Friday, January 18, 2008
Yesterday, I talked about the boomerang kids phenomenon - where adult children return home to live with mom & dad. That was scary enough; but, today let's look at a new trend that just starting to show up in the market - the boomerang house.
I'm actually coining that term today to describe houses that were foreclosures and which were sold to people (many of them young, first-time buyers) who have now, themselves lost them to foreclosure. So, the house has boomeranged back on the market and back a second time as a foreclosure. What's that all about?
I've reported here more than once on foreclosure homes and the care that is needed to buy one. They are just such darn tempting things - the gold rings of the current real estate merry-go-round. There sits that house that sold once for $350,000 and now you can "steal" it for $175,000 (or less). What a bargain! So you jump at it. And then the fun begins.
If you've followed my advice or just shown common sense, you had a good inspection done. What should have resulted was a list of things that need attention, some more immediate and costly that others. Certainly the list will go beyond just a coat of new paint here and there. Most of these foreclosure houses need maintenance, many need major repairs, and almost all need some updating. After all, the last owner fell on hard times and lost the house. You don't think he/she was maintaining it at the end do you?
The list of major issues can be quite long and quite expense, especially if the previous owner was the type to strip or damage the house on the way out, which many have. Also the house was left empty for a period (sometimes for a year or more), so vandals might have also wrecked havoc on it. You'd be lucky if none of that happened to the house that you want to buy. Still, it has been sitting there empty and maybe totally winterized for a while, so don't be surprised by the amount or work and money that may be involved to bring it back to a livable state.
And that, dear readers, is the rub. I've seen people dump $20-50-100K into these "bargains" and still not have it livable. What happens is, they run out of money themselves and end up losing the house again. If they're lucky, that's all they lose. I've seen cases where amateur "investors" had hocked their own house to buy a property that they hoped to "flip" and end up losing both houses - truly a sad turn of events.
So some (not many yet, but this is just the start of this trend) of these great foreclosure houses are turning up again as "boomerang houses". This time they actually may be a better deal, since the last buyer may have dumped a ton of money into them before going broke. It's sad, almost as if the houses themselves were collecting a wall of "trophies" of the heads of previous owners. Don't let yourself be added to that trophy wall - look twice before you leap and get a good Realtor to help you with the search and the decision.