Buying Ugly Houses
Judy wants to know all about the companies that advertise to buy ugly houses. How do they work?
QUESTION: Judy and her sister inherited their mom’s home. They know there is a foundation problem and don’t want to get it fixed. The house is worth about $75,000 and the foundation would cost around $10,000 to fix. What does Dave think of the people who offer to buy “ugly houses”? Dave explains to her how their process of ugly house-buying works.
ANSWER: These companies buy with the intention of reselling at a profit. They typically buy houses for about 70% of their value, minus repairs. They’ll estimate the cost of fixing the foundation, so you’ll pay for the foundation in terms of a reduced price. They are not bad people, they are just in the business to make money. With the foundation problem, you’re going to take a hit because a traditional buyer can’t get traditional financing on this residence. You won’t qualify for a Fannie Mae, FHA or VA loan in that case. If it were me, I’d try to scrape together the cash and get the foundation fixed.