Foreclosures have become normal in America, so much so that I am no longer shocked when talking with someone who is facing this horrible situation. However, this is not one of those cases.
A great deal on a house
Houses in this neighborhood are normally valued around $140,000 – $200,000. However, it is a foreclosure. Read into the details of the sale and you will find
- The foreclosure happened in July 2012
- The utilities are off (bring a flashlight)
- It is being sold as is with no inspection
Not such a great deal after all, unless you are looking to have a fixer-upper in your portfolio.
How did the house get into this situation?
“If the walls could talk”, right? We will never know why the house was taken back by the bank. However, we can glean insight in the following information:
What do you see here? Yes, the value of the property rose and fell with the Great Recession. It was purchased in 1991 for $86,000 and is being sold for $93,000. However, the foreclosure price was, get this, $156,182.
Why it is so sad
This ranch home that was purchased for $86K has been foreclosed on 19 years later for 81% more than the original purchase. What does that tell us? It sounds to me like the previous owner was a normal American – cashing in on the equity of their home because the bank told them it was a good idea to get a HELOC or cash-out re-fi for renovations or family vacations.
This was somebody’s home. It has 3 bedrooms which means they may have had children.
- Maybe they attended a local church and went to baseball games.
- Maybe they were friendly neighbors and decorated it for Christmas.
- Maybe they had visions of the American dream
That was squashed by the temptation of short-term pleasures financed into the mortgage.
We have to stop this type of behavior
If we could have just seen this coming. If we could have warned the owner that things don’t always work out the way we plan. If we would have known about the job loss, the move to a new house in another city for work, the bad choice of pulling more money out of the house as values went up.
Hindsight is 20-20 and many have promised large sums of money if they could just go back in time to change it.
Knowing the ins-and-outs of personal finance could save everyone a lot of heartache, especially in the case of choosing the right house – or the right mortgage. If you find anyone about to make a bad decision with their money then please speak out. It could be the difference between hurting your current neighbor’s feelings or helping new ones move into the foreclosure they just bought.