure we knew exactly what we were getting into, so we were happy to have a very thorough inspector.  When he discovered mold in the attic, I sat and thought for a bit before I had him continue.  I absolutely can’t do mold with Little Miss’s asthma and Mister Man’s autism, but relatively the mold wasn’t bad and we could get a remediation company out to give us an estimate fairly quickly.

As we continued, things kept going in that vein, however.  The deck?  It wasn’t stable.  The footings hadn’t been sunk deep enough and with frost heave (hello, Chicago winter), they had cracked and no longer supported the deck well.  The driveway had settled and needed to be cut back 10-15 feet and redone.  Where the sewer pipe exited the house, there was evidence of water seepage, something we’d need to keep an eye on and potentially have fixed.  Switches didn’t turn on lights, leading our inspector to theorize that the electrical wiring was sloppy.

But what killed the deal for us was the master bedroom closet.  The master bedroom was at grade, and the closet smelled… funky.  He took one look at a corner and said there had definitely been a water issue at one point in time.  He saw it as a potential foundation crack, though he couldn’t say how severe since it’s finished inside and not accessible from the outside.  Given the smell, there was likely mold in the wall, but again he couldn’t possibly say how much or how extensive.

It took my husband and I a day and a half of debating back and forth before we finally decided we were trying to fit a square peg in a round hole.  There were too many unknowns, and we couldn’t walk into a situation where we couldn’t even identify the extent of the damage that we’d already noticed.  A sick house was just not in our budget or our patience level.  We canceled the contract.

And I felt bad about it.  I was sad that I didn’t have a house.  It wasn’t that I loved this house so much but that I thought we were near the end of the process.  I posted about it on Facebook, and I was so touched by the flood of comments and messages from friends encouraging me that we’d done the right thing by walking away from that house.

I mostly believed it, but not entirely.  And yes, the house is again under contract – you can bet that I’ll be watching to see if it closes and what happens with the house.  Last week, we closed on the sale of our old house.  I have so much to write about that, but with our house sold, we’re currently living in a rental.

The rental is – ironically – also a foreclosure that our landlord bought in June.  He’s been working like a dog trying to get it all updated and finished for us to move in, although there is still more to do.  He’s found several unexpected “projects” that have popped up during the process.

Last night, I arrived home from the Northwestern football game and proceeded to make myself dinner.  As I was cooking I could hear a dripping noise and went to investigate.  In the utility room, the window is leaking.  Except it isn’t the edge of the window like the seal has broken or the caulk is missing.  It appears to be coming from up somewhere and through the window well.

Hidden issues with foreclosures

I set up a couple bowls to catch the water and have periodically been emptying them as they fill.  I checked again this morning, and the four drop spots along the edge of the window well had dried. Instead, another spot had started dripping further back, so I adjusted my bowls and cleaned up the water again.

Texting the landlord, I know he’ll get it repaired, though initially he thought it was just a little caulking that he’d need to redo.  As I explained more, I think it’s sunk in a bit that this is probably a bigger problem.  In fact, I had to add bowls this afternoon (yay, Chicago severe weather) as more spots are dripping.

His response summed it perfectly for me.  I am finally completely at peace with walking away from the house in foreclosure that we almost bought.  “Of course it would come from up… from out would be too easy/low cost!  Foreclosures are a great deal until….

Buying a house is always a gamble.  There’s always something that can and does go wrong.  With foreclosures, they’ve generally been sitting empty and not maintained during that time.  During the foreclosure process, the previous homeowners generally aren’t taking care of the home with the level of pride and care that other homeowners do.  And then there are the homeowners who purposely cause problems or damage things and feel justified in doing so because they’re losing their house (witness the missing dining room chandelier in our almost house, among other little things).  It’s that added element that makes foreclosures more risky, on top of the fact that many are sold as is, with no disclosures, etc.

You simply don’t know as much, and you have less recourse when you find something in inspection.  Having a roof fixed by a seller when there’s a leak controls the cost.  Deducting what you hope the issue will cost and fixing it once you own the foreclosure is a gamble, and that doesn’t count any additional damage that may occur from the issue not being fixed as soon as it’s discovered.

For many, foreclosures may be a great way to get into a house they otherwise might not be able to afford.  But there’s a reason you’re getting such a “great” deal.  Some things I’m ok gambling on, but the house – the most expensive asset I’ll ever own – is not one of them.  So for now I’ll enjoy the fact that my landlord has to fix the issues that crop up.  And when I do buy a house?  I’m hoping it will be from someone who loved the house and took care of it as much as I did the house I just sold.

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  • Melisa

    Yes. So glad you walked away from it. (and I’m glad you weren’t in love with it anyway: that would have made things much more difficult!!)

  • Kim

    Amen! You did the right thing. Our house was as-is and we suspect in the last few years the minimum of care was given to it, but it did received care–it was an estate sale, not a foreclosure. We saw our share of foreclosures and I’m certain you did the right thing. It’s amazing how quickly systems degrade and nature takes over when no one is watching!

  • Shannon

    Moving can be so stressful. It sounds like you are handling everything very well. Our fence blew over last night and I’m kind of wishing I had a landlord right about now. Good luck with the house hunting. I’ll keep my eye out.

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