House Search

About once a week I look at online listings of houses for sale. I’m not looking to move right now, but if I see a great deal, I might take it.

I found a house that is located in one of the more upscale areas of my town, and it was listed at only $400,000, about $200,000 less than the average home in that area. It only showed this one photo of the exterior, and it seemed to be owned by a bank. I did some more research on it by looking up the deed and mortgage filings. It was bought for $320,000 in 2004, with a mortgage of $280,000. As the next few years went by and the real estate market went crazy, this house apparently was valued at nearly $700,000, because the owner kept refinancing until he owed $682,000 on it!

Very curious as to whether all this extra cash was put into the house, I made an appointment to take a look at it. The house was evidently added on to, and it now sports a terrible layout. It has only 2 bedrooms and a kitchen with literally no counter space, yet the house is over 2,000 square feet. It has custom cabinets and wainscoting, which is complete overkill. I hope that some of that refi money was used on things other than for the house, because what was spent on it was surely spent foolishly.

Even at the low list price, I did not see how this house would be a good purchase, unless you wanted to try to flip it in five years. I left with a first-hand view of the mortgage crisis going on in this country.