How to Decipher the Condition of a Foreclosure (at Least in St. Louis Park) Without Actually Going Inside
“Sold As Is. Great rambler in the most desired SLP location, minutes to Uptown, Southdale, shopping, etc. Needs work. Highest and best due by Friday October 11th at noon. As Is Addendum required. See supps, escrow required by city, $5k-$8K.”
–Excerpt, MLS “Agent Remarks”
No, this 2 Bedroom, 1 Bath Fern Hill rambler does not have a “to-die-for” Kitchen — or anything else.
The allure is entirely in the very attractive list price, $99,900.
Too attractive, in fact.
Not the Real Price, or, “Foreclosure Games”
Given that the home’s tax assessed valued is $178k, and the value of just the lot is conservatively $150k, the chances of this home actually selling for $100k are . . . zero.
And the bank-owner, the listing agent, and anyone else savvy about such things knows it.
So, what is the bank up to?
Trying to ignite a feeding frenzy that drives the sales price WELL over ask.
If Buyer #1 doesn’t pan out — often the case in such scenarios — the bank moves on to the first runner-up, then the second, etc.
Inferring Condition
In the meantime, what else can be gleaned from the Agent Remarks?
Notwithstanding the unflattering MLS pictures, the home is actually not in such tough shape.
That’s because St. Louis Park requires Sellers to either “repair or replace” defective items identified by the city inspector, or, to assign responsibility for fixing them to the Buyer.
Escrowing for R&R’s
When the Buyer is to assume responsibility (the case here), St. Louis Park further requires 150% of the estimated repair cost to be put in escrow.
Assuming that the listing agent’s $5k – $8k range is accurate, the actual cost of repairs here is likely under $5k.
Of course, “in good repair” (and safely habitable) is not the same as “updated.”
See also: “Realtor Prayer”; “New Name for ‘Highest and Best.'”
“Calhoun Lake”
I happen to live in the same neighborhood as this foreclosure, and I’ve got to say, “proximity to Southdale” ranks WAY down the list of neighborhood amenities.
In the same vein, I recall another listing — also a foreclosure — a few years back where the listing agent touted the home’s proximity to “Calhoun Lake” (It’s “Lake Calhoun”).
You wouldn’t call it “Minnetonka Lake,” would you?!?
