{"id":4597,"date":"2024-02-15T18:54:11","date_gmt":"2024-02-15T18:54:11","guid":{"rendered":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2024\/02\/15\/buyer-beware-there-are-still-1-homes-for-sale-but-many-smart-buyers-dont-want-them\/"},"modified":"2024-02-15T18:54:11","modified_gmt":"2024-02-15T18:54:11","slug":"buyer-beware-there-are-still-1-homes-for-sale-but-many-smart-buyers-dont-want-them","status":"publish","type":"post","link":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/2024\/02\/15\/buyer-beware-there-are-still-1-homes-for-sale-but-many-smart-buyers-dont-want-them\/","title":{"rendered":"Buyer Beware: There Are Still $1 Homes for Sale\u2014but Many Smart Buyers Don\u2019t Want Them"},"content":{"rendered":"

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Photo-illustration by Realtor.com. Source: Getty Images<\/p>\n

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In today\u2019s ultraexpensive housing market, buyers who find a home listed for $1 might think they\u2019re hallucinating.<\/p>\n

They\u2019re not.<\/p>\n

In January, there were 216 very real homes listed for $1 on Realtor.com\u00ae. That\u2019s right, there were properties listed for less than the cost of a bottle of soda in many parts of the country. There were an additional 333 priced at $5,000 or less, according to a data analysis of Realtor.com listings.<\/p>\n

While some of these unbelievably cheap home prices are typos, marketing ploys, and scams, many are foreclosures, starting bids in auctions<\/a>, or homes in such bad shape that they need tens of thousands of dollars in repairs to<\/a> become habitable again.<\/p>\n

\u201cIf it sounds too good to be true, it probably is,\u201d says Realtor.com Chief Economist Danielle Hale<\/strong>. \u201cIt\u2019s important to read the fine print and look at the pictures.\u201d<\/p>\n

Why cheap homes aren\u2019t always a bargain<\/h2>\n

Even at extremely low prices, these properties fail to attract regular buyers and investors. Last year, there were 23,000 properties listed on Auction.com with a starting bid of $1. Only 10% of them sold\u2014at an average sale price of $41,000.<\/p>\n

\u201cIn most cases, you\u2019re not going to actually buy them for a dollar,\u201d says Daren Blomquist<\/strong>, vice president of market economics at Auction.com. \u201cWhen there is [buyer] interest, they will still be bid up to a larger price.\u201d<\/p>\n

If these homes are foreclosures, the bank often has a minimum amount it wants for the property. So if buyers don\u2019t bid up the price enough, the property sometimes won\u2019t change hands.<\/p>\n

Sometimes buyers can purchase a home for cheap\u2014but they are then on the hook for the back property taxes<\/a> and other liens<\/a> that the previous owners didn\u2019t pay off. This can be quite costly.<\/p>\n

The buyers might also be charged commissions and transaction fees that boost the true cost of the home far above $1. And this is all before any repairs are made.<\/p>\n

Those searching for inexpensive homes also have to be careful that they\u2019re not getting ripped off.<\/p>\n

Investor Scott Stuber<\/strong>, of Nuremberg Properties, cautions against fraudsters who sell properties they don\u2019t own to unsuspecting buyers. When buyers see these extremely cheap properties, they should be on their guard.<\/p>\n

\u201cA lot of times, it\u2019s just a marketing ploy or a scam, period,\u201d says Stuber. \u201cPeople need to do their due diligence. They have to really understand what they\u2019re getting into. You have to be really careful. There are a lot of scams and unsavory characters out there.\u201d<\/p>\n

Buyers may spend more on repairs than the home purchase<\/h2>\n

Even if the sale is legitimate, there aren\u2019t any back taxes owed on the property, and buyers can get it at a good price at auction<\/a> or from a private seller, the new owners still have to consider the cost of the repairs, renovations, and maintenance<\/a> that many of these homes desperately need.<\/p>\n

These ultralow-priced homes are often not in the best condition. Some need significant work to be habitable, and many aren\u2019t located in the most desirable neighborhoods.<\/p>\n

\u201cThese are typically pretty highly distressed homes,\u201d says Blomquist. \u201cThe electrical may not be working, the plumbing may not be working. \u2026 They may be right next to the train tracks or right next to something that is going to be disruptive to anybody living there.\u201d<\/p>\n

Nearly two-thirds of Auction.com buyers said they spent more than $20,000 on renovations.<\/p>\n

\u201cIn a lot of cases, it takes a special buyer to come in and be ready, willing, and able to take on these properties\u2014even at an extremely low price,\u201d says Blomquist. \u201cThese properties typically are going to require major repairs at least in the tens of thousands of dollars, possibly in the hundreds of thousands of dollars. It requires skill and [financial] capital to fix these properties up.\u201d<\/p>\n

Last year, as mortgage rates surged and home prices remained high, the percentage of people purchasing homes on Auction.com with the intention of living in them more than doubled, says Blomquist. About 15% of sales were for owner-occupied homes in 2023, compared with 7% in 2022.<\/p>\n

That might be due at least partly to how financially challenging it\u2019s become to purchase move-in ready homes,<\/a> especially for first-time buyers. They might be seeking more affordable options, such as fixer-uppers<\/a>.<\/p>\n

\u201cAffordability and lack of inventory are pushing more owner-occupant buyers to consider more out-of-the-box alternatives,\u201d says Blomquist.<\/p>\n

Even investors won\u2019t always buy the cheapest homes<\/h2>\n

Investors remain a big buyer of these distressed properties. Generally, they will fix them up and then either flip them or rent them out to tenants.<\/p>\n

Stuber and his husband, Tyrone Velasquez<\/strong>, have purchased more than a dozen homes in Dayton, OH, since 2017. The investors do most of the rehab work themselves and then turn the properties into rentals<\/a>.<\/p>\n

They will buy smaller, single-story houses at auction, on the regular market, or through estate sales for as little as $6,000. In some cases, they\u2019ve only been able to drive by a property to see its exterior before bidding on it at auction. What\u2019s on the inside, then, is a surprise. That\u2019s why Stuber encourages folks interested in these homes to get a home inspection done by a professional whenever possible.<\/p>\n

He will also pass on some of the cheapest homes that are in the worst shape.<\/p>\n

\u201cThere\u2019s a lot of $10,000, $12,000, $15,000 homes on the market there. But they\u2019re just in really bad condition pretty much to the point of just being a teardown,\u201d says Stuber. \u201cIt\u2019s going to take serious investment to get it to the point where it is going to be livable.\u201d<\/p>\n

The post Buyer Beware: There Are Still $1 Homes for Sale\u2014but Many Smart Buyers Don\u2019t Want Them<\/a> appeared first on Real Estate News & Insights | realtor.com\u00ae<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

Photo-illustration by Realtor.com. Source: Getty Images In today\u2019s ultraexpensive housing market, buyers who find a home listed for $1 might think they\u2019re hallucinating. They\u2019re not. In January, there were 216 very real homes listed for $1 on Realtor.com\u00ae. That\u2019s right, there were properties listed for less than the cost of a bottle of soda in…Read More→<\/a><\/p>\n","protected":false},"author":0,"featured_media":4598,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4597","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/4597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/comments?post=4597"}],"version-history":[{"count":0,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/posts\/4597\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media\/4598"}],"wp:attachment":[{"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/media?parent=4597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/categories?post=4597"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/billingsrealtybrokers.paradiseinnovations.com\/index.php\/wp-json\/wp\/v2\/tags?post=4597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}