In this market their are a lot of people out there saying that foreclosed homes are the way to buy homes. You can get them for below market value and they are good, if not great deals. but are they really?
A few things most people do not realize when they buy a foreclosed home versus a home for sale by a seller. The foreclosed home is sold "as is" condition. That means what you see is what you get. the bank is NOT going to do any repairs to the home. The home is not going to be cleaned prior to you buying it. The utilities are not on and if (and you always should) have an inspection and there are issues with the house you are never going to get the bank to repair them.
Another thing on most foreclosed homes is the flooring is either stained beyond repair, damaged or missing. The people living there prior to you really do not care if the stains are going to come out. They do not care if the carpet has rips in it or the hardwood floors got scratched when they were moving their items out of the house.
Then you have to look at any other miscellaneous repairs the home will need. A kitchen cabinet door may need replacing, leaky toilet, electrical issue, furnacne or water heater issues are all items that you CANNOT negotiate with the bank once you and they agree on a price. But, these are all things that can come up in a home inspection.
Now, not to sound to gloomy. You do have a ten day window to have an insopection done on a foreclosed home to evaluate the issues with the house. Once that evaluation is done you either move forward or back out of the agreement.
But, just because you bought the house for 10% to 30% less than a home that was for sale that was not a foreclosure does not mean you got a great deal. Factor in the repairs and maintenace you need to do to bring the house up to the standards of the other home and see what savings you then have.
I have sold my share fo foreclosed homes where the deal was good. Even after factoring in the reparis to the house and the repalcement of items that were damaged ro stained it still came out to be a better deal than the one doen the street that was being sold by a seller through non foreclosure means. But, do not assume every bank owned home is going to be a great deal or you will be greatly disappointed.
Dave diCecco
Realtor/Broker
www.davedicecco.com
Saturday, September 25, 2010
Wednesday, September 22, 2010
Home Affordability Not Just Based On Home Values
In today's market there is a lot of talk about whether home prices are stabilizing, getting better or are goign to get worse. While no one can ultimatley predict what the future holds in the housing market ; there are certain variables we can track. One is the affordability of a home.
A lot of people think it may be better to wait to buy a home. Prices still may drop lower. We have not seen the bottom is a common phrase we hear a lot today form consumers who are reading news headlines or watching TV. However; is it still wise to wait?
A common misconception is that prices of homes dictate the affordability of the home only. When in reality it is a combination of home prices and current average mortgage rates. We have not in history seen interest rates on 30 year mortgages as low as they have been now. Couple that with the price decrease in homes and more people can qualify for a home now than ever before. Of course, the third variable is credit which is individually controlled and not controlled by the market.
But, let's say that home prices in your area average $200,000. With current 30 year fixed mortgage rates at approximately 4.4% right now a majority of homebuyers could afford to buy this priced home. Now, let's say that prices drop 10% on this home (a good thing?) but interest rates go up 1%. You would lose approximately 10% to 15% of the buyers who could afford this home before. Why? Because even though the price went down; the itnerest rate went up. The price drop was not signifcant enough to offset the increase in the mortgage rate.
So, when you are looking or thinking of buying a home. You need to consider more than just how the home prices are doing right now. A fluctuation in interest rates can have a more dramtic impact on yoru purchasing power than the price of the home.
Dave diCecco
Realtor/Broker
www.davedicecco.com
A lot of people think it may be better to wait to buy a home. Prices still may drop lower. We have not seen the bottom is a common phrase we hear a lot today form consumers who are reading news headlines or watching TV. However; is it still wise to wait?
A common misconception is that prices of homes dictate the affordability of the home only. When in reality it is a combination of home prices and current average mortgage rates. We have not in history seen interest rates on 30 year mortgages as low as they have been now. Couple that with the price decrease in homes and more people can qualify for a home now than ever before. Of course, the third variable is credit which is individually controlled and not controlled by the market.
But, let's say that home prices in your area average $200,000. With current 30 year fixed mortgage rates at approximately 4.4% right now a majority of homebuyers could afford to buy this priced home. Now, let's say that prices drop 10% on this home (a good thing?) but interest rates go up 1%. You would lose approximately 10% to 15% of the buyers who could afford this home before. Why? Because even though the price went down; the itnerest rate went up. The price drop was not signifcant enough to offset the increase in the mortgage rate.
So, when you are looking or thinking of buying a home. You need to consider more than just how the home prices are doing right now. A fluctuation in interest rates can have a more dramtic impact on yoru purchasing power than the price of the home.
Dave diCecco
Realtor/Broker
www.davedicecco.com
Tuesday, September 21, 2010
Making A "Low Offer" Could Hinder Your Negotiations
Every headline you read or article that seems to be posted right now focuses on how it is a buyer's market. Sellers are desparate to sell or banks are letting home go for pennies on the dollar. Thus, when you are looking at a home you should be offering substantially less than the asking price of the home. But, is that reality and reasonable to do?
I have been dealing a lot lately with buyers looking at homes. Especially bank owned properties and short sales. Homes that are priced aggressively in this market are getting showings and people are tending to view these homes. However; just becasue it is on the market for X amount of dollars why do you feel you should offer 20% to 40% less? Because the headlines tell you they will accept it?
i cannot speak for other parts of the country but in the Charlotte market the banks are NOT even entetaining offers that low. I have the opportunity to work with a few agents who list quite a few bank owned properties. In conversation they have mentioned that the banks right now are not even countering "low offers" . If they feel people are trying to make an offer that is substantially lower than the value of the home; even in it's present condition they will not even offer a counter to them.
i have sellers who will not counter offers that are not even justifiable in this market for what comparable homes have sold for. Then when you come back with a higher offer there is a bad taste in their mouths becuase you have insulted them with your inital offer and that can make negotiations even harder for you. The perception is you are trying to get a great deal; not just a good deal and you may not be willing to come to a fair value for the prorperty. So, why should they counter you with a reasonable price? You are going to try and get the home for subsantially less than they are willign to sell it for?
I had a seller who was so infuratied with an inital offer that he countered higher than the asking price. After a week of negotiations he said NO.... Two weeks later we received another offer on the home. They started a substantially more reasonable starting price. We agreed on numbers at LESS than we offered as a final and best offer for the previous offer. His reasonign was simple. They wanted soemthing for nothing and he felt that they were not negotiating in good faith trying to buy a home. They were trying to get a great deal that was not justified.
When you are considering puttign an offer in on a home; think about what you are offering. Is your offer price substantiated by the market conditions right now? Are the comaprables that have sold justifying your asking price? Or are you only looking to buy this home if you can get it for pennies on the dollar? Becasue if you are, you may lose out on a good deal. You also may not get the home you want.....
Dave dicecco
Realtor/Broker
www.davedicecco.com
I have been dealing a lot lately with buyers looking at homes. Especially bank owned properties and short sales. Homes that are priced aggressively in this market are getting showings and people are tending to view these homes. However; just becasue it is on the market for X amount of dollars why do you feel you should offer 20% to 40% less? Because the headlines tell you they will accept it?
i cannot speak for other parts of the country but in the Charlotte market the banks are NOT even entetaining offers that low. I have the opportunity to work with a few agents who list quite a few bank owned properties. In conversation they have mentioned that the banks right now are not even countering "low offers" . If they feel people are trying to make an offer that is substantially lower than the value of the home; even in it's present condition they will not even offer a counter to them.
i have sellers who will not counter offers that are not even justifiable in this market for what comparable homes have sold for. Then when you come back with a higher offer there is a bad taste in their mouths becuase you have insulted them with your inital offer and that can make negotiations even harder for you. The perception is you are trying to get a great deal; not just a good deal and you may not be willing to come to a fair value for the prorperty. So, why should they counter you with a reasonable price? You are going to try and get the home for subsantially less than they are willign to sell it for?
I had a seller who was so infuratied with an inital offer that he countered higher than the asking price. After a week of negotiations he said NO.... Two weeks later we received another offer on the home. They started a substantially more reasonable starting price. We agreed on numbers at LESS than we offered as a final and best offer for the previous offer. His reasonign was simple. They wanted soemthing for nothing and he felt that they were not negotiating in good faith trying to buy a home. They were trying to get a great deal that was not justified.
When you are considering puttign an offer in on a home; think about what you are offering. Is your offer price substantiated by the market conditions right now? Are the comaprables that have sold justifying your asking price? Or are you only looking to buy this home if you can get it for pennies on the dollar? Becasue if you are, you may lose out on a good deal. You also may not get the home you want.....
Dave dicecco
Realtor/Broker
www.davedicecco.com
Monday, September 20, 2010
Is Your Realtor Putting In The Schools When Listing Your home?
One small thing you can do to help market your home and maybe even sell it is to make sure yoru Realtor has put in the schools that are assigned to your address. In Charlotte it is very simple. On the school system website the is a link to find your school. You put in your street address and it tells you what Elementary, Middle and High School you are assigned to for that school year.
Sometimes these can change. There has been construction of new schools, closings of others and reorginzation due to over crowding on others. But, is it not our responsibility as a Real Estate agent to know these things and make the changes appropiately?
I recentyl had a client who was looking to buy his first home. Being a renter for the past 15 years he decided to see what was availble for him to own. He had some basic requirements in terms of amount of bedrooms and bathrooms (which each of us has when we look at a house). However; he had ONE item that was non negotiable in his search...that was the High School. He was very happy with the school his daugher was at and refused to move her. So, I had to condense my search to his requirements for bedrooms and bathrooms and then search by High School.
When he decided on about three to go look at; we made appointmetns to view them. On the way to one of them we saw a comparable house in the neighborhood. The home was priced slightly less than the one we were going to look at...however; it never came up in the search becasue they NEVER put the schools in. Well, we made a showing for it and he bought it.
The moral here is had the other Realtor on the street NOT done his job properly this Realtor would not have benefitted. In this market can you afford not to have all the possible information in the system for people to search by?
Dave dicecco
Realtor/Broker
www.davedicecco.com .editdelete.
Sometimes these can change. There has been construction of new schools, closings of others and reorginzation due to over crowding on others. But, is it not our responsibility as a Real Estate agent to know these things and make the changes appropiately?
I recentyl had a client who was looking to buy his first home. Being a renter for the past 15 years he decided to see what was availble for him to own. He had some basic requirements in terms of amount of bedrooms and bathrooms (which each of us has when we look at a house). However; he had ONE item that was non negotiable in his search...that was the High School. He was very happy with the school his daugher was at and refused to move her. So, I had to condense my search to his requirements for bedrooms and bathrooms and then search by High School.
When he decided on about three to go look at; we made appointmetns to view them. On the way to one of them we saw a comparable house in the neighborhood. The home was priced slightly less than the one we were going to look at...however; it never came up in the search becasue they NEVER put the schools in. Well, we made a showing for it and he bought it.
The moral here is had the other Realtor on the street NOT done his job properly this Realtor would not have benefitted. In this market can you afford not to have all the possible information in the system for people to search by?
Dave dicecco
Realtor/Broker
www.davedicecco.com .editdelete.
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