Big Houses Enter Foreclosure: Extreme Makeover Home Show Aftermath

by Silicon Valley Blogger on 2008-08-0847

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. Here are 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.

big houses in foreclosure

extreme makeover home edition house in foreclosure

big house, extreme makeover home edition

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.

Copyright © 2008 The Digerati Life. All Rights Reserved.

{ 42 comments… read them below or add one }

Luke @ Money & Fitness August 8, 2008 at 2:03 pm

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.

Silicon Valley Blogger August 8, 2008 at 2:16 pm

Can you believe it was given away for free? Wow. If only people were more prepared to handle windfalls as awesome as this.

theWild1 August 8, 2008 at 2:27 pm

It was only a matter of time before these types of things were going to happen.

Mr Credit Card August 8, 2008 at 8:13 pm

Hey SVB

This is a big 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

Sean August 9, 2008 at 10:58 am

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?

MADD August 9, 2008 at 5:23 pm

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 despair 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 families 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.

Silicon Valley Blogger August 9, 2008 at 5:39 pm

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.

Late Night Austin Real Estate August 10, 2008 at 1:52 am

For the family that experience a death, I don’t understand why they don’t simply sell the house. Personally, I don’t know if I can blame the EP or ABC. I mean just because the owners fall behind on tax payments doesn’t mean the EP didn’t properly disclose information about taxes. It’s perfectly possible the family is just not financially responsible.

fathersez August 10, 2008 at 2:07 am

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.

LC August 11, 2008 at 8:48 am

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.

Suz August 11, 2008 at 4:42 pm

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

TigerTom August 20, 2008 at 12:26 pm

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.

Praveen August 22, 2008 at 12:03 pm

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.

Use your head September 9, 2008 at 10:09 pm

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.

Cassy September 20, 2008 at 5:59 am

“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?

Ned Carey September 25, 2008 at 8:47 pm

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.

T. M. Noonan September 27, 2008 at 2:42 pm

This is sure a downer…. I guess that is what happens when you can’t afford your home…

bill October 6, 2008 at 1:47 pm

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.

Insider November 14, 2008 at 7:36 pm

That was a shame to see. My wife & kids love this show. Depressing.

Joey Marino November 28, 2008 at 11:46 pm

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.

ashley December 9, 2008 at 1:18 pm

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.

Shaun December 11, 2008 at 9:39 am

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?

ATW1611 March 18, 2009 at 6:53 pm

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!

doc April 11, 2009 at 5:46 pm

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!

supergirl291 July 3, 2009 at 7:58 pm

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

Ellie Swenson July 22, 2009 at 2:15 pm

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.

atl dude August 5, 2009 at 10:56 am

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.

Rachel Humphrey January 4, 2010 at 6:15 pm

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.

Rune Laursen January 14, 2010 at 6:22 am

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.

Dee April 4, 2010 at 7:13 pm

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.

Jeff April 6, 2010 at 9:12 pm

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!”

Cherie April 6, 2010 at 9:24 pm

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.

Michelle April 7, 2010 at 7:46 am

Boey’s name was not Jessica. It was Janessa!!

Thomas May 27, 2010 at 1:10 pm

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!”

Clevelander October 5, 2010 at 7:55 am

Today, Oct 5, 2010, they are going to reveal another McMansion being built in the inner ring Cleveland suburb of Maple Heights, where I was raised and still have family.

The house stands out like a sore (but beautiful) thumb in a sea of postwar bungalows, many of them currently in foreclosure, in a suburb where the ghetto gangsta wannabees have been infiltrating, and selling a house is a 2 or 3 year process at best because it is pretty much ground zero two of the past few years’ foreclosure crisis and hundreds of homes are on the market or bank-owned.

This new house is located on the worse of the two sides of town, the house that was taken down still has a mortgage (how can a house bought for $80,000 8 years ago be in such bad shape that it has to be demolished??) and no one would even want a house like that in a neighborhood like that if they should decide to sell or if it gets foreclosed on. BIG MISTAKE. I agree – it should be a smaller house – one that fits in the neighborhood but is tailored for the needs of the family. A family with blind parents and a deaf child doesn’t need a two story Tudor colossus.

Watch in December or go to newsnet5.com to see the house.

nicki6 October 6, 2010 at 2:57 pm

This show has sickened me since I first saw it. The premise is great and that’s how they sucker you in. It makes viewers believe that the show is out to help people when in reality they are only out to get high ratings. If they really wanted to do some good they would build houses that fit within the neighborhood and that the family can afford to maintain. They would also provide counseling for the family and financial planning to help them manage. Large monster homes? Who pays the newer, higher property taxes and increased utilities and insurance costs? Free cars? Who pays the insurance? This show is nothing more than a band-aid solution and does nothing to really fix any of the families issues. Shame on you Extreme Makeover!!

Louisa May May 8, 2011 at 4:34 pm

If it costs about $1,000,000 for two extravagant homes, why not repair fifteen to twenty homes at approximately $50,000 each? It’s lovely that ABC/EM:HE helps… until the money problems roll in for the families. Surely fixing up fifteen to twenty dangerous homes is helping the community more than just temporarily helping two families? Say that there are on average, four people in a family (bear with me here) and you spend $1,000,000 on eight people, you could spend that $1,000,000 on saving fifteen to twenty families from disastrous houses, resulting in an average of SIXTY to EIGHTY people in the communities. TEN times more than right now! Surely they’d get their ratings and publicity for that, more than for giving a few people houses they can’t always afford to keep?!

Loisiana October 18, 2011 at 8:33 pm

Easy come…easy go…Law of the universe!

Liz Ann November 5, 2011 at 11:16 am

There’s a family in our city that got an Extreme Makeover home. The home was remodeled so that the wheelchair-bound woman who lives in it could easily access all parts of the house, which she uses to run a free afterschool program for children in her neighborhood. It was also remodeled for her son, who if I remember correctly is nearly blind. I feel that their makeover was certainly well-deserved, but it seems to have caused them quite a bit of trouble.

Those who designed the house decided to give it a high ceiling and plenty of windows, along with making all the appliances inside of it run on electricity. Her heat, stove, oven, washer, dryer — everything — is run on electricity. We live in northwestern Pennsylvania, where heating may be needed off and on from mid-September until late May. In our area, electricity prices have been rising and gas prices have been falling, which has caused this woman’s bills to skyrocket to the point where she can’t afford to pay them. At least once, local community leaders have paid off her utility bills to try to help her out, but paying off one month’s bills won’t stop next month’s bills from costing so much. Had the designers of this house taken into account the huge costs of heating a high-ceiling house with electricity, perhaps she would not be in this kind of situation.

Here is a link to a local newspaper’s article about this situation.

Silicon Valley Blogger November 5, 2011 at 11:30 am

@Liz Ann,
Thanks for this story. I simply don’t understand why there is not much planning provided by the Home Makeover show when determining eligible candidates. Maintenance is a HUGE part of owning a home, and a lot of these families are probably entrenched in their neighborhoods and would much rather live where they are now than be forced to sell or relocate elsewhere if they can’t afford their home’s upkeep. It seems just so unnecessary and impractical.

I find this to be a strange show. It is nice to certainly give someone a new lease on life with a new home, but at the same time, families that are having trouble with cash flow may not be the proper candidates or recipients for such a “prize”, given the steep monetary requirements needed to support a huge, new home.

Not only that, a house on the verge of disrepair because of cash flow issues can be a big albatross around your neck. It causes huge stress for the family and is really not worth it in the end.

Moral of the story: do not own a house you cannot comfortably maintain indefinitely (for the long term). The size of your home should be commensurate to what you can afford to maintain.

Cathy April 8, 2012 at 12:18 pm

What is wrong with people today? This show gives away gorgeous homes. And no, the family is only responsible for their OWN original mortgage. And now for the most part they are paying the original mortgage off as well. Which only leaves them with property taxes and monthly utilities. Where else but the USA are you going to get a free home (that you sign up to receive with no one forcing you) and then complain about it? What is wrong with this generation that is so entitled as to even look at the situation this way? Guess what. For those of that are complaining about this…..move to another country. I bet they won’t build you a free home. Kudos to Extreme Makeover. You all go out of your way to build homes, especially sensitive to special needs individuals. The rest of you book that airplane ticket to the other countries handing out free homes. FYI: your plane won’t be landing because the place does not exist.

Silicon Valley Blogger April 8, 2012 at 12:44 pm

@Cathy,
A free home is great to own if you can afford keeping it. We’re not against free homes: it would be awesome to get one as a gift, of course. The criticism here is not directed against the generosity of the show, but rather, at the ostensible excess that is displayed when there could potentially be issues with dealing with that excess.

If there is the proper support for such a house, then yes, the idea is wonderful. By the way, property taxes and monthly utilities are just the tip of the iceberg. If you are a homeowner, you know that things break. You’ll have to cover regular repairs for a bigger house. If your house is larger, you’ll be filling it up with more and more stuff, larger furniture, and so forth. All that costs more money. Even your utility bills will be automatically higher (usually) for a larger house.

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