Bank owned, falling apart, and stripped

I am pretty handy with a hammer, and, if it weren't for time constraints, we'd probably build a custom house. So "bank-owned" and fixer didn't scare us off. Besides, I love the charm of old houses and despise cookie-cutter "semi-custom" tract home neighborhoods, but find truly custom home neighborhoods pretentious.

We saw an interesting houses for sale, with a price beginning to resemble rational, and we scheduled a viewing. We drove by the house the day before our visit, and watched two separate couples emerge; in both cases, the wives came out with arms crossed, faces pinched, leaning away from their husbands. The husbands' body language and mannerisms didn't suggest that they were any happier with the house. It seemed comical at the time, the similarity of both couples' reactions.

The house is on Winding Way in Fair Oaks, California. Bought in '05 for over $700k, "sold" (probably the foreclosure action) for just shy of $500k last year, and on the market today for $430k. Oh, sure, a kitchen remodel costs $50k so it would still be a half-million-dollar home, but it also had hand-coved ceilings and straight, quality wood. Well, it also had termites and dry-rot nibbling away at the wood - to the point that one window sill had a gaping hole to the outside. The bedrooms were all painted garish theme colors, and the bathroom had been painted bright yellow, right down to the vanity top, bathtub, and tub enclosure. I think that the carpet in one bedroom was actually painted - but it did match the hot-pink walls nicely, if you like that kind of thing. Half of the square footage was a badly-done addition - poor craftsmanship and the terrible "flow" of a poorly conceived floorplan. Shapes and finishes didn't match the main house, and the master shower was located in the laundry room. The pool house smelled of mold, the workshop was converted to an illegal apartment, and the garage had drainage holes so the entire backyard could drain through the garage. Wear your waders to get in the car in the morning - that sounds fun.

Still, no big deal. Put in proper drainage, gut the workshop back to a workshop, tear down the pool house, rebuild the addition. Oh, but there's more. The house had two air conditioners; now it has the exterior shell of two air conditioners, with a bunch of cut wiring poking out. One air conditioner looked brand new, but with every removable part stripped, it is probably a complete loss. Every light fixture I saw was missing parts, and the ceiling fans dangled oddly, with a blade or two removed, the wiring stripped for a few cents copper value. The lawn sprinkler controls were gone, and the entire pool pump/filter mechanism was missing. The attic access panel was askew, and I shudder to imagine what was removed up there. The little 1-foot long copper pipes from the water heater to the wall had also been cut, worth very little in the scrap market, but a nice $50 repair for the next owner. Given enough time, so much will be stripped that it will not be economically feasible to repair - the once-proud $700+k home will be just another tear down.

It might already be. The house had a 14-page Section 1 pest report (items deemed major and in need of immediate repair). Termite damage, fungus damage, broken windows, water infiltration. It seemed that every water fixture had a leak - I wonder if the pipes froze and burst? I don't know if it was an optic illusion or a major structural defect, but one of the rooms seemed to slant away from the rest of the house. The pool was green, the tennis courts cracked and being overtaken by weeds. The yard was uneven and had trenches in the front yard, an earth berm in the side yard, and a rather frightening wood retaining wall in the back. The grass, such as it was, was a motley mixture of grasses and weeds, with lovely large shade trees in the front yard, and broken branches abandoned beneath.

This, my friends, is the asset that backed a mortgage security for over half a million dollars.