The Sandy-damaged homes heading for the auction block may look like bargains, but they're rife with potential pitfalls, especially for inexperienced fixer-uppers.
The minimum bids for the 150 homes to be sold Tuesday and Wednesday range from $27,950 for a ranch in Mastic Beach -- slightly more than one-fifth its value before it was wrecked by the Oct. 29, 2012, storm -- to $397,800 for a waterfront Colonial in Massapequa worth $1.2 million before the storm.
Nearly half the homes are on the water, and another 24 have water views.Story150 Sandy-damaged properties to be auctioned
Some properties could sell for steeply discounted prices, said John Walsh, a real estate agent with Galaxy Realty Group in Hauppauge who took potential investors on a tour of soon-to-be-auctioned homes in April.
However, Walsh said, even if a home sells at a $100,000 discount and repairs only cost $50,000, "How much are you paying to live somewhere else for a full year while all this is getting done?"
All 150 homes were substantially damaged, meaning that repairs would cost at least 50 percent of the prestorm value of the houses. All must be elevated, said Misha Haghani, managing principal at Paramount Realty USA, the Garden City-based firm that will run the auction.
The necessary repair jobs are "not for the run-of-the-mill do-it-yourselfer," said Mitchell Pally, chief executive of the Long Island Builders Institute, a trade group.
It can cost $75,000 to $150,000 to elevate a home, Pally said. Post-elevation repairs and other expenses can boost the price tag to $200,000, said Freeport-based builder Ben Jackson.
In most cases, buyers are likely to knock down the homes and build new ones, Pally said.
After all, building a new home doesn't cost much more than repairing a storm-damaged one -- and new homes sell for much higher prices, Pally said.
Buyers must be confident they can finance the full purchase price, since they risk losing their deposits if they do not close on their purchases within 45 days. They must obtain a certificate of occupancy within three years, or risk losing the property. They also must factor in potential increases in costs for property taxes and flood insurance.
"I don't think it's a bargain for your regular Joe," Jackson said.