Distressed Properties

Recently a potential buyer wanted to see lake front homes that are distressed (in foreclosure or bank-owned). After visiting a few properties, it was clear what he had in mind: a premium, well-maintained lakefront home buyable at about half the county tax assessors' appraisal. The ones we had seen all needed some work. He knew it is a buyer's market, but had an unrealistic idea of what that meant.

Think about it...if a home is in foreclosure or has reverted to the lender, it's a fair bet that there was some deferred maintenance on the property...if an owner can't make his monthly payment, he is likely not painting, reroofing, installing new HVAC systems, maintaining the landscaping, or refinishing the floors. And there have been instances where the foreclosed owner ripped out cabinets, fireplaces, appliances, landscaping, etc. In short, distressed property really is usually DISTRESSED!

What IS on the market, however, are some really nice lakefront homes where the owner has taken good care of the property and has adjusted the price to a realistic reflection of the market. I just listed a flawless home in a gated golf community...the price I listed it at is over 30% lower than the asking price when I showed it two years ago. It is now a very good price/value buy. It happens to be over a million bucks...it's not going to be bought for much less...but there are similarly great buys in most price ranges. Here is the reality...no homes are being sold at half their true value in the current market, but you may be able to buy a home for half of what the owner would have expected three years ago.

Late last year, prior to closing on an outstanding bargain of a house, my buyer said "But what if the house is worth less next year than I pay for it now?" My response: "It could happen (*it hasn't), but you will have had a year of enjoyment for your family and business guests...try doing that with with your IRA."

I know I was right, and so does his family. A lake home should be a good financial investment, but it should be more...it's a lifestyle purchase that should pay handsome dividends in more ways than one.