All Forum Posts by: Scott K.

I'm looking at buying some vacant land in the southwest, which I've never done before.

I'm surprised to see some of this land sounds pretty cheap, like $2,500 for 10 acres in the wastelands of New Mexico for example. It's just land, no utilities. My use of it would be to camp on it with my RV and maybe do some rock hounding and prospecting. Some day, maybe I'll build a home on it with several RV pads with full hook-ups to rent out.

But for $2,500 for 10 acres and maybe just $20 per year in property taxes, I'm wondering what's the catch. 

The company selling lots like these from NM to AZ to NV, charges a $400 doc fee and says this on their website:

"What kind of deed will I receive? You will a receive a special warranty deed, which means the seller is guaranteeing the property wasn’t encumbered during the time of his/her ownership."

OK, so what are the pitfalls of buying land like this? 

Is this some kind of scam like I buy the land and then I get socked with a bunch of back taxes and fines and penalties or something, or it's Indian burial land and I'm forced to build a 5-star cemetery on it, and I can't get out of it? 

Is this land actually free or worth pennies to anyone looking hard enough to buy it from the state directly?

I suspect the company is really in this for the $400 doc fee.

What do you do when you are aware that a neighbor's rental property (not yours) has a potential mold issue because everyone that rents it moves out after getting horribly sick with pneumonia and recurring respiratory infections?

Say something to the potential renters looking at it? Mind Your Own Business?

Thanks John, Beau, Jay. I had been leaning towards doing that. I've already got an estimate for the contractor-grade carpet at $2.5K installed from Home Depot (50% of the house is tile) and it's just a rough guess the interior paint will be around $5K-$6K. I figure $8K together.

I might give it another week as-is, then maybe look at the paint/carpet option and raising the price to at least recover the carpet and paint cost. I gotta keep in mind there are 2 listings over $600K, and 8 listings for $499K-$549K. My neighbor started at $620K, then dropped to $599K, and it finally sold at $571K after 5 months.

There's price-resistence over $600K. The sweet-spot where inventory is running out is under $500K.

Thanks Jake. The house is all about the view. If anything will sell that house, it's the 180-degree unobstructed ocean and sunset view from 500-foot altitude. No other house listed has that view. I bought the house because of the view, and that it was on a cul-de-sac on a bluff looking past all the other houses below, and it was the floorplan I wanted (it's a tract home, I bought it new in 2007).

Thanks Wayne. That sounds like a good analysis. The realtor said the feedback she hears back are they were disappointed with the kitchen being upstairs (vs ground floor) on the same level with the livingroom and bedrooms, and they were disappointed with the old paint and carpet (8 years old).

New contractor-grade carpet and paint would cost about $8,000. After 3 months, I will have paid that in mortgage payments.

The realtor says we shouldn't do anything yet.

What would you do?

UPDATE: Just got this e-mail from the realtor (I asked the same question here):
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Realtor said:

Too soon. We're getting WAY too many showings and WAY too many positive comments to change anything now. Hang tight.

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I'm selling my house in Hawaii. There are 12 houses in my subdivision for sale. My house is the 3rd highest priced listing, priced at $597K. The next 2 highest priced listings are $608K and $649K. There was another listing for $649K which was 13 DOM and just sold.

My realtor says that they are having daily showings. She said there are 5 common comments:

1. negative - They don't like the floorplan (can't change that)

2. negative - Needs painting

3. negative - Needs new carpet

4. positive - The view is spectacular (unobstructed ocean view, best in the subdivision)

5. positive - Price is good

My realtor has been telling the buyers that we are priced lower because rather than putting money into paint and new carpet which the buyer will probably want to change anyway, we've lowered the price.

I've already sunk about $5,000 into repairs and cleaning for the house (after 2 horrible renters), at the realtors request to make it "sale-ready" and now I'm hearing about paint and carpet. I feel like I'm dying by a thousand paper cuts.

I have to also be mindful of the huge mortgage payments I'm making while the house sits. If paint and carpet will definitely sell the house tomorrow without question, it's a no-brainer because I'd spend the same money on mortgage payments in a couple of months.

The house has been on the market for 16 days thus far with daily showings and the common comments and no offers. Maybe it's too soon to try and chase offers by making drastic expenses like new paint and carpet. I don't know, I'm not a pro at this.

16 DOM. Maybe it's too soon to react. What do you recommend?

Thanks everyone who replied. I have thought this out quite a bit, and I have done a short sale before. But I don't claim to know everything or to even know what I think I know.

To answer some questions:

1. There are no other liens on the house in Hawaii. Just the primary mortgage note and the HELOC. Both are with the same lender, Wells Fargo.

2. I don't care about my credit. I have lousy credit after the short sale from 2012 anyway. I'm not buying a car or another house. I have no desire to take on any more debt. Ever. Never ever. So, I'm not too concerned about having bad credit for awhile.

3. Like I did with my short-sale of a condo in 2012, I put a condition in the contract that the lender would not hold me responsible for deficiency, and they agreed to it. The realtor thought this was strange to put in the contract, but I felt it should be there. I would do the same with this house.

4. I'm actually not underwater on this house. But after you factor in the realtor commission and closing costs, I'd be short -$30K at closing which I don't have.

New questions:

1. I've never heard of a "Deed-in-Lieu (of Foreclosure)". What are the conditions for this to be available to me? What is required of me? What are the advantages/disadvantages over short-sale or foreclosure? Do I need to have my lawyer file for this? Do I need to miss some mortgage payments to trigger this discussion with Wells Fargo? I remember having to miss 2 mortgage payments before Wells Fargo would discuss the short sale for that other condo I had.

Big Island, Kona side. There's normally 3-4 houses for sale in my subdivision. There's now SIXTEEN (16) for sale! And they are dropping their prices fast. 

The biggest drop was yesterday, one of the houses dropped their price -$50,000. 

It's true the market for less than $400K homes in Hawaii is hot, but the homes in the mid-high $550K-$600K is not selling, not in Kona. In fact, there's too many of us that bought these homes and we're all trying to dump them at the same time.

I own two properties -- my condo and my house. I live in my condo and it is a very manageable mortgage with Chase. After everything shakes out, I only want my condo.

I also own a house in Hawaii which is listed for sale with a realtor. The mortgage and HELOC on the house are totally unaffordable and have drained every penny out of me. The mortgage and HELOC on the house are both with Wells Fargo. Even if I was to rent out the house, I'm still losing -$1000 a month which I have to cover out of pocket. Without rental income, I'm out -$3500 a month (max rent for the house is $2500).

Selling the house for market price (which is getting lower by the day as sellers are dumping their homes) and after paying the realtor commission, I'm short -$30K out of pocket at closing, which I don't have. I don't have savings, no 401K, no IRA. I'm also facing an out-of-work scenario in July, since my job contract hasn't been renewed.

So, I'm trying to figure out what to do. I learned from before when I did a short sale on another property in 2012 that it's a bad idea to throw good money after bad, waiting for the market value to rise. I do not want to throw good money at this house.

Possible Options

1. Somehow get $5K to pay for the repairs to get it rental-ready, and rent it out. Hawaii law does not allow you to terminate a lease when a house is sold, so renting it out will limit the field of potential buyers. Even with rental income, I'm out-of-pocket -$1000 per month. For the months without a renter, I'm out -$3500 a month.

2. Don't rent it. Don't make payments on the mortgage or HELOC either. Continue to try and sell it for an above-market price that covers the mortgage note, HELOC, and realtor commissions. Eventually (2 months probably), the bank will start threatening foreclosure. I can talk with them about foreclosure or short sale possibilities, maybe delay it for a few months, meanwhile the house is still listed for sale. Best case: the house is sold and I walk away free-and-clear. Worst case: the house is short-sold or foreclosed.

3. Something I haven't thought of?

My questions

1. What would you do? I'm leaning to option #2, but am open to ideas.

2. Will Wells Fargo who holds both the mortgage note and the HELOC on the house be likely to agree to a short sale and forgive the balances of both the mortgage and the HELOC?

3. With a foreclosure or short-sale on the house, what happens to my condo that I live in?

Thanks.