Buying Baltimore: Red flag or typical for vacant rowhouse sale?

Question

Hi All,

I'm investigating rehabbing Baltimore City row homes as a career change.  I'm a mechanical engineer; I've done some home additions and built small houses as a hobby.  I'm looking to get into rehab/flipping as more of a career.

I have my eye on a property, which I thought was a straight forward FSBO, but it's getting weird. The house has a FSBO sign on the front, is vacant, was purchased in 2013 & a new roof was installed.  According to the listing it's a full gut job.  The listing contact turns out to be a development company who tells me they're based in D.C. and decided this property in Baltimore wasn't worth the commute, but it is FSBO.  I asked for an appointment to see it and they told me to call back in 2 days.  When I called back, they said they toured it, took pictures, & decided it was unsafe to show and the property needs to be purchased sight-unseen.  I asked for the pictures, but they never sent them.

This property is not in a high-risk neighborhood, which is attractive to me as a newbie.  I'd like to specialize in upscale renos...and I love all aspects of this property.   However, they are asking $100,000 for a full-gut, sight-unseen property!  And, they don't seem very interested in entertaining offers.  I told the guy I was prepared to pay cash and then had to ask who to contact to make an offer, and the guy said, "Oh, you need to talk to me."  I'm thinking...But I am talking to you and you don't seem to care.

This property has not been declared vacant by Baltimore City, but they have a hot-line to call it in.  Special attention is paid to vacant properties in up & coming neighborhoods because they don't want such a property to drag the community back down, and they will force the owner to do something (sell or reno).  But, getting involved in government red-tape isn't enticing either.

Is this nonchalant attitude normal or is this a big red flag?  The property has been on the MLS for almost a year.

Thanks for your advice!

Ned Carey · Answer

Um Account Closed have you been there lately. Lots of renovations. Whole blocks have been demolished and replaced with new construction. A block I own on has comps over $200k

Of course $100 k is still a silly price. I used to call that intersection the "Axis of Evil"

JJ Conway · Answer

So many things I'm concerned with here - doesn't mean it's 100% a no go, but there's so many other deals out there!  I've crawled in and out of all kinds of "unsafe" properties and I'm usually working with someone who is motivated enough to sell that they'll send pics or whatever I ask for. Times when a seller hasn't been forthcoming have been when it wasn't a good deal (way overpriced, needs more work than they said, squatter or some other situation).

Also, a friend of mine almost got scammed by someone trying to sell a property they didn't actually own. Basically they put a FSBO sign out front of and craigslist ad for a vacant property and wanted a deposit to take it off the market in advance of an auction that somehow never happened. Come to find out, the real owner knew nothing about it. Have you looked in the SDAT database to see if the person you're speaking to is actually the owner?

That doesn't mean all sight-unseen properties are bad deals. While I prefer to see what I'm buying I have friends who make money with property out of state they've never seen. They pay someone else to take pictures.

Account Closed · Answer

@Ned Carey, i wouldnt go there on purpose under any circumstances. if people are paying 200k to live there than proof exists that we live in a world of the insane. i believe they call it, "putting lipstick on a pig"

Ruth Gottuk · Answer

Well, I've become an amateur forensic real estate agent; being passed from one department to another in the City of Baltimore Department of Housing.  Baltimore has many different programs to deal with vacant houses depending on the circumstances.   I eventually found the property in the city database on vacant homes, but it's not owned by the city.  The house was put into receivership in September by the court and the owners have until the end of October to sell it or it goes to auction within the next 3 months.  I'm not sure which could be more lucrative for the owner; I suppose it's a risk.  I believe they are up-side-down, owe over 3 years of taxes (at a ridiculous assessed value) and I don't know if there's a bank in involved yet.

I've been looking for comps to try to figure out what a "full-gut" vacant property in this neighborhood is actually worth, but such comps are rare (I guess that's a good thing).   There are other houses for sale, but they are inhabitable, some fully renovated and some "authentic".  That gives me an idea of resale values, but not what I should offer right now.   And, of course, the owner told me I'd have to buy "sight-unseen"; if it goes to auction the receiver will allow a pre-sale inspection.

Anyway, I'm learning a lot about purchasing property in Baltimore.

Anyone willing to share their experience in writing a contract of sale on a vacant property?  Other than "as-is" & unoccupied and getting a good title company, are there any other things specific to such deals to look out for?

JJ Conway · Answer

So what did you decide?  After reading your additional info, I tend to agree with @Ned Carey that it's probably not a scam so much as someone who is incredibly unrealistic and unmotivated. That said, I have had (and still sometimes do) have other investors throw out crazy terms to see if I'm experienced enough to know they're offering me a bad deal. Even if it's not a scam, it just doesn't "feel" like a good deal. Surely there are other deals you can get into for $100K in Baltimore

Ned Carey · Answer

@Ruth Gottuk Nothing you said would give me much of a concern. I don't see a red flag here. I see an unrealistic and unmotivated seller. That is pretty common. Just because someone should be motivated doesn't mean they are motivated. If he was just out to scam you for a deposit, I would think he would be more willing to come down on price.

@JJ Conway's concerns are legitimate. However they are not likely and easily avoided. One thing to do is give the money to a title company and not directly to the seller.

Ruth Gottuk · Answer

Hi @Joshua Velte, the house is in the Barclay neighborhood.  The other strange thing is that they originally told me that a realtor was contracted to show the house, but it was still a FSBO.  I asked if I should contact the realtor to see it, and the guy said, "No, call me in 2 days."  The house has a key lockbox on it.

@JJ Conway, I have checked the Baltimore City database and the named owner is a partner in the same firm as the guy I've been talking to.  No idea if they're related.  I googled them both and they come up, not as developers, but as consultants in business reorganization.  Something tells me I'm not getting the straight story.

I wasn't going to use a realtor to save a little cash, but maybe I should for their expertise and my peace of mind!

Buying Baltimore: Red flag or typical for vacant rowhouse sale?

Most Popular Reply