Friday, February 26, 2010
First Time Buyer....Should I Consider a Foreclosure?
Well that is a loaded question. In Mecklenburg County which is mostly made up of Charlotte and surrounding smaller towns foreclosures are on the rise. In fact, I read an article a week or so ago that mentionedthat Charlotte is the highest foreclosure rate in all of North Carolina. Is that all bad? No, not really. Unfortunately, people that are losing their homes right now bought them at the peak of the Real Estate market. Considering we are now at or close to the bottom of the Real Estate market (depending on what report you look at) in Charlotte, the values are there lowest.
I know when I have a buyer considering the purchase of a foreclosure in the Charlotte area I do not discourage it in any way. I find that these type of bank owned homes are relatively easy to negotiate with and generally speaking you can receive a good value for them. Does it mean it is right for everyone to consider a foreclosure? No. There are some drawbacks and other things to consider when you look at one.
First, when you purchase a foreclosure home you are buying the home AS-IS. Now, it does not necessarily mean you have no rights. In North Carolina when you purchasea foreclosure home you have a right to a home inspection. During the time frame you and the bank have agreed upon, you can have an inspector come out to the property and do a thorough inspection of the property. Once you receive his report you have the option of backing out of the deal as long as you are within the time frame agreed upon by you and the bank. Some people are handy type of people (I am not one of them) or have friends or relatives that are and can do it or help them get the items fixed. Others will feel the deal on the house warrants the cost of a few repairs they may need to make to the home.
Second, how is the value in relation to the other homes in the area. Is the neighborhood influx with foreclosures? Or is this just an isolated one in what is a rather stable neighborhood otherwise. How long has it been on the market for sale? Because on the face value the deal may seem good in comparison to other homes that are for sale. But, what if the neighborhood has been or is being over run with foreclosures or short sales? If they have not sold yet, the deal you are receiving may not be the best deal. As more and more homes enter that foreclosure status banks are looking to liquidate them. In Charlotte there is major concern over values of homes with so many people in danger of losing their homes right now. A home thatis for sale in the Charlotte area for over 30 days that the bank owns starts to become a major liability. Thus the bank will tend to be more aggressive in selling that home. And the longer it is for sale the better the deal can become.
For example, I worked with a buyer that looked at a bank owned home in Charlotte. On the face of it the deal was a good deal. In the process of negotiations we came to an impasse of what my clients were willingto spend and what the bank was going to accept. Problem was house was only on market for 10 days when we put the offer in. Well, they walked away and looked around some more. A little over a month went by and they asked about the original house we looked at. Guess what, it was still for sale by the bank. This time we started less and ended up getting to an agreement on terms for less than we had originally offered to pay 30 days prior.
Is this common. No. I am not sure how other areas of the country are faring. I do know in the Charlotte area well priced foreclosures in good move in condition are selling relatively quickly. I have seen homes come on the market for sale and find out the next day it is sold.
So the question of whether a foreclosure is the right first time home depends on you... Can you receive a deal better than one for sale that is not in foreclosure maybe. You have to weigh the costs of repairs and the condition of the home against what you are paying for it and decide for yourself if it is worth the savings.
Dave diCecco
Realtor/Agent
www.davedicecco.com
I know when I have a buyer considering the purchase of a foreclosure in the Charlotte area I do not discourage it in any way. I find that these type of bank owned homes are relatively easy to negotiate with and generally speaking you can receive a good value for them. Does it mean it is right for everyone to consider a foreclosure? No. There are some drawbacks and other things to consider when you look at one.
First, when you purchase a foreclosure home you are buying the home AS-IS. Now, it does not necessarily mean you have no rights. In North Carolina when you purchasea foreclosure home you have a right to a home inspection. During the time frame you and the bank have agreed upon, you can have an inspector come out to the property and do a thorough inspection of the property. Once you receive his report you have the option of backing out of the deal as long as you are within the time frame agreed upon by you and the bank. Some people are handy type of people (I am not one of them) or have friends or relatives that are and can do it or help them get the items fixed. Others will feel the deal on the house warrants the cost of a few repairs they may need to make to the home.
Second, how is the value in relation to the other homes in the area. Is the neighborhood influx with foreclosures? Or is this just an isolated one in what is a rather stable neighborhood otherwise. How long has it been on the market for sale? Because on the face value the deal may seem good in comparison to other homes that are for sale. But, what if the neighborhood has been or is being over run with foreclosures or short sales? If they have not sold yet, the deal you are receiving may not be the best deal. As more and more homes enter that foreclosure status banks are looking to liquidate them. In Charlotte there is major concern over values of homes with so many people in danger of losing their homes right now. A home thatis for sale in the Charlotte area for over 30 days that the bank owns starts to become a major liability. Thus the bank will tend to be more aggressive in selling that home. And the longer it is for sale the better the deal can become.
For example, I worked with a buyer that looked at a bank owned home in Charlotte. On the face of it the deal was a good deal. In the process of negotiations we came to an impasse of what my clients were willingto spend and what the bank was going to accept. Problem was house was only on market for 10 days when we put the offer in. Well, they walked away and looked around some more. A little over a month went by and they asked about the original house we looked at. Guess what, it was still for sale by the bank. This time we started less and ended up getting to an agreement on terms for less than we had originally offered to pay 30 days prior.
Is this common. No. I am not sure how other areas of the country are faring. I do know in the Charlotte area well priced foreclosures in good move in condition are selling relatively quickly. I have seen homes come on the market for sale and find out the next day it is sold.
So the question of whether a foreclosure is the right first time home depends on you... Can you receive a deal better than one for sale that is not in foreclosure maybe. You have to weigh the costs of repairs and the condition of the home against what you are paying for it and decide for yourself if it is worth the savings.
Dave diCecco
Realtor/Agent
www.davedicecco.com
Thursday, February 25, 2010
First Time Buying...Should I look at a Short Sale?
It all depends.... With the tax credit for first time buyers due to expire soon the question looms; Is a Short Sale worth the look? One thing you need to ask yourself is can I wait? Unfortunately right now with the influx of short sales on the market with the economy struggling to get out of a recession and home values plummeting to historic lows in comparison to a few years ago banks are over run with short sales.
I read an article recently that stated Mecklenburg County is the largest area in North Carolina for foreclosures pending. That means record levels of people are attempting to sell their home via a short sale to avoid foreclosure. Typically, with a short sale your response time can be anywhere from three weeks to months depending on the bank. Some banks will work with you and counter your offer. Other banks will just say no. Then if you want to increase your offer you are going through the process all over again. I have dealt with both buyers and sellers on Short Sales. I have had some great luck with them and some horrific luck right now. I was blessed on one of my listings that the bank ordered a BPO(Broker Price Opinion) upfront and when an offer came in i was able to have an answer back within forty eight hours and within five days had the deal negotiated and approved by the bank. On the other end, I have a buyer who has an offer in on a home in Charlotte right now that we are still waiting for the bank to respond....it has been 5 MONTHS. If you are looking to take advantage of the tax credit and need to be under contract by April 30, 2010 have your agent check with the listing agent before you put in an offer to see where in the process they are and who the bank is. Generally speaking, most agents should know based on the bank what the response time should be on average.
Are there deals to be found out there right now...definitely. I know in the Charlotte area buyers are having a lot of choices and good deals are found in just about every price range. I just warn my buyers up front. if you are looking at a short sale and thinking of putting an offer in; here are the possible ramifications of waiting. I give them the information and let them decide what is best suited for their needs.
Now it does not mean that if I put an offer in on a short sale I cannot stop looking. I advise my clients to continue to look at properties just in case. you just never know what might come on the market in that time frame as well. I will continue to send listings to them that meet the criteria they desire and show homes to them that they want to look at while we wait for an answer. The potential of losing the $8000.00 tax credit is large. I always advise my clients to have a plan B in place just in case.
Also, while you are waiting for a response back from the bank another offer may come in. The other offer could be better than yours or worse. The bank may negotiate with both of you or just one of you. Unfortunately, until the bank accepts your offer or negotiates a deal that you both accept anything can happen. Just because you are the first offer does not mean you ahve first right to the home. too many times when I explain this to first time buyers in the Charlotte area they have a stunned look. They never realize that they could have an offer pending with a bank for weeks or months and someone else can come in at the last moment and put a better offer in and they are out.
As we get closer to the deadline to be under contract, that window of waiting becomes smaller. As of the writing of this post you have only 65 days to be under contract on a home to qualify for the tax credit. You do not have to close to July 1, 2010 but need to be in agreement on the purchase of a home by April 30, 2010. So, do your due diligence and consider the short sale but make sure you know how long you may be waiting for a response back from the bank.
Dave diCecco
Realtor/Agent
www.davedicecco.com
I read an article recently that stated Mecklenburg County is the largest area in North Carolina for foreclosures pending. That means record levels of people are attempting to sell their home via a short sale to avoid foreclosure. Typically, with a short sale your response time can be anywhere from three weeks to months depending on the bank. Some banks will work with you and counter your offer. Other banks will just say no. Then if you want to increase your offer you are going through the process all over again. I have dealt with both buyers and sellers on Short Sales. I have had some great luck with them and some horrific luck right now. I was blessed on one of my listings that the bank ordered a BPO(Broker Price Opinion) upfront and when an offer came in i was able to have an answer back within forty eight hours and within five days had the deal negotiated and approved by the bank. On the other end, I have a buyer who has an offer in on a home in Charlotte right now that we are still waiting for the bank to respond....it has been 5 MONTHS. If you are looking to take advantage of the tax credit and need to be under contract by April 30, 2010 have your agent check with the listing agent before you put in an offer to see where in the process they are and who the bank is. Generally speaking, most agents should know based on the bank what the response time should be on average.
Are there deals to be found out there right now...definitely. I know in the Charlotte area buyers are having a lot of choices and good deals are found in just about every price range. I just warn my buyers up front. if you are looking at a short sale and thinking of putting an offer in; here are the possible ramifications of waiting. I give them the information and let them decide what is best suited for their needs.
Now it does not mean that if I put an offer in on a short sale I cannot stop looking. I advise my clients to continue to look at properties just in case. you just never know what might come on the market in that time frame as well. I will continue to send listings to them that meet the criteria they desire and show homes to them that they want to look at while we wait for an answer. The potential of losing the $8000.00 tax credit is large. I always advise my clients to have a plan B in place just in case.
Also, while you are waiting for a response back from the bank another offer may come in. The other offer could be better than yours or worse. The bank may negotiate with both of you or just one of you. Unfortunately, until the bank accepts your offer or negotiates a deal that you both accept anything can happen. Just because you are the first offer does not mean you ahve first right to the home. too many times when I explain this to first time buyers in the Charlotte area they have a stunned look. They never realize that they could have an offer pending with a bank for weeks or months and someone else can come in at the last moment and put a better offer in and they are out.
As we get closer to the deadline to be under contract, that window of waiting becomes smaller. As of the writing of this post you have only 65 days to be under contract on a home to qualify for the tax credit. You do not have to close to July 1, 2010 but need to be in agreement on the purchase of a home by April 30, 2010. So, do your due diligence and consider the short sale but make sure you know how long you may be waiting for a response back from the bank.
Dave diCecco
Realtor/Agent
www.davedicecco.com
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