Buying a bank owned home in Oakland
I’m trying to buy a house in West Oakland. The price is right - about 135K. The place needs… well, everything. The previous owner bought three places, side by side, and did a lot of “work” on them, so they could flip the houses. All of it was illegal, and all of it was BAD
. Want new walls? Just smack up some drywall over the old plaster. New outlets? No sweat - wire those bad boys in before the new drywall goes up. They won’t see the wires; they’re between the two layers of plaster. But the absolute best? The roof. You can see daylight through this roof. You can whiff basketballs through this roof. 
The mold is so bad that I have to wear a respirator. The floor has traces of green from alge. But the kitchen! it looks FAB, does it not? Want to remove a stairway and not fix the siding? Cut the door in half, nail it shut, and call it waterproof. NEXT!
In other words, it’s exactly what I’m looking for. I’m delighted. However, the City of Oakland is doing everything in it’s mother-lovin’ power to stop this sale. Why? Probably because they LIKE crack houses. My diligent and excellent escrow company has been “working” with the City of Oakland for almost a month to try to get this thing sold.
First, we pull the title. YOW! Ug-LEE. There are numerous liens on the property from the city. Apparently, when the owner walked away, the crack heads moved in. The city cleaned it up a few times, and tried to charge the owner for the service. Now, the owner has fled, so the city is owed the cleaning charge. Also, there are numerous fines from “red tagging” - All the work was done without permits. There are three additional liens which were recorded in error (how do you record a lien by mistake? Three times?) Then, there’s the doozy. The city has a $50,000 “prospective lien” on the property. And, to cap it all off, the city is in the process of declaring the property a “Substandard public nuisance”. Now, this is all well and good. The guys who “fixed” this house weren’t going to correct anything, and city wants to get paid. However, here comes a buyer - me - paying cash for a crack house in West Oakland. Not to fix it and flip it, but to live there. You’d think they’d want to help.
Here’s where the fun starts. Escrow contacts the city, and the city informs us that the “prospective lien” is ACTUALLY only for $5176, and they refer us to an inspector. The inspector’s boss has been known to return emails, though it usually takes 48 hours. The inspector herself hasn’t returned an email, ever. And she’s running about 30% on phone calls. In fact, the city of Oakland’s voicemail system has been entirely unavailable twice. So, since we’re now three weeks into the 7 day escrow, I decide to trot down to city hall.
I lean that, we (the seller and myself) have to file a “compliance plan” with the city. The intent, presumably, is that we follow through with the compliance plan to remove all the issues that the property now has. However, to do this, we have to work with the inspector. Oh, and draw up plans. And file a $2000 bond. And pay about $1600 in fees. BEFORE the buyer owns the house. What happens, I ask, if the deal falls through? I’m informed that it has happened in the past, and the buyer attempted to get the fees and bond refunded (I guess they were out the plan drawing charge, which typically start at $2500). The inspector told me that the city of Oakland - i.e,:, her - told them to fuck off, and the buyer was left with no money, and the city was left with another crack house. Oh, and one of the violations? Well, my door is right bang at the top of the stairs. No landing. I go to the historical department, and pull a photograph taken in 1988, showing the door in the current position. The historical department guessed that the porch had been glassed in sometime in the 1920s. So, I’m forced to correct a code violation from 1925 before I can move into a crack house?
After three or four rounds of this, (not to mention the good old runaround to other departments, but that’s a side issue), the inspector calls me back and informs me that since it’s an all cash transaction, I can actually just take responsibility for all of the above issues, and we can FINALLY transfer title. The seller - a bank - drops the price of the house by the cost of the bond - $2000 - and the approximation of the fees - $1600.
The summary, though, is pretty sad for Oakland. What it really means is that it’s effectively impossible to use a loan to buy a house which has been declared “substandard” by the city. Only the worst of the worst manage to get declared substandard, but it’s a bureaucratic roach motel. Essentially, the city is going to ensure that once a house has been identified as a nuisance, it’s pretty much going to stay that way, racking up additional fees, and never get sold.
My house will close August 5th. 36 days after entering the 7 day escrow period.
How far will you have to deconstruct this house before restarting? Down to the frame? Seems like that would be required in order to get rid of all the corner cutting and moldy badness.
Would they let you demolish the entire house if you wanted to, or would that be more trouble than it’s worth due to red tape?
when you finish all the work, i’ll bid you 95k for it
You are MAD to buy a house that crack may have been cooked in. THe chemicals will have infused everything, cancer will be the best you can get from them. Consult a doctor or organic chemist before buying anything that has these chemicals present you will be committing slow suicide.
I was with until you explained the mold. You should be really careful sometimes houses have to be completely torn because of spore problems. I read an article that explained how a family sold all their belongings at their moving sale, before the house was razed, so they could be rid of the spore problem.
Hey there is that house for free in the Picate parking lot on 4th street in Berkeley.
To address the above points:
The poster who addressed the mold correctly identified the biggest problem with the house. Basically, what I’ve bought is a pre-existing structure, siding, framing, and a lot. I’ll remove the plaster and sterilize the frame with a sprayed 15% bleach solution. Then, foundation (40K) and a roof (I’ll do that myself). The siding will require patching (time consuming, but not difficult) and the windows will need to be removed and propertly re-installed. In some cases, I’ll make new windows (being a woodworker, I’m actually looking forward to that part).
A “crack house” in this part of town means that it was inhabited by addicts, not used for manufacturing. While unsavory, it’s not a source of chemical health issues.
The value of a pre-existing structure is signifigant. New construction - up to code - requires that windows on the property line be removed, and that windows within a few feet (I forget the exact number) must be tempered and have a sprinkler behind them. The whole house has to meet the new energy codes (lighting, insulation, heating, etc), and a host of other more minor issues. And new construciton permits cost about $30K. I’d actually be happy to build a house from scratch, and this project will come close.
Leave one stick standing and put something PoMo and LEED Silver or Gold in. If you start from scratch (well, from a vertical post) you get something that can harmonize with the neighborhood, give you off-street parking for two cars, and generate enough electricity to provide half of your needs, given the marine layer.
New Owner: I realize you plan to live in the house indefinitely. What happens if, for whatever reason, you have to sell and the only buyer(s) don’t have all cash; i.e., they have to get financing? Seems like that leaves you out a considerable sum of money?
Not at all that bad…the only real pain is time/effort. You should have just reduced your bid by the value of the time/effort - if you had experience with this, your effort and expectations would have been much less. I wouldn’t expect cities to have the infrastructure to process the amount of cases they are dealing with today…and as a taxpayer, I sure as hell don’t want them to build that infrastructure.
Nice post. So here’s my question: why bother? I grew up in the Bay Area and know Oakland well. I would never live there. Crime is bad. The city government is corrupt and inefficient. The housing stock is falling to pieces.
However, these are things you’re obviously well aware of. So you must have a very good reason for buying a place in Oakland. What is it? I’m not trying to argue. I’m trying to figure out why a smart, energetic person is bothering with Oakland. Can you help me out here?
Too bad the city of Oakland has their heads up their collective a@@es. Up here in Stumptown (Portland) the city will actually give you a low cost loan and tax abatements to buy and improve a house with code violations to help rebuild the inner city neighborhoods. And it’s working.
Kudos to you for restoring this place, sounds like a lot of work, but a lot of fun. Just make sure you treat the mold properly so it doesn’t come back. Hey, if they can get it out of houses in New Orleans, Oakland should be easy!
TN: It’s possible. That’s a lot of “ifs” strung together, though. Once I work with the city to start the process of restoring the house, I’ll pay the fees (about $4k, which was paid by the bank). At that point, I could sell the hosue and it wouldn’t have any issues unless the new buyer failed to complete the process. But it wouldn’t impede the sale.
[...] first two paragraphs aren’t germane to this issue, but it sure is annoying!) and also here: http://www.nothingugly.com/wordpress/?p=84 I’m not sure where else to go with this one; my neighbor is also engaged with the city, and [...]
Oakland is just trying to get back money to pay some bills. I am an Real Estate agent in oakland,ca and I hate what the city have done to all these bank owned homes.
1. Almost each and every home will have an outragous garbage lien.
2. Other city liens.
3. And the worst is the prospective liens.
These liens are very difficult to deal with especially if the inspector does not know what they are doing.
I am running across this prospective lien in East Oakland. The home was actually inspected in 05. but records shows it was sold in 06 for $400K. Now it is a bank owned. How did it transfer title in 05? Now it can’t clear this lien?
It is next to a treasured creek!! LOL.
I want to buy it, but the problem is no one in the building or code compliance department knows what the hell they are talking about. It really bothers me when the lien was placed on these inspectors think they are the geniuses and they type into the records saying that this home needs a special scientist , A “Licensed Hydrologists who specializes in creek renovation…Category 4 “. From my research this person does not handle creek renovation. and also category 4 is the highest level of creek renovation and will require numerous city and county and maybe even state departments.- But the creek seems just fine and is not damaging the surrounding areas.
That is really funny because the inspector is now retired. This prospective lien must be handled by a new inspector.HAHAHA. You must be kidding me right!!!!
Then one person told me that that inspector was a genius!! Now whoever takes this property will have to handle this great issue. Which nobody wants to help or know what to do. I think I rather just walk away from the oakland BS. It really pisses me off when all we want to do is improve this place, but the BS redtape is holding us back!!
They just want crack houses in oakland I guess!! Is this even legal!! ??? They just want to squeeze money out of people and think they are helping..