Big change of plans!!

[Mariana Skonieczka]

I recently won an auction for a house. (Judicial tax sale so we couldn't go in before to check out the inside.) I paid $29,000 for a small house on a 1/3 of an acre lot in a great area. The houses on either side are adorable and fixed up very nice and this house had nice-looking vinyl siding.
We finally got into the house today to look around and it's bad! It is a ranch house and the walls are buckled. The ceiling in one bedroom has totally collapsed and there were acorns and dirt everywhere. The frame and underlayment of the roof is soaked and there was mold everywhere. I easily put my finger through the ceiling that was buckled. We made our way down the ladder-like stairs to the basement and we couldn't stand up. There was a puddle in the middle and 2 hot water tanks tipped over. In a connecting room in the basement there was a huge pile of dirt up against the wall. The foundation in the back of the house was crumbled and missing huge chunks of concrete. All the wood trim outside has rotted.
Here's my question. Our only option seems to be demolishing this dilapitated pile of XXXX. Has anyone been in this situation? Do I have the demo done and sell the land? The land in this township goes from $35,00-$75,000 for 1/3-1/2 acre. Or should I build a small house and sell? Prices in the area go from $90,000-$129,000. Any advice?

[Jon Holdman]

Mariana Skonieczka was there someone living there who physically prevented you from walking up and having a look? Or, were you just told to keep away? You've made a huge bet. Being told to leave seems like a small risk to take to try to evaluate the odds on your bet. Someone with a shotgun or a rottweiler would have kept me away. But if not, walking up and knocking on the door would have been in order.

I would seriously try doing absolutely nothing and trying to sell it as is. If a rehabber has their own crew and is experienced with big rehabs, they may be able to get this one fixed. By your own admission, you're a novice. What looks horrific and impossible may not be so bad for someone with more experience. Roofs can be repaired. Ceilings can be fixed. Concrete can be poured. For example, we bought the house we live in in 1999. As part of finishing the basement, I considered moving a bathroom. But I didn't want to dig through the concrete to deal with the plumbing. Since then (in that house I mention above), I've had to dig up a bunch of concrete in a basement. What terrified me in 1999 turns out to really be no big deal. A $100 jack hammer rental, a few sacks of concrete, and a few hours of time and I could have moved that bath.

Are there any building projects in the area? There are very few in mine. But I saw plenty when we were in Houston a while back. If there aren't, a lot is going to have little value. If there are, stop at those projects. Find the GC or the owner and chat with them. They might be able to give you some idea about the cost to build and the value of lots.

Do you have good title? Auctions often don't give you a clear title and its up to you to deal with any issues. Have you done a title search, or at least a preliminary one? Around here, title companies will do basic searches (called "owners and encumbrances" or O&Es) for free. You should do that if you haven't.