Thinking About Buying a Foreclosure? Things to Think About!
1) Obtain a Home Inspection – The house may look great on the surface but might have hidden problems which could require expensive repairs. On the other hand, a fixer may look bad but could have excellent bones that can be repaired at a reasonable cost. Even if the listing agent has previous inspections and reports that may be a few months old, you may want to still consider having a new inspection as a sitting home can deteriorate a bit.
2) Use Common Real Estate Logic – Too many people focus on price alone. You need to keep in mind sub-par locations, poor lighting, terrible views, below average school district, high crime rates and other negatives that may be another reason why a home went into foreclosure. You should always try to find out how long the home has been empty; the longer it has, the more of chance it may not be a good deal. Also, if there are other foreclosures nearby, that may be a reason for concern.
3) Rethink or Skip the Flip – Even if the house looks like a great flipping opportunity, beware unless you are a pro, with incredible contractor connections. You may want to triple the amount you think you will be spending to fix up the home. Sometimes the temptation to make fast money doesn’t always pan out, so think it through and speak to a real estate professional and contractors.
4) Go over the Budget – A fixer-upper means nothing if you can’t afford to fix it up. Make sure you have an ample budget to do all of the repairs needed.
5) See the house in person – You should never buy a house without going in person to see it.
When will home prices begin to increase?
Nationwide, the US housing market remains deep in the doldrums and economists expect prices to fall another 5% to 10% in many places.
When the rebound arrives, desirable zip codes will see price jumps first. Real estate is always local.
Here are a few things to start watching in your neighborhood:
How fast are homes selling? It is a good sign when price drops slowly down, inventory levels are actually a better gauge of where your market is headed. Ask a Realtor to tell you the number of listings now on the market in your area and the number of homes sold over the past year. An example would be that there are 100 listings and there were 240 sales last year, or an average of 20 per month. That equals a five-month supply, which is considered stable. More than six months and it’s a buyer’s market; less than three and sellers probably have the upper hand.
Compare your neighborhood’s price-to-rent ratio with what it was before the housing boom. Calculate the price-to-rent ratio, or the price of a home divided by one year’s rent on a comparable one. In general, it’s cheaper to buy when the price-to-rent ratio is below 15.
A decrease in foreclosure filing is often an encouraging sign but not always the case depending on the processing delays in foreclosures. Distressed owners tend to fall behind on lawn cutting and house painting long before a foreclosure. If you see several places in disrepair, don’t expect your home value to rise soon.
If you area is a prime location. As buyers return, they naturally grab places with short commutes and better schools and amenities which will help increase the sales price.
Homeownership Purchasing Hurdles
Harris Interactive, a market research firm’s bi-annual survey on purchasing a home found the following from a recent online survey:
Among renters, 59% said they aspired to own a home, but of those, 51% said saving enough for a down payment was their biggest obstacle.
Those in the 18-34 age group cited the following concerns: 62% saving down payment, 36% qualifying for a mortgage, 34% having poor credit, 31% in ability to pay off existing debt, 29% not having a stable job and 13% declining home values.
Both the 18-34 and over 55+ age groups expressed preferences that indicate they prefer to live in urban centers: The younger group preferred short commutes to work and the older group preferred the proximity to restaurants and shops.
The majority, 70% of respondents said owing a home is part of their American dream. This attitude toward homeownership rose with age, from 65% of 18-34 year olds to 76% of those 55 +.
Among current homeowners, 80% said they plan to buy another home in the future and 57% said owning a home is among the best long term investments.
Home Buyers Changing:
With married couples comprising less than 50% of all US households, home buyers are changing. A growing number of non-family households, according to a report from John Burns Real Estate Consulting are on the increase. Non-family households where no one is related to the house holder have increased nearly five times in the last 50 years from 7.9 to 39.2 million.
A lot of non-family households are looking at SMALL HOMES: preferring a home under 2500 sf with three or fewer bedrooms. LOCATION: the proximity to work and entertainment over home size and they are less interested in media rooms and pools.
Rid home of mildew culprits
Mildew, a form of mold is often seen as black, white or greenish growth on siding, drywall, roofing and other areas.
Mildew likes organic materials like drywall, wood, paper, wallpaper paste, cotton, linen, leather, wool to name a few. In addition to food, it will grow best in moist and warm areas with lack of air circulation or light.
One of the most common areas is the bathroom. Usually the only thing needed here is the installation of a ventilation fan. Make sure it is ducted to the outside and not just into the attic. You should use the fan during and after taking a bath or shower. If you find your family can’t seem to remember to turn the fan on, you might think about having it wired to the light switch. If you use the fan regularly, it should remove the moisture and circulate the air. If you find this isn’t enough to combat moisture then you may have moisture generated from somewhere else. Hidden moisture problems include, leaking valves or supply pipes, loose and/or leaking drain lines, bad wax rings below the toilet, and water around the tub or shower from excessive splash.
Other areas inside the home include closets, behind beds & other furniture (especially those placed against an exterior wall, combined with high humidity). Silica gel can help in closets, as well as making sure your clothes are not densely packed in the closet. Also, moving furniture away from the wall so air can circulate helps alleviate mildew.
Outside the home you may see mildew on the siding and roof shingles. If you have widespread areas of mildew this may indicate a larger moisture problem, one that can usually be traced back to lack of ventilation. Cut back trees, shrubbery or other landscaping that is overgrown that can be the cause of some problems, as well as adjusting your sprinklers not to hit the side of the house.
If you think you have hidden moisture you should contact a contractor who has a moisture meter and specializes in water damage restoration.
