At a time of record foreclosures, vandalized lender-owned homes are causing big headaches for banks and agents across the country.
Vandals caused over $250,000 in damage in a foreclosed home in Huntington Beach, Calif. The two-story home was previously valued at over $1.7 million, but is currently undergoing extensive renovation before the bank that owns the home tries to sell it again.
Vandals had poured cement and chemicals down drains and left water running in the Jacuzzi bathtub to flood the property. All the drainage pipes had been clogged, which led the pool to turn green. Mold and decay had spread around the home when agent learned of the vandalism last September.
"I don't know what any house looks like when I first learn I have a listing," said Tom Moon, a realtor with Pacific Moon Properties. "I showed up to this house, saw the extent of damages and said, "Oh, s***."
Of the 6,000 homes he has sold, Moon said about 200 have been vandalized. He said angry owners usually take appliances at most, but this case was over the top.
"This is the worst intentional case of vandalism that I have seen by far," said Moon, who has sold foreclosed homes for 30 years.
The home is near a golf course in a gated community, called The Peninsula at Sea Cliff, one mile from the beach. The home was at a foreclosure auction in August, listed for $1,782,214 in cash, but it returned to the bank when no one had bid on it. The police had no witnesses when the property vandalism was discovered in September, so they have not pressed charges.
Moon said the renovations only recently began on Jan. 11 due to standard legal processes and communication between contractors, the bank, and the outsourced firm managing the bank's foreclosed properties. Moon said he could not disclose the name of the bank.
Moon said he is confident he will be able to sell the home once the renovations are completed, but the job has been complicated.
He said the worst damage, and most expensive, is related to the mold in the home. The vandals had poured some liquid on a large pile of clothing on the second floor, which caused water damage and the ceiling to cave-in.
A contractor is currently putting the house through "mold remediation" by ripping out the drywall and anything else infected with mold. The process will last another two weeks and cost over $32,000.
He estimates the repairs in the Huntington Beach home will cost over $250,000 but will return the house to around its original value. He expects repairs be complete by the end of January and the home will be back on the market one month after that.
Huntington Beach, Calif., is not the only city dealing with vandalism in distressed properties.
Myra Beams, a realtor in Tamarac, Fla., said half of her foreclosed properties, regardless of the price range, have been vandalized by the former owners.
"I think the former owners are angry, and for some reason, they think they're entitled to destroy properties," said Beams. "I guess they're angry at the banks for giving them the mortgage."
Beams said vandalism makes her job more difficult as she tries to sell distressed homes. She often has to pay for repairs, such as light fixtures, out of pocket to fix a home quickly until a bank can reimburse her.
"So I'm acting as a general contractor and realtor," Beams said.
Beams said she has seen the same frequency of vandalism in the past few years compared to the largest foreclosure waves in the mid 80s and late 90s.
"It hasn't subsided," said Beams. "It's ridiculous it's still going on."
Moon said he has seen fewer instances of vandalism in southern California because people are more educated about the foreclosure process today. He said most foreclosed owners are aware that banks will offer relocation assistance if they move out of the house by a specific time period with the house intact.
"Before, they were more ashamed that they lost their homes. These days, they're not ashamed. They say the bank ripped me off, when it can be the economy. So it's more of an entitled generation."
About 13.9 percent of all real estate properties owned by a bank or agency were so badly damaged that they did not qualify for standard mortgage financing, according to data collected from real estate agents across the country for November 2010.
Thomas Popnik said this is an improvement from July 2009, when his firm, Campbell Surveys, began collecting data. At that time, the proportion was 19.8 percent of all real estate owned properties.
He said agents are selling properties more quickly before they are vandalized, often conducting short-sales for less than the mortgage amount outstanding. Otherwise, he said damaged properties decrease the value of not only one home, but other homes in that neighborhood and cause declines in the overall housing market.
If you are a neighbor to one of these damaged properties, your house value goes down, and it feeds into a system of comparables for appraisals," said Popnik. "All these really low prices get fed into the appraisal system."