Mark Atteberry

In December 2010 I closed on a great condo on Gardiner Lake Road in Louisville, Kentucky. The home was originally listed for $149,900 in May 2008. It was reduced to $129,500 when I negotiated a deal for $122,000 with $4442 in seller concessions. Special circumstances meant a delayed closing but everyone stuck in there and 100 days later we finally traded a check for the keys.

This sale was a true testament to perserverance and focus. With persistent clients who knew what they wanted and my experience as an agent and a loan officer who knew how to get it, everyone ended up HOME for the Holidays.

For more information on how you can get a home for the holidays, click here to visit www.LouisvilleMARKet.com.

Mark Atteberry, SG Priest Realtors

Expert Louisville Advice

502-224-1039

Can a person buy a house in Louisville for $500? I did. It wasn't hard, just a matter of being in the right place at the right time. I show you both sides of it before you decide if I made a good deal.

I was invited to the courthouse steps by a dear investor friend of mine. He had been in a jam and lost a lot of money when he played banker while funding a rehab. He said he just didn't want to take ownership of the house and he wasn't putting a minimum bid on the property at auction.

I showed up with $3000 in my pocket. When they reached the property I was interested in, I hesitated, waiting for the opening bid. I thought this was a good strategy because if I went first, I would have to bid $1500 if anyone bid against me (increments of $500). After a pause, I realized NO ONE was bidding at all. I let the auctioneer get to "going twice" before I spoke up. I bid $500. I still expected some one to bid against me once I got the ball rolling. They didn't.

With a quick count and a slam of the gavel, I bought a 3 bedroom house for $500...Kind of.

There is a law in Kentucky that allows a person to buy back their property if the sold price is less than 2/3rds the appraised value as assessed by the court. In this case, the property was valued at $15,000. Any sale price less than $10,000 would give the owner 1 year to redeem the property. The law prevented the scam Boss Hogg always ran on Uncle Jessie where he missed the last payment so they took the farm. I don't think the Dukes were the inspiration for the law, just a side note. In fact, during the great depression, there were similar laws in the midwest. Good-hearted neighbors would often bid just a nickel for farms in foreclosure, allowing their former owners to purchase them back.

So, I have to acknowledge that however unlikely, the former owner could technically try to redeem this property.

Here's the other side of things: I did my due dilegence and found an unpaid tax bill from 2009. The total on that is nearly $900. The taxes are already due for this year for another $400. These have to be paid, so I'm in for another $1300, bringing the total for $1800.

I first entered the property to find out that it had never been touched by the "investor" who purchased it (funded by my friend). Apparently, an elderly woman lived there and all of her belongings were still in closets with the house in general disarray. I've estimated the trash-out to be $700 including labor and dumpsters. This brings the total to $2500.

If this were a bank foreclosure, the bank would have bid the minimum to circumvent the right of redemption. They don't have to actually pay money, but the debtor is credited with that amount against the total that they owe. The bank then pays an asset management company to come in and change the locks (I didn't get a set of keys and had to break in), clean out the house and dispose of all personal belongings. The place would have been winterized and any current roof leaks would have been tarped. They would have stuck a price on it that they would never get, I would have offered less, they would have countered, I would have waited and done it again 3 months later. That time, if no one else took it, I would have gotten the same house for $3000-$4000 but would not have the redemption period and would have been ahead of schedule in securing and cleaning the property. And I wouldn't have the back taxes.

After the auction, I did a full blown title search that revealed the city placed a lien on the property 3 days before the auction for work done 10 months before. If the bank had bought it, the foreclosure would have cleared it off the title. However, it was up to me to fight city hall (or at least the office of inspections, permits and licenses). One email challenging the lien and they agreed to remove it.

In all, I won't lose money. It was destined to be a good deal. My way took a lot more risks, residual risks, that will stay with me for the next 365 days. I'm never going to recommend the auction to a novice. There are too many variables and ways to get burned. If you are new to the investing game, hook up with a TRUSTED REALTOR that can provide references. You don't want to be someone else's test case.

You make money when you BUY real estate, not when you sell it.

Mark Atteberry, Louisville Real Estate Expert

Mark Atteberry sold a home in the Castle Condominiums on N. Clifton off Brownsboro Road in Louisville, Kentucky. This was a well-kept, 2 bedroom, 1 bath condo on the 2nd floor.

While representing the buyer in this transaction, Mark Atteberry negotiated a $4500 price reduction, adequate repairs plus $2500 in closing costs and a home warranty. In all, the buyer saved over 10% off the list price. The home had been on the market for just over 3 months.

Mark directed his client to a special program that only required $500 for their initial investment, or down payment. The program was at a competitive interest rate and did not require mortgage insurance (also known as PMI). This made a beautiful deal for everyone involved. The list agent had previously had trouble marketing the condos since they were not FHA approved.

If you are looking for a home in Louisville or a condo, search online at http://www.louisvillemarket.com/property-search/search-form/.

Search other great deals that Mark has completed at http://www.louisvillemarket.com/even_more_sold_homes.asp

I hear every day, "I want to buy a foreclosure". What they mean to say is, "I want to invest in something with equity". When you look at any home you have to do the math. When you add the purchase price to the material cost and factor in what your labor is worth to you (for those doing sweat equity), you come up with the true cost of the property. Every investor should be asking their Realtor to do after-improvement comparables so they know what the potential market value would be after renovation. This makes a strong case for nurturing the Realtor-Investor relationship as well. Your Realtor needs to know the scope of your work and the quality of your finished product. It truly makes a difference in whether or not your image of "renovated" matches what your Realtor's image of renovated.

Here's some quick tips to factor:

• Know before you buy what you will do with the property: Live in it, Flip it (sell without improving), Renovate it for sale or Rent it. Every one of the choices affect your end market value.
• Take pictures...LOTS of them. These will help you once you get home to remember the details. You will also review them later for potential problems you didn't see at the home site. Keep them for later. If you are refinancing or selling it is good to prove your work and why the home is worth so much more than you paid for it.
• Try to get close to true numbers. You don't want to under-estimate, but over-estimating isn't good either. If you say the renovation takes $20k and it can be done correctly for $14k but you bid less and lose it because of your percieved cost, you ultimately lost out on equity because of misinformation. Try to hit your target.
• Know the rough cost of mechanicals for the size of a house you are chasing. You should have a good guess at how much a furnace, air conditioner (because they are usually stolen), hot water heater (trash if it wasn't properly winterized) and electrical panel. You aren't getting a quote, just a mental picture of how much this is going to cost.
• Work with a Realtor that is experienced with foreclosures. They should know the ins and outs of HUD homes, Fannie Mae, Freddie Mac and Bank REO. Ask for references or see if their past deals are posted online. My completed deals are posted at http://www.louisvillemarket.com/sold_homes.asp. You can find testimonials from past and repeat clients at http://www.linkedin.com/in/markatteberryrealtor.
• Do your due deligence. You are purchasing a home AS-IS. It may or may not be contigent on an inspection, so make sure you know your way(s) out of your contract if there are any. Some of them allow a number of days for inspection and if you cancel after that, you lose your earnest money.
• Finally, have your financing arranged ahead of time with an investor-friendly lender. Make sure your lender knows that you are searching for a distressed property that may be in disrepair. If they have an underwriting issue because of that, you need to know now, not later. If all else fails, you can get a 203k loan (purchase/renovate) through FHA with 20-25% down as an investor or 3.5% down if you will live there as your primary residence.

Real estate is like the stock market. You don't make money when you sell, you make money when you buy. If you buy right, you'll never get burned.