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I was not impressed with this
house. And when she looked at it in February, neither
was Nora. It was a foreclosure special, and even though it was cheap
relative to the neighborhood, it needed work. So we moved on, though I made a
mental note to keep track of what happened to the place. If it sold for more
than list ($629,900), I figured, then this market was still seriously out of
whack.
I learned last month that not only did it sell for more than
list price—it sold for 25 percent more than list price. (See also this
site.) What kind of madness was this? Then I noticed the sale price—$789,000—was about what the property was assessed for. I chalked
it up to my ignorance and inexperience as a first-time would-be homebuyer.
Maybe the bank was obligated by its fiduciary duty to its shareholders to
accept nothing less than assessed value on its houses. There was probably a
provision to this effect in the TARP legislation. Tim Geithner drives a hard
bargain.
Which was a ridiculous thought—I have a fair amount of
those—because the bank wouldn't have offered it for less than its
assessed value if it couldn't have accepted less than its assessed value. What was
going on here?
The mystery only deepened when I learned—just today! (thanks, Frank)— that the house sold
for $651,000. (See also this site.) What happened to the earlier sale? Did someone buy it again? A check of the
public record (you have to type in the address) shows only the earlier
sale, from February.
Maybe the earlier price was a mistake. Maybe the later one is. Maybe there has been a glitch
in the D.C records-keeping department. Maybe, hard as it may be to believe, I
have uncovered a
mistake on the Internet. Undoubtedly, there are things I do not know about the foreclosure process.
Oh well. It was near the top of our price range and needed a lot of work, so we weren't going to buy this house anyway. So no non-buyer's remorse for us. We'll save that for houses we could actually have afforded.
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As it turns out, we aren't the only Slate writers looking for real estate in Washington. Nora and I never looked at this building—it didn't come up in any of our searches!—and now we find out that our fellow columnist Eliot Spitzer has bought it for $180 million.
If you had asked, Eliot—as colleagues, we can be on a first-name basis—we would have been happy to show you around, maybe introduce you to a broker or two. Nora knows a lot about the pros and cons of various kinds of kitchen countertops. I could have told you about what kind of paperwork to have handy when you talk to a lender. Maybe we all could have attended an open house or two. But you seem to be doing OK on your own. And you probably get some good advice from your dad.
Still, we're here if you need us. And to return the favor—if you ever decide to get into the local residential real estate market, can you give us a heads up? Just so we don't make any competing offers.
By the way, I notice the place you got is what is known as "a distressed property." (Another thing Nora and I can do: guide you through some of this real estate jargon. It's not that hard once you get a few key concepts.) Which got me to wondering: How much would you pay for this? Nora looked at it a couple of weeks ago and didn't much care for it, but I wonder if it's worth a second look.
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Like Mickey, I was struck by this fact: The median sales price of a house in Detroit is $7,500.
That figure comes from December. For the three months that ended in January, according to Trulia, the median sales price was $10,000. Slightly higher, but still shocking. The average listing price for a house in Detroit, according to Trulia, was $77,426 for the week ending Feb. 25. (All of these figures are for the city only.)
These two figures leave us with at least two possibilities. Either homebuyers are getting discounts of about 83 percent in Detroit, which seems unlikely, or the only houses selling are the ones that are very, very cheap. Trulia currently lists 399 houses for sale for less than $15,000 in Detroit. Which got me thinking: How many houses for that price in Washington? Exactly three.* The average listing price for Washington is $753, 241, while the median sales price is $349,865.
Two more numbers—the last two, I promise! Detroit's median household income (from a 2003 Census survey): $26,157. Washington's: $42,118.
I still believe real estate prices are too high in Washington. But that doesn't mean I wish for D.C. what's happening to Detroit.
*As several readers have pointed out, these properties are for rent, not for sale. So it appears there are no houses for sale for less than $15,000 in Washington.
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I'm sorry, Mom: I didn't buy a mask before looking at this house on Tuesday. I even brought Joe with me. But, I promise, he didn't touch anything. As Denise suggested, I held him during our whole tour, which, truth be told, wasn't very long.
Really, it wasn't that bad. Michael was right: The property is much bigger than it looks from the front. There's a good-sized family-room addition that leads to a large backyard. There's also a wood-burning fireplace in the living room and a very large (unfinished) basement with lots of built-in shelves.
But.
Beyond the cosmetic issues (lots of orange paint, a collegiate-looking mural on a bedroom wall), there are larger matters, such as the odd placement of a (very steep) staircase (with teeny steps) behind the kitchen and the lack of central air conditioning, not to mention that droopy exterior with the asbestos. Denise suggested that an overhaul would cost around $100,000; I think that's a fairly conservative estimate. She also pointed out the handful of Realtor business cards in the kitchen, commenting that such interest is likely to keep the price up.
I know one has to adjust expectations when looking at a bank-owned property. I was hoping that we could be like all those pioneers I've been reading about, magically turning this shop-worn property into our dream house. What flipper extraordinaire Jeff Lewis could do with this place! (Cabinetry hand-crafted from exotic woods! A koi pond in the yard!)
But shouldn't the starting price on such a house be less than $629,900? It's not as if this is some grand mansion; it's a simple, three-bedroom, two-and-a-half bath Craftsman-style house. Granted, it's in a great neighborhood, with good public schools and a pleasant walk to the nearby Metro. Houses in this area sell for $700,000 and up. But do they have sagging porches and rock-inspired frescoes?
Is location really that valuable?
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Assured by our reader lorikay4, I'm not going to be scared off by asbestos shingles. ("Not a big deal as long as the shingles are painted," lorikay4 says. "Unless you are planning on scraping the paint off and ... inhaling the dust, I think you'll be fine.") Still, I may follow my mother's advice and wear an asbestos mask when I go to see this house in American University Park. ("Good ventilation is your friend," the respirator's ad reads. I couldn't agree more.)
I have to admit that Michael and I have both taken a quick look at this property from the outside, and I'm sensing we're going to be divided on this one. While we agree that it's in a great location, I was a little taken aback by the condition. This is a bank-owned property, so I know I shouldn't be so surprised that it doesn't "show well," to use a Realtor's term. But the electrical tape holding together boards on the front porch was a bit much. (I think it was just stuck there. But the color was suspicious. —Michael.) But Michael says the backyard is pretty big, that there's a sizable addition, and a kitchen reminiscent of the one we had in L.A. (And I'm the nostalgic one?) But the location is just too good to leave this one un-investigated. Also, from what I've been hearing, there are lots of contractors out there looking for work, so maybe we could get a good deal on the renovations? (Leave your estimates in the Fray.—Michael)
It's hard to believe, though, that the asking price of this house is $629,900. That does not feel like a bargain. It is, though, if you look at the tax assessment: $786,800. Of course assessments are derived in part from recent sales of nearby and similar homes. Still, this high assessment could become a problem if the bank thinks it's already offering enough of a discount.
But I'm getting ahead of myself. First I have to get that mask.