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Five Tips to Identify Fixer-Upper Homes Worth Investing In
You may know someone who did very well during the market crash in 2008 purchasing fixers. Its a complex issue that you need to study up on before you even consider taking that plunge!
When shopping for a fixer-upper home, some properties have potential beyond their appearance. Keep the following tips in mind as you look for that home.
When shopping for a new home, be aware of properties that have potential beyond their current appearance. Home buyers often overlook a great property because they are too focused on the cosmetic appeal, which can be easily altered. Keep the following tips in mind as you search for your perfect home:
- Finding the Best Neighborhood for You
Location is one of the most crucial factors to consider as you look for possible homes. Unlike the style and even structure, no amount of time, effort, or money can change a home’s location. To find the best neighborhood for you, it can help to visit the area multiple times at various hours. This will help reveal the local culture and activity to be expected from neighbors. - Identify a Cost-Efficient Fixer-Upper Home
Look for a home with sound fundamentals and an appealing floor plan. Cosmetic improvements like new paint, lighting fixtures, and flooring are relatively cheap and easy to change, while work on plumbing, electrical systems, structural walls, or cabinets are more difficult and expensive. Typically, the most expensive change involves altering a home’s structure.
- Hire a Contractor Before Buying a Home
You may want to hire a contractor in your search if you know you want to make changes to a home you plan to purchase. A contractor can help you better understand what kind of commitment a given home will require. Many remodelers will visit a potential purchase at no charge to give an estimate of how much the work would cost. This is valuable information when comparing different homes with one another. - Know What to Check Before Buying an Old Home
Examining a home can be a complex process, and looking for one with unused potential can make it more difficult. Keep in mind that homes older than 50 years are likely to have similarly aged plumbing, electrical, heating, and other systems. The home may also be worn out or too outdated to remodel. - Real Estate Agents Can Help
Real estate agents are valuable resources. They can help you understand a home in the context of its neighborhood and area, and may be able to offer advice on how to increase the value of the property after purchase.
Source: CB Blue Matter
What is the Difference Between a Short Sale and a Foreclosure?
Distressed sales can be difficult but the more you know about the differences in them, the better your ability to navigate those waters if you are in the market!
Here is how to dip your toe into the water on foreclosures and short sales while heeding all the risks when buying a home.
Not sure about the world of foreclosures and short sales? Don’t worry. Here’s a rundown of everything you need to know to grasp the basics of foreclosures and short sales.
What Are Foreclosures and Short Sales?
A foreclosure is a process by which a lender is able to repossess a property when the borrower defaults on loan payments.
A pre-closure is the period between when the lender files the Notice of Default and when the foreclosure process is complete. If the home is sold during this period, the transaction is called a short-sale foreclosure (or “short sale” for short).
While both a short sale and a foreclosure result in the unfortunate event of the borrower not being able to stay in their home, a short sale allows a borrower to avoid the harmful effects that a foreclosure would have on their credit score.
How Can You Buy a Foreclosure/Short Sale Property?
There are fewer foreclosures and short sales on the market today than there were a few years ago. “Default notices, scheduled auctions and bank repossessions…are down more than 7 percent from a year ago,” according to RealtyTrac’s November 2015 U.S. Foreclosure Market Report™.
But if you’re a buyer, you can still find a great deal on a foreclosure or short sale, particularly if you work with an agent who focuses on finding these deals.
If you are interested in purchasing either a foreclosure/short sale property, talk to an agent who specializes in foreclosures and short sales.
What Are the Pros and Cons of Buying a Foreclosure/Short Sale Property?
Let’s start with the advantages.
Foreclosures and short sales are often priced below retail, which means that you can buy these properties for less than the cost of other comparable homes. Subsequently, your monthly mortgage payments will be smaller and you’ll spend less interest over the life of the loan.
Furthermore, you may build equity quickly, particularly if you improve or renovate the home. This equity increases your net worth, and you have the option of borrowing against this equity in the future if you choose.
Additionally, if you purchase a short sale, you’ll also enjoy the emotional satisfaction of knowing that you helped someone avoid foreclosure.
Although foreclosures and short sales can offer the buyer exceptional deals on real estate prices, there are some drawbacks.
Foreclosures and short sales often need renovations or repairs. It’s likely that the owner wasn’t able to maintain the property, which means that you might have to deal with deferred maintenance issues. It’s important to get a full report of the maintenance issues you might face. Ask your real estate professional if he or she can recommend a qualified licensed home inspector who can produce a full report for you.
It is possible that some foreclosed properties are vandalized while they’re vacant, which can add to these repair bills. However, this damage will generally be reflected in the pricing of the home.
Foreclosures and short sales are in shorter supply, which means there’s a lower likelihood that the property has all your wants and needs. You may need to compromise on certain features, amenities or desired location. You may also need to act quickly, as these opportunities can get snapped up fast.
For a short sale, the seller may be motivated to sell, but he or she may not be able to budge on the negotiation price due to the outstanding balance on the mortgage.
Short sales are notorious for their lengthy closing times – typically between 45-90 days. This is because the original lender needs to approve the sale. If you’re in the market for a quick closing, a foreclosure or short sale property may not be for you.
That said, however, the financial benefits of buying a foreclosure or short sale can be fantastic for homebuyers who are flexible and patient.
Source: RisMedia
