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> For example will a bank even lend money against such a home or is there some underlying assumption that you'd have to demolish and rebuild new before they'd e
by resoluteteeth 5y ago
> For example will a bank even lend money against such a home or is there some underlying assumption that you'd have to demolish and rebuild new before they'd even consider it?
If they're being sold for $500 why would you expect a bank to want to lend money against it? It already has no value as collateral.
- onlyrealcuzzo 5y agoLOL - on a 30 year term, too! =PMT(0.02/12, 30*12, -500) $1.85 per month!
- Tiktaalik 5y agoMy concern would be that if the land is worth ~$0, and building worth ~$0, that the bank won't even lend you money to build a new building.
- tormeh 5y agoThe bank could take collateral in something else than the house. But if you have that kind of collateral, you might not need a loan in the first place...
- lazide 5y agoIt can actually be even weirder. The land might be worth -$money (in some cases like Detroit, tax liens and other issues meant the ‘$1 house’ was actually $50k+ because of the liens.) And yes, no sane bank is going to lend against collateral that is fundamentally worthless. Construction loans are problematic because the property can be worth -$$$ if say the work isn’t finished and the builder starts putting (western concept, not sure how it maps to Japan) builders liens on the property for all the work they did, and then it all rots because no one put windows or a roof on it. These properties are at these prices because they are currently fundamentally not worth more. They sit on the market because they won’t even sell at that price.