Oct. 24, 2008: Foreclosure homes are sold 'as-is' -- but most need only minor restoration to bring them back to fully-livable condition
If we were to have a contest for the Valley's most-gutted home, judging might take a while.
A significant number of homes for sale in the Phoenix area, especially at the low end of the price spectrum, are in the foreclosure process. Not all of these homes are in rough shape, but a lot of them are. At a minimum, buyers of short-sale or lender-owned homes should anticipate painting the walls and replacing the carpets.
But virtually all foreclosure homes will be sold "as-is." This means, first, that any defects discovered in the inspection process will be the buyer's responsibility to repair after close of escrow. But the "as-is" addendum also often implies that there may be serious deferred-maintenance issues.
Still worse, many lender-owned homes will have been looted, either by the former owners on their way out or by burglars. Missing ranges, microwave ovens and dishwashers are common. Air-conditioner compressors and hot-water heaters are also absent from many homes. It is not uncommon to see that all of the ceiling fans or all of the knobs on drawers and cabinets have been removed.
My pick for the most-gutted Valley home? The entire kitchen was gone -- even the kitchen sink -- and the air-handler had been removed from the attic.
I would not want to refurbish that last home, since there is no telling what else has been taken. But for most lender-owned properties, the cost of bringing the home back to livable condition is fairly low.
A new set of kitchen appliances is maybe $2,500. A brand new air-conditioner compressor is around $4,000. A decent water heater is perhaps $1,200 installed. Paint, carpet and tile in the high-traffic areas should run $5,000 for a typical suburban home, less if you do the work yourself.
There definitely are homes to avoid in this market, but there are many, many others that are selling for very low prices. These properties need only very minor restoration efforts to bring them back to fully-livable condition.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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