WHY IS THE AGENT TELLING ME THIS HOUSE IS ONLY WORTH ‘LOT VALUE’? A reader named Gary writes: “My husband and I have been looking for houses (which has been daunting in this seller’s market) and I’ve been a little jaded by agents listing houses that that are being sold for lot value and are “drive by only.” These houses look to be in okay shape and just need the right buyer to fix it up but the listing agents are marketing them to developers to tear down. For instance, the house [at 1905 Shearn St., pictured at left] could be so cute! It even has those gingerbread architectural details! . . . Houston is bleeding cute houses because of listings like these and I feel helpless to do anything about it because I don’t have the cash to buy a place like this and fix it up.” [Swamplot inbox] Photo: HAR
Just basic market principles at work. Chances are this house is not considered livable in it’s current state and therefore may not be financeable. Also, people who want this house generally don’t have the cash on hand to fix it up properly even if they manage to finance the original purchase. Anybody with ability to finance and have cash on hand is looking at something bigger, newer, better. So in essence, a buyer for this house does not exist.
While I am not a Realtor, my guess would be that the seller has indicated that it does not want to engage in discussions concerning what defects the “improvements” suffer from. If I were in your situation, I might acknowledge that I understand the “lot value only” concept, but am considering doing some work on the structures and as a result need a quick look to determine if that approach makes economic sense. You could flat out represent that you would not present a contract that required the seller to make (or give allowance for) any repairs, or perhaps even give up the inspection contingency if you could just have a look. Might not work, but you never know unless you give it a try.
Just as other have stated, the owner doesn’t want to do any repairs or want to hassle with inspections. The land is simply worth more than the house. If you want to rehab the house, you are more than welcome to.
Get a realtor that can get you inside.
You can always push for whatever neighborhood the house is in to become a Protected Historic District, as happened a few years ago with Old Sixth Ward. This is a great way to preserve the city’s historic heritage, and has the nice upshot of seeing all the a-holes who told you to “work harder” before whine and bemoan the death of capitalism/freedom/America on places like Swamplot.
Having had quotes to “improve” an old house of mine for sale was an introduction to over-regulation destroying incentives to fix anything. That being said, I know 2 people that re-habbed their 70-year-old homes. One did a nice job, retaining the old look. The other basically built a Frankenstein. Both appraise at lot value, nothing significant is attributed to the house, which hinders financing. However, if you’re not needing financing, you will face living an improved house that creaks, has sloping floors (potentially), is inefficient, some one which people call charming but after living in my house for 8 years under those conditions, I’ve had enough. So if you’re asking these questions, which are good ones, I’d say, go buy that old gingerbread-laden house and prep it for living, you’ll learn all you wanted to know about knob-and-tube wiring, plumbing drains eaten by roots, collapsing soil conditions, humidity, etc. Best of luck.
Yeh as a realty layman, it seems there could be a better way to say this, like selling the house “as is”. I’ve always thought that if someone is selling a property for “lot value” only, then the seller should pay to have the house razed and removed at his cost.
Likely because they can sell the property for lot value for about the same price as if they sell it for someone to live in. However, to sell it to a person looking to move in, they have to setup tours (over and over, by home buyers they know will likely pass), deal with inspections (and the renegotiation after), financing contingencies (which might cause a no-sale due to result from the inspection and/or appraisal but of which the bank is going to require — on top of finding someone willing to insure it).
So yeah, you’re welcome to pick up a ‘lot value’ home, just make an offer on it, buy it, and move in. However, if the seller knows it’s not in good shape he’s not going to want to bother with 10 people that want to view the inside, be picky about the size and condition of the bathrooms, etc.
TL;DR: Home buyers suck to sell to vs. selling to a developer. If you want a “lot value house” then place a offer w/o typical home buyer contingencies.
Geeze, sorry, I guess I could have just ‘ditto’d’ the other comments.
Bill, a Realtor isn’t going to have much luck getting you inside as the sales agent isn’t likely going to want to bother doing tours. And a home being sold for lot value isn’t likely to have a supra sitting on it because if it’s being sold for the land, what point is a tour?
My suggestion? If it’s really the location and size you want, then drive by, walk the property, peek in, etc. If you want it, be aggressive and put it under contract and waive contingencies.
Progg, you’re free to make that a condition of your offer if soothes you.
Commonsense pretty much nails it – “Lot Value” means the seller is aware that the structure is in poor shape and that is already reflected in the asking price. It also means he doesn’t want dreamers, lowballers, the clueless, or the tenuously financed wasting his time.
If it “soothes” me? What in God’s name are you talking about?
Hey, at least the HAR listing has a few interior pictures and a few of the house from the back. A lot of these ‘lot value only’ homes only have one or two front pictures and then pictures of all the new, boring townhouses up and down the street.
Maybe it’s to show a prospective owner the house isn’t TOO bad, and might be sold and moved off the lot. But that can get expensive if you are moving it very far.
“Houston is bleeding cute houses because of listings like these …” That is categorically untrue. There is no shortage of cute little houses like this, east of downtown and inside the loop. I think what you meant to say is. “Houston is bleeding cute houses in places like the Heights where affluent, mostly white people want to live and are willing to pay obscene prices to do so”
I bought a house that was being sold as “lot value” only. I was aggressive and explained to the sellers that I didn’t give a shit about the lot and only wanted it if I could salvage the house. They ignored me for a few weeks until no other offers came in. Then they called me out of the blue and allowed me to walk the house AND bring an inspector to check the foundation. I got the house. Completed a 2 year renovation of it. I absolutely LOVE IT and have no regrets. That said, this was back in 2009 when the market was softer. However, if you want the house… GO GET IT.
First Ward could be a very nice place and combine both older renovated homes and new construction. Most of the older homes have been poorly kept and are in such bad condition that it would not make economic sence to rehab. The recent run up in lot costs has been due to new development. If this area becomes a historic district values and prices will drop back to where they were 3-4 years ago before the new construction began. And good luch trying to get financing for a project there as no appraiser would give much value to any of those houses making it a real danger to invest…either as an individual or investor. First Ward is not Woodland Heights where the homes were fairly well maintaned and it was converted to a HD before any real development progress took root. Let this remain an owners rights area and allow new construction and old to live in harmony.
East of downtown, you can get houses in much better condition (move in ready maybe even) for 1/2, or maybe even 1/4 the price. You can also get ‘lot value’ places for damn near the price of a car, and do whatever you want.
You may even come to enjoy the area. Please though, if you do move in, give me a chance to do some serious exterior renovations (double pane windows, for one) before you and the other upstarts force me into a historic district against my will.
The much larger issue is….. Why on Earth does this Realtor think this 4,900 SF lot is worth $270,000???
I’m selling my house on Posey St where I lived for almost 12 years. It’s a great house and super cute on the outside with big live oaks and a tree swing. But, my realtor is frustrated because he can’t find a builder or an investor and is convinced that no individual would ever buy this house. I shouldn’t have to argue with my own realtor that this house is a great investment for someone and just needs some TLC that I didn’t have time to give it. I feel your frustration and live it every day right now.