Skip to main content

What happens when a property becomes worthless? [US]

This is mostly a hypothetical question that I'm curious about.

I'm curious about what a homeowner's options are when a property becomes effectively worthless. For example there are some condos in certain major cities with very low purchase prices (<$50k) but are saddled with thousands in monthly assessments, usually a combination of high HOA fees for older buildings along with a slew of special assessments. This situation is rare but does exist. At a certain point it's conceivable that the maintenance costs might exceed the unit's rentable value, making it effectively worthless.

Or, if thinking into the distant future, properties may become worthless due to some western/southwestern cities losing most of their fresh water supply (I know that's probably extremely unlikely).

If the property has a mortgage, then obviously it will go to the bank if the owner abandons it.

If there is no mortgage and property taxes are unpaid, the home may go to the taxing authorities. In this case, what are the homeowner's additional liabilities? For example, if the city/county doesn't want to take ownership of the property because it's worthless, would the owner still be held liable in any way for the property if it's abandoned? Who decides when it's time to demolish a condo building? Are owners responsible for demolition costs?

Again, just hypotheticals I've wondered about. For an idea of some examples, search Zillow for cheap Chicago condos and you'll find some where one year in maintenance fees (sometimes >$2k/month) exceed a third of the purchase price. There's also a condo building in Honolulu that's been struck with catastrophic assessments of over $15M on top of already high fees. At some point, it makes you wonder if demolition and rebuilding is the better option financially but that's probably not viable since not all residents would agree to that and in some cases these building have a historic designation.

submitted by /u/pernambuco
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/vo1rg6/what_happens_when_a_property_becomes_worthless_us/
Labels:

Comments

Post a Comment

Popular posts from this blog

North Carolina – “One to Buy; Two to Sell”

I realize I will likely have to contact a real estate attorney but also hoping to hear insights and experiences from others! I have a house in NC that I bought by myself in 2009, and paid off, in full, in 2022. I got married in 2023. My spouse and I have not lived in the house as our "marital residence". We have maintained separate residences even after we got married. (That a separate topic!). I am now selling this house. Realtors have told us that my husband has to sign the deed at time of transfer but I am not convinced since the house has not been our marital residence. The realtors like to use the phrase "one to buy; two to sell", which seems like a broad-stroke statement which is not applicable under all circumstances. And of course, the realtors don’t realize the details of my specific circumstances: I purchased and paid for the house in full prior to marriage Only my name is on the deed And most importantly, we have never lived in the house as a marit...
Post a Comment
Read more

Aren't comps/CMAs useless with buyer credits at close happening now?

I'm looking into buying a new construction townhouse in my HCOL US city. I'm seeing builders offering interest rate buydowns worth $20k-$60k on $800k homes (rather than just lowering prices) in order to keep their comps high for their other units, now that buyer demand has been declining. I asked my agent about these, and he said these buydowns aren't even the full story: buyers can write all kinds of other credits into an offer, like their closing costs, prepaid sewer fees, etc. Apparently cash buyers can just write in a "buyer credit at close" for any amount in their offer. So a new townhouse that appeared to sell for $800k in the MLS might have actually been a cash offer with a $100k+ buyer credit at close, meaning the buyer only spent $700k or less in total, but to the rest of the world they can only see the $800k! So that made me realize I can't trust comps/CMAs for other new construction townhouses. The sales prices could be way lower than they appear...
1 comment
Read more

Co-signing as non-primary resident - effect on size of required downpayment & first time home buyer status?

Contemplating co-signing on a house with my mom and splitting the mortgage payment. I currently have a significantly higher income and much better credit than her. I'm looking at potential home costs and related downpayments but have difficulty using some of the online estimators. From my perspective, this would be somewhat of an investment purchase (I intend to stay in my current location in a different state and contribute to the mortgage), however, for my mom, this would be a primary residence. For purposes of the downpayment size and the type of mortgage arrangement, would it be an investment property or a primary residence? Many thanks for any help. submitted by /u/piercalicious [link] [comments] source https://www.reddit.com/r/RealEstate/comments/km4hvl/cosigning_as_nonprimary_resident_effect_on_size/
Post a Comment
Read more