Real Estate Advice

Buying A Foreclosed Property: What You Should Know

 

Given the recent state of the economy and the rising rate of mortgage foreclosures, the number of properties available at rock bottom prices is at an all time high.  While purchasing one of these homes may seem like a sound investment and a great way to get more house for your dollar, there are some issues to consider before purchasing a foreclosed property.  Depending on your financial situation, your experience as a homeowner, and your access to information about the foreclosure market in your area, there are some risks involved.

 

Finances Of Foreclosure

 

The financial considerations of purchasing a foreclosed home can sometimes be overlooked.  Often foreclosed homes can be in need of considerable maintenance and repair to make them habitable.  You need to know this cost when making the purchase, or you may end up with a considerable amount of debt in bringing your home back to its original shape.  Also, even though the price of the property is right, there are other financial considerations you may not have considered.  The cost of maintaining a home, property taxes, and utilities are all expenses that may be greater than your budget will allow, especially if you are purchasing a home that is much larger than your existing home or if you are unfamiliar with the costs associated with home ownership.  There is also the consideration of your ability to pay for the purchase.  Often foreclosed properties must be paid for in cash, so be sure you have the available credit.

 

Knowing The Facts

 

The process of purchasing a foreclosed home can be much more time consuming and complicated than a normal real estate transaction.  If the sale is occurring because an eviction notice has been served or if you are purchasing the property at auction, you may not be able to inspect the house before purchasing it or you may have to deal with some issues to get the current homeowners out.  There is also the issue of not knowing the condition in which they have left the home.  You will want to be sure you get the advice of both a real estate agent and a banker to ensure that your purchase is both a good investment and will increase in value over time.

 

Overall, purchasing a foreclosed home can be a great way to enter the income property market or find yourself a great investment opportunity, but being sure you have all the facts can prevent you from making a poor investment decision.

Buying A Fixer-Upper: Are You Ready For The Work

 

Always dreamed of renovating a home exactly to your specifications, or have you found an older house that is structurally sound but needs a lot of work inside?  Perhaps the price is right and you can't resist all that house you can get for your money.  Whatever the reason, buying a fixer-upper can be both an exciting and rewarding purchase or a financial and time consuming disaster, depending on whether you are prepared for what you have gotten yourself into.  So what should you know before buying a home that requires a little or a lot of tender loving care?

 

The Benefits

 

The benefits of purchasing a fixer-upper are obvious.  The price is usually right, and if the seller wants a quick sale because of decreased interest in the home, you may be able to negotiate a really great price.  Also, if you intend to flip the home after the renovations, the profit for the money and time you have invested can be quite considerable.  The trick to getting these benefits, however, is knowing what type of property to look for, as well as having an accurate idea of the associated costs, and realistic expectations of the time and labor it will take.

 

What Makes A Great Fixer-Upper?

 

There are several features that may make for a great fixer-upper.

 

Location-Buying a home in a desirable neighborhood is always a smart idea, particularly with homes that require a lot of work. Purchasing a house in a sought after area can mean a greater profit margin for resale value.

 

Layout And Configuration-This is especially important if you plan to sell the home after the renovations are finished.  Selecting a home that will appeal to the greatest number of buyers will get you the best price.  Also, choosing a home with a layout that flows may save you a considerable amount on the actual renovation costs because you are less likely to need custom installations and work.

 

Condition-Ultimately the most important consideration is the actual condition of the home. Choosing a fixer-upper with only cosmetic problems such as damaged flooring or old fixtures and appliances, and in need of only a new paint job, can often have the greatest profit margin and require much less money and time.

 

Overall, when purchasing a home that needs work, getting a qualified home inspector's advice and getting estimates of the cost of work to be done before making your offer can make all the difference.

Fears about a slowdown in global economic growth, stock market volatility and the government shutdown have stoked economic uncertainty, sending mortgage rates into a free fall.

According to the latest data released by Freddie Mac, the 30-year fixed-rate average tumbled to 4.45 percent with an average 0.5 points. It was 4.51 percent the first week of January and 3.99 percent a year ago. The 30-year fixed rate dropped below 4.5 percent for the first time since April 2018.

Despite recent drops in mortgage applications (due in large part to the government shutdown), falling rates are already starting to cause an uptick of more than 20 percent as a response. Expecting continued house price appreciation throughout 2019, many are seizing this opportunity to fetch lower rates on loans, locking interest while they are still relatively low.

Historical Chart of Interest Rates

Here are the interest rates for home loans for the past 30 years