Before you buy a foreclosure or a short sale, make sure that you understand what you are buying and that your real estate appraiser and Realtor understand this too. If you don't understand what you're buying or you try and convince the appraiser what you've got, it will only hurt your pocket book in the long run. Let me explain.
The home was all updated when I got there. I looked through the MLS photos and the home really didn't seem that bad. A few improvements, new flooring, new kitchen counter tops and some good cleaning would make this home look new. Some of the bigger items were that the electrical was not working properly and the septic tank was broken and the in ground swimming pool was not maintained.
Six months before I got there, the buyer had a full appraisal completed on the property as part of the purchased. Since the home was considered primary water frontage, there was plenty of equity in the property, so he thought. This equity was taken out of the property to purchase the home and fix the home up. The problem was that there was really no equity in the property. To find out why, keep reading.
The new home owners took the money out to make the improvements.
Now they would have the property appraised again to get their money back out of the home. I was hired to appraise the home for a refinance. This is when it gets ugly.
The home was said to offer direct access to the water. The unique thing about the property was that you had to walk across the street and down an embankment to get to the water frontage. As it turns out, the power company owned the land with the direct access to the water.
Now the owners thought that they were purchasing primary water frontage. Here is the truth. As it turns out, the Realtor asked the distressed home owner if they owned water front property (Yes, I called the Realtor. Of course, the owners said yes, they said they owned the land to the middle of the river. The Realtor listed the home, as such. It's not. The power company owns up to the water. This can easily be checked by looking at a plat map. It get's worse. Read on.
This home was appraised by an appraiser who really didn't complete an accurate appraisal. You see, the home was noted as being located on water front property and the comparable sales used to determine the value for the original purchase is based on the home offering ทาวน์เฮ้าส์มือสอง primary water frontage.
The real owner of the primary water frontage was the power company. The other appraiser appraised this home as primary water frontage when it wasn't. So now the home will not sell or be able to be refinanced as primary water frontage or for what the home owners' think that home is worth because of how the home was identified as primary water frontage when, in fact, it is not.
So the moral of the story is if the home offers any and I mean any grey areas about views, water frontage, square footage, zoning issues, make dang sure that you are right before you buy. If not you'll be the proud owner of a new problem that the prior owner got rid of.
Do you think that a road that divides your home from the water is the same as the property that offers one continuous lot that backs directly to the water? Which would you rather have? This owner has been tricked into thinking that his water frontage is just as valuable as a home that backs directly to the water and worse yet, he doesn't even own up to the water and he paid for it. My guess is that he will pay for it for the next 30 years.
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