Thursday, Dec. 11, 2008 | It would have been a generous description to call the bank-owned house in Clairemont Mesa that buyer Kris Goland first walked through a few months ago a “fixer-upper.”

The kitchen cabinets were gone from the yellow, 1960s-era four-bedroom, two-bathroom house. So were ceiling fans, blinds, light switches, outlet covers, interior doors, closet doors, the toilet, a vanity, the stove and marble counters. The kitchen walls had jagged lines of marble tile, marking the perimeter where the cabinets once were. Gaps showed in the paint, inside and out, the job stopped in mid-refurbishment. The former owner had stripped the house and taken nearly everything with her.

“A normal person would say, ‘Oh, this is a disaster,’” Goland said. “I saw potential in it.”

This is the state of a home in a market flooded with foreclosures and angry homeowners desperate to squeeze the final pennies from their faulty investments. Agents selling homes for the banks — and buyers coming to look at them — have little idea what they’ll find when they open the front door, or if there will even be a door handle to turn when they get there.

It takes banks months to repossess and sell homes after owners stop making mortgage payments. In that time, some homes fall into natural disrepair. But a number of the foreclosures on the market deteriorate faster. Thieves snatch the copper piping or wiring to sell. And sometimes former owners strip the place of fixtures, hoping to sell them or to send a message to the bank.

“They’re taking everything,” said Sara Schwarzentraub, real estate appraiser and owner of Inter-State Appraisal Service. “Everything that’s not nailed down and some stuff that is nailed down.”

Just because the house-gutting occurrence is common doesn’t mean it’s legal. A house is collateral on a mortgage, and a kitchen sink is intrinsic in that value, as is a working toilet and a stove.

“If you can detach it from the property without damaging the structure, and you put it in in the first place, then it’s a removable fixture,” said local real estate attorney William Markham of the firm Maldanado & Markham. Counted among permanent installations are things like granite countertops and wood floors. The dishwasher: “A closer call.”

And taking a hammer to the house before you leave just to spite the bank?

“If there’s willful destruction of property, that’s deliberate harm to the collateral,” Markham said. Banks can go after owners for breach of contract.

“The question is, if it’s a few thousand dollars, is it worth prosecuting people who probably have no money anyway?” Schwarzentraub said.

Goland saw potential not just for fixing up his place, but for major savings. The house was owned by a bank that had foreclosed on the previous owner, and Goland wasn’t the first buyer to come along. The other one fell through when their lenders refused to give a mortgage on essentially an empty shell.

Goland and his real estate agents, Karen and Mike Dodge, offered $390,000, but in order to close the deal they knew they’d have to prove to an inspector that the house had a stove, had a certain square footage of counter space and cabinets, and at least one working bathroom. Goland was set to buy those pieces at Home Depot, but he and the Dodges had something to try first.

Karen Dodge found out that the first owner happened to live across the street. That owner paid more than $630,000 for the house at the height of the real estate boom in 2005 and had spent more than $20,000 fixing it up — installing marble counters and tile, hardwood floors and Spanish-style arches in the interior doorways.

But the owner was hit by a delivery truck and lost her ability to earn income from her home-based massage therapy practice. She fell behind on her payments on both houses and has filed for bankruptcy. When she left, she hired some ex-military guys to rip out the features she was still paying off and put as much of it as possible in her garage, to try to sell later.

In a series of long conversations, Dodge and Goland convinced the owner to sell them what she still had, for a steep discount. They persuaded Goland’s lender to add a few thousand dollars to his loan for interior fixes, which they parlayed into reinstalling much of what the former owner had removed. He gave the former owner $4,000 for as much as she had left, and put another $1,500 or so into the property.

“She needed the money; I needed the products,” Goland said. “She understands that I have no bearing on her situation. I’m just the lucky guy who found the place. If it wasn’t me it’d be somebody else.”

Goland re-installed the cabinets, the marble tile and several fixtures. He closed the deal late last week, ultimately paying $395,000 — 38 percent less than the former owner paid in 2005.

Goland’s particular story is an anomaly in the market. Most buyers would be hard-pressed to find the former owners of their houses, much less convince them to sell back the pieces of their former dream homes. But it’s not unusual to find foreclosures in such straits, with messages like “not for the weak buyer” included in the house listing database, next to euphemisms like “sweat equity” for the hours of work many of these homes need.

Real estate broker Gary Kent’s team has listed about 500 foreclosures in this cycle, he said, and has seen a few egregious properties. One had the kitchen and bathroom removed. A recent house in National City he listed was missing door handles, the kitchen, the bathroom, light fixtures, electrical outlets. In that case, Kent filed police reports for the stolen items.

“Everything that could be removed was removed,” he said.

Another real estate broker listing homes on behalf of banks, Jim Klinge, said between 20 and 25 percent of the bank-owned houses he sees or lists have had stuff taken out of them.

“Some of them just need the money, and they think they can rip off the appliances and get some money for it,” he said.

It’s a bone of contention for Klinge, who often must quarrel with asset managers at the bank to let him fix up the house before he puts it on the market. Sometimes they refuse, even though most financing available — including the first-time homebuyer programs under the Federal Housing Administration and Veterans Affairs — require specific livability standards before they’ll lend money to a homebuyer.

One of Klinge’s listings, a foreclosure, has no stove and no dishwasher, and has mold in the downstairs. Klinge asked the asset manager for $3,900 to remediate the mold. The request was denied, in favor of waiting for a cash buyer who won’t mind paying for its removal. Three buyers have come and gone, and Klinge has held the listing for six months. It’s not the only one.

“It’s a real hot button — the banks are crazy to just be throwing these in the market,” he said. “How are you going to finance these? It’s not rocket science; this is basic real estate 101. You can’t get a loan without a kitchen.”

But buyers like Goland, a self-described “property virgin,” are happy to take advantage of some banks’ occasional refusals to make stripped houses whole before listing them on the market. The Dodges, his real estate agents, expect he’s added at least $100,000 in equity just by getting those pieces back.

“I have no problems with the lady at all,” he said. “This house was way out of my budget before.”

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