10 TIPS FOR BUYING A FIXER-UPPER
NOW is the time to buy a house. Prices have been drastically reduced in our market. The question you may be asking yourself is, should I buy now or wait? Are prices going to continue to decline? When will prices start going back up? Unfortunately my crystal ball is broken, however, what I can tell you is that is really is a great time to buy. Below are some common sense tips I came across in reading real estate periodicals and thought they were worth sharing. I hope they help you. If you have additional questions, or if I can be of assistance to help you find a "fixer-upper" or foreclosure, please contact me. Thanks! Mary@Gibbins.com.
10 Tips for Buying a Fixer-Upper
Buying a basically sound house and updating the cosmetics is a profitable thing to do in almost any market. But be careful what you buy or it may end up costing you later on.
Here are 10 things to consider when selecting a fixer-upper:
1. Purchase homes that are at least 30 percent below the market value of comparable nearby homes.
2. Choose a location with a low crime rate, good schools, and quiet streets. There isn’t anything you can do to cure a poor location.
3. Choose a house with three or four bedrooms. Smaller homes are unlikely to have enough buyer appeal.
4. Avoid homes that need major unprofitable repairs, include wiring, major plumbing, foundation repairs, major kitchen and bathroom renovation, room additions, and/or a new room. Spending money on these basics doesn’t add value. Buyers expect them.
5. Find a home that needs profitable cosmetic improvements like fresh paint inside and out, new light fixtures, new carpets and flooring, and fresh landscaping.
6. Look for affordable, low down-payment financing, such as taking over an existing mortgage, lease with option to buy, seller carry-back financing, or a combination.
7. Avoid obtaining new bank financing until the fix-up work is completed and the home’s market value has increased.
8. Don’t buy a fixer-upper that is more than 60 minutes from your current residence because it is important to visit everyday while the renovation work is being done.
9. Make sure that the seller or tenants will vacate immediately upon transfer of title.
10. Look for sellers who are motivated to sell and who want to make the sale happen.
Source: Inman News, Robert J. Bruss (09/01/07)
Labels: fixer uppers, flip property, housing market, investors
TREASURE COAST HOUSING MARKET UPDATE
Recently I attended a seminar where a local economist presented facts about what is going on in the housing market on the Treasure Coast of Florida. The facts were interesting and somewhat sobering. We all know that the "boom" and craziness of housing prices is a thing of the past (at least for the foreseeable future). We have priced ourselves out of the affordability market. A majority of the people who live here and work here cannot afford the houses once the taxes and insurance are added on to the payment. You all know of course that our state legislators are working on those issues. Cheap money (aka subprime lending) along with the investors and speculators (flippers) really helped drive up the prices of homes.
The tri-county area (Indian River, St Lucie and Martin Counties) has seen a decrease of 43% in building in the past year. The inventory of vacant homes has increased 390% since the second quarter of 2005. You know that is evident just by driving down any street. Also, in our tri-county area there is a 44.7 month supply of vacant developed lots, which is expected to remain excessive for the next 24 months.
Indian River County currently has a 13.6 month supply of homes under construction and homes currently on the market for sale. The bulk of the homes being built there are in the $300,000-$500,000 range. However, the number of units under construction has fallen to 2003 levels and so total inventory has declined over the past three quarters.
In St Lucie County, as of the 2nd quarter of 2007, there was an inventory of 1,368 vacant homes - that is a 9.5 month supply. Add to that the homes currently under construction and there is a 15.3 month supply of NEW homes for sale. Now add to that all the houses, condos and townhouses for sale (new and not new) and you have a 20.8 month supply of housing inventory in St Lucie County. Per the economist, we should reach equilibrium some time in late 2008 - meaning that the number of properties for sale will come much closer to the number of buyers out there looking to purchase. In 2007 40% of homes for sale are priced between $300,000-$400,000 - which is out of range for 60% of the local market of buyers. In 2005 St Lucie County was one of the fastest growing counties in the United States - and now, we have one of the largest inventory hangovers.
Martin County which seems to have a more "controlled growth" mentality has a smaller amount of inventory available. Building starts are down. It is surmised that Martin County will possibly reach equilibrium late in 2007.
In the tri-county area there is a 35.1 month supply of vacant lots for sale. Two of the newer subdivisions in St Lucie County have many vacant lots, for example, in Tradition there are 717 lots available to build on. In Tesoro there are 468.
Foreclosures are on the rise, as are "short sales". Foreclosures are expected to even go higher by mid-2008 as adjustable rate mortgages reset (their rates). So what will it take to get back to "normal" (whatever normal is)? The rising home prices far outpaced the increases in income which affected the affordability of the homes. Prices in most markets will have to decline - some even significantly in order to restart the market. It is painful, won't be pleasant and won't be pretty, but this correction must occur to get the housing market back on track.
The economist who provided much of the facts in this article is Mr. william Pittenger, Senior Vice President, Chief Real Estate Economist and Risk Advisor for Seacoast Nation Bank. He said something that I thought was right on and which I would like to quote for you now: "Value is not an inherent quality. It is directly linked to the supply and demand relationship in the marketplace. As a result, land value (or houses(my words)), like the value of other commodities, can be subject to wild price swings." The housing market will improve, will come back, but it will take time.
Labels: economy, foreclosure, housing market, short sale
