Big houses are really nice, if only they weren’t so costly.
It won’t be long before the iffy real estate market will be fertile ground for bargain hunters, if it’s not the case already. But recently, there’s been quite some buzz about the latest high-profile foreclosures to hit the news: those homes that were given away for free through the Extreme Makeover Home Edition show.
The Extreme Makeover program makes for great reality tv by providing “free” custom-built homes to families that have been hard on their luck in order to give these families a fresh start. But unfortunately, for a couple of these home recipients, their change of fortune doesn’t stick and they promptly lose their homes to the banks. Some details of these cases, along with my thoughts:
How Big Houses Can End Up In Foreclosure
#1 The Harpers’ Story
In particular, this magnificent Extreme Makeover home owned by the Harper family is one such casualty of foreclosure borne of poor financial decisions.
From thestar.com:
In Clayton County, Georgia, more than 1,800 people showed up to help ABC’s Extreme Makeover team demolish a family’s decrepit home and replace it with a sparkling, four-bedroom mini-mansion in 2005. The finished product was a four-bedroom house with decorative rock walls and a three-car garage that towered over ranch and split-level homes in their Clayton County neighbourhood. The home’s door opened into a lobby that featured four fireplaces, a solarium, a music room and a plush new office.
What’s more, the house cost $450,000 to build, with reports also stating that Beazer Homes raised an additional $250,000 for the Harpers, in order to cover scholarships for the family’s kids and to help defray maintenance costs and property taxes for the home. It turns out that after such a tremendous bounty is showered upon grateful and lucky families such as the Harpers, these folks are sent along their merry way. They are on their own financially, after the show bestows upon them a gold mine that turns very quickly into a money pit.
ABC said in a statement that it advises each family to consult a financial planner after they get their new home. “Ultimately, financial matters are personal, and we work to respect the privacy of the families,” the network said.
How could fortunes change so drastically in three years’ time?
#2 Jessica Boey’s Story
One other Extreme Makeover home is lost to foreclosure due to a death in the family:
Ty Pennington and his team built Jessica Boey a new home to help her during her fight with cancer in October. Boey passed away in late December and now, the family is struggling to pay for the expensive new home.
There’s still $250,000 dollars left on the old mortgage that they have to pay, plus they’re paying property taxes for the value of the new home because it’s worth more than the old home was. On top of that, utility bills now cost anywhere from $500 to $700 dollars a month.
Was this something that could have (or should have) been prevented with adequate financial preparation?
In an earlier post I wrote about the Extreme Makeover Home Edition show, I stated that the idea behind the television program is wonderful, but I’ve expressed my skepticism over its whole premise, and wondered whether the show’s participants are really prepared to own and maintain such elaborate homes (or mansions). Were these people ready to receive such generous gifts? I’m sure many are, but this doesn’t alter the fact that those who experience a sudden change in fortune often find themselves in a vulnerable situation: when you’re steeped in financial difficulty and suddenly receive a massive windfall, you’re susceptible to financial stress. Without some solid financial guidance and direction (even intervention!), those in this quandary can eventually find themselves back to square one.
Stories like these just emphasize the importance of fostering money management skills in our homes and schools.
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That is definitely a fantastic looking house. The people that should be the maddest should be the ones who helped did it. I assume many donated materials and labor to make it happen. They probably just need to tone down the houses that they make.
Can you believe it was given away for free? Wow. If only people were more prepared to handle windfalls as awesome as this.
It was only a matter of time before these types of things were going to happen.
Hey SVB
this is a very eye opener. Really gives meaning to the phrase nothing is free. It is really sad that all the good work came to nothing for these folks. But I guess the worst thing is really the lack of disclosure that a bigger house will have higher taxes and higher utility bills. Bigger house equals bigger maintenance.
Mr Credit Card
I wonder if this will impact the kind of houses they build in the future. Do you think they could shift the meaning of “Extreme” away from over-the-top largesse and keep their viewers?
Not to diminish the hard work and volunteerism But for those looking to question or place blame..Blame it on the Executive Producer(s)of the Production Company(a sub-contractor for the network) not ABC. They are the final say. They choose the family, they approve the size of the house. They consult the family about taxes and how to program the wide screen TV.
The EP’s job is to get ratings… and destitute families have that guaranteed over the top memorable reactions at reveal that the network demands.
It is sad that a families biggest qualifying factor are their over produced potential reactions or heartfelt dispair they spin to Mr. Pennington. Not their so-called community service or their well being.
It’s an hour show, filled mostly with force fed product integrations and ty screaming his head off all whacked out on booze or adderall and concludes with the “reveal”.
if the famillies are smart they would sell the house the day after the episode airs and buy something they can afford…..doubtful huh?
Hollywood is evil my friends.
If only the chosen families have their heads on right and decide to flip the house instead of live in it. I agree. Even if the house is sold for a discount, the family would still be miles ahead from where they used to be, and it would be the surest way to protect their winnings.
Big houses are a major money pit and will simply suck away your cash over time. Unless you have high income, it’s tough to keep your hold on a brand new, mcMansion.
For the family that experience a death I dont understand why they dont simply sell the house. Personally I dont know if I can blame the EP or ABC. I mean jsut because the owners fall behind on tax payments doesnt mean the EP didnt properly disclose information about taxes. Its perfectly possible the family is just not financially responsible.
Chalk one more to “windfalls do not help most people”.
Like you said money management skills count. Maybe there are families that seriously benefitted from this program.
The first one I heard that they used the equity to take out a $450k loan for a business venture that failed. Even if they could afford the upkeep, they didn’t have the financial sense to make a solid business plan or to get financing somewhere other than their home.
The second one is unfortunate because the owner died. I don’t put the blame for either of these on ABC. But it is very unfortunate and goes to show that getting someone back on their feet does not prevent them from falling again.
What a sad couple of stories… I don’t think that they’re ABC’s fault any more than depression of lottery winners is the fault of the state government, but people who get huge windfalls like this sort of thing should make sure that they get appropriate advice and professional help to deal with the transition.
-Suz
I don’t like big houses. For a start, heating can be costly. In the old days the upper classes needed big houses for all their servants. Now it’s vanity, I think.
I’d sooner have a small house and more acreage.
This is a case of having a hammer, so all problems look like nails.
The show is called Extreme Makeover: Home Edition, so they have to build extreme homes.
That would be appropriate for, say, a well-off family that wanted more space. But, I guess they don’t think the ratings would be as good as if they built the house for a family in need.
But, the key is that the needy family doesn’t need the extreme house.
If the family is poor and living in decrepit conditions, then they need a nice, newly built, modest home worth maybe $250,000.
If the mother has cancer, why do they need a mansion? Instead, why not a modest home that has access for her special needs?
Also, if you ever get a chance to buy one of these extreme makeover homes, even at a cheap foreclosure price, you should think twice.
Here in the Chicago area there was an article in the local papers a few years ago about a local family that got a house from a Fox version of extreme home makeovers.
After the show was over, they had all kinds of issues with the workmanship.
The homes are built on tight TV production deadlines, so they are not necessarily of the quality you would want for the long term.
I don’t blame the show for the Harpers who took out a loan on their house. If you don’t have to make house payments, most people could afford taxes and utilities. If not, sell the house and buy a less expensive one. Don’t up the expense by taking out a loan. If you can’t afford the upkeep, how can you afford payments on that kind of loan? I think that’s beyond stupid.
“How could fortunes change so drastically in three years’ time?”
Good Question!
In my opinion big houses are a waste of time, sometimes one single family build a house with 5-6 bedrooms. What is the purpose?
They should do a show on the people who fail after they get their house. I think that would be just as interesting and it could be a real financial lesson for the viewers.
This is sure a downer…. I guess that is what happens when you can’t afford your home…
The family losing that big house cannot blame the show or Hollywood in any way. They had no mortgage, plus were given enough money to pay property taxes for years and years.
They sought a second mortgage for $450,000 and found a lender. The family and the lender are to blame.
You can give a man a fish, but you can’t expect an idiot to learn how.
That was a shame to see. My wife & kids love this show. Depressing.
That’s sad. I always get choked up whenever I watch that show, but I always wondered how they were going to pay the taxes and upkeep.
These houses are so cute! I love them. I wish I had a house like this..
Thanks for showing us such great alternatives to those typical mcMansions out there.
These family members must feel bad having to sell or give up a home that was built for them. Can you blame them for selling a home they can not afford?
Well…to start out, i dont think the blame should be on ABC or the Extreme Makeover Home Edition crew…the blame should go to the family! I agree with what people are saying…that the family not be as financially responsible as they should have been!
Frankly when I saw the Harper’s episode I said to my wife….”That’s Rediculous!”, Building such a home in that neighborhood first off and secondly I was annoyed that the Show has gotten out of control with the Makeovers. I mean a distressed Family does not need a half a million dollar house. “Seriously How do they expect to maintain the thing or pay the taxes and Utilities?!”
The interior theme rooms, the ridiculous use of high end materials. Absolutely the best thing to do if you ever receive an extremem make over is to sell the house while the show is still hot!
They used to help people…now the show is simply a showcase for McMansions. Pathetic really!
omg that’s a big house but i’ve seen bigger but that is a pretty house i wish i could see more of it
I stopped watching Home Edition: Extreme Makeover long ago because I found the premise so troubling. Large, beautiful houses were built for struggling families, but I questioned whether they truly needed such fancy places in which to live. A smaller home could be just as nice and much more affordable. Even though the houses were built by volunteers, I figured the property taxes would escalate and cause problems for the families. I didn’t know that the families were also responsible for the mortgages on these places. These dream homes quickly turn into financial nightmares for them, and I think this program should be stopped because in the end it creates more problems than it solves.
They were not made responsible for the mortgages. They went out and borrowed $450k against the value of the “free” home they were given. Just goes to show some people are better off living in housing projects.
I agree with one girl. These people are in dire straits they would be happy with someone with enough floor space to live in, water proof, working pluming and electric. But they get houses that the rich live in. They don’t need it and in some cases prob. don’t want it. They just need and want a house.
I have often been thinking about, how the people that get these houses, are going to pay taxes and what not. I always said that if I was in the show, I would sell the house and get what I needed + a hefty sum of money.
But I think they should give their show a makeover, because when you think about it, they wish to help people living in poverty, right?
What better way to do so, than to give an entire apartment complex an extreme makeover? To show they are responsible, the production company, could then find sponsors that would pay the taxes and what not, so the many families living in the house, could live there rent-free, on the condition that they take an active part in maintaining the grounds and being involved in the local community.
If the people can’t afford to make the necessary repairs to their homes to make them livable, how do the producers expect that they can afford a brand spanking new expensive house??? Seeing a financial planner doesn’t throw money into your wallets. Yes they are useful, but when you have next to nothing, adding a big new payment won’t help. Any financial planner will tell you to whittle away your debt first and to live within your means. Those homes are beautiful and built with good intentions, but realistically it’s absolutely ridiculous to assume anyone that bad off could afford a huge home.
when the show started out i am sure it had all good intentions. It is a wonderful thing to do for needy people, i have done volunteer work on homes for habitat for humanity it was very rewarding. But these people should have stipulations that come with this new free home that will not allow them to leverage against the equity for a certain time frame.
A lot of these people were given these homes with enough to pay taxes and maintenance for years; there should have been an untouchable trust set up just for those expenses, taxes utilities etc. they just need to tone it down a bit and give the show the title “modest home make over with extreme gratitude!”
Just because one has access to lots of money does not mean one has lots of brains. I think God quit giving people common sense cause no one was using it anyway.
Boey’s name was not Jessica. It was Janessa!!
I think that you can have just as impressive a house if it was built smaller, and more manageable, but with perhaps better and more elaborate furnishings if the show wanted to keep it “extreme”.
A big house can be a pain in the butt, I would much rather have a smaller house with nicer things inside than a huge house that is “watered down”.
Important to remember: “Don’t judge a man by the size of his house, but rather by the laughter coming from in!”
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