Without a doubt, EVERYONE is looking for a deal if they are in the real estate market. Barely a day goes by that I don’t get a call asking me about foreclosures and short sales.
Tag Archives: flipping
First Time Home Buyers… I just found a REAL bargain…
- Saturday, 26 September 2009 23:47
- Written by Lane Bailey
- 0 Comments
- Image by mlhradio via Flickr
The October issue of Realtor Magazine (our industry magazine) had an interesting article about dispelling myths while educating first time home buyers. The third point was about the realities of “bargains”.
There are absolutely some bargains in the market… But, often those properties that are the real bargains are NOT the ones that have rock-bottom prices.
The HECK you say…
Really… I have been in some pretty cheap properties in the last few months. It seems that a house priced at $25,000 in a neighborhood or $150,000 homes would be a slam-dunk, right? That deal starts to look WAY less attractive when the issues get added up…
- roof
- mold
- floor coverings
- appliances
- plumbing fixtures
- electical fixtures
- copper wire
- copper plumbing
- landscaping (not to make it pretty, but to stop water from washing away the foundation)
- HVAC
- driveway paving
Seriously, I looked at a house that needed all of that. It would be faster, easier and probably cheaper to bulldoze the house and start over. Since the lot would be worth about $10,000… and it would take about $15,000 to clear the lot and get it ready for a new building… This wasn’t a deal.
Of course, most aren’t that severe…
However, there are a lot of times where one house will be significantly cheaper than another for sale, but after correcting its issues, it actually ends up costing more. It might be simple things like carpet and appliances, or maybe something more involved, like a roof or HVAC.
This often ties back to “I need to see all of the options“, presented earlier. In this case, we just want to get a look to make sure that it really is in that bad of shape.
I have looked at a lot of “bargain” properties and have a pretty good feel for them. There are some great deals, but they are usually not the first ones to present themselves… They are generally in much better shape and slightly more expensive.
Finally…
Remember that the deal properties often still need work. And it is probable that the buyer will have to come up with cash for that work, in addition to downpayment and other closing costs… it isn’t something to bootstrap.
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Mold, not just for bread and cheese anymore…
- Friday, 04 September 2009 12:07
- Written by Lane Bailey
- 5 Comments
- Image via Wikipedia
Ok, mold has NEVER just been for bread and cheese. and while it can be useful stuff… when it is penicillin… the rest of the time, it is NOT something we want in our bodies.
So, Mold and Real Estate?
I’m seeing it more and more. Actually, it started a few years ago, but as more foreclosures come on the market, mold gets to be a bigger issue.
In some homes it is a minor issue… a little musty smell that can be handled with a couple of filter changes in the HVAC and a good cleaning. There are even some homes that don’t seem to have any mold smells present.
But in other homes it is a MAJOR problem. We aren’t talking about a little smell, we are talking about unhealthy levels of toxins… and in some cases, they could cause serious respiratory distress, or worse. In those cases, if the price is good enough, and the home is otherwise desirable, a mold remediation company could be brought in to kill the mold and bring the property back into a healthy state.
How can we know?
Get an inspection. Of course, I ALWAYS recommend getting an inspection from an ASHI Certified Inspector for any home… even brand new. But there are actually specialist Mold Inspection companies. If you suspect that there could be mold in the property, getting it inspected is cheap insurance. Mold remediation can be simple, or VERY involved and expensive. Knowing during the Due Diligence Period is much better than unexpectedly finding out that your good deal is going to suck $50,000 out of your pocket before you can move in.
Some favorite mold hangouts…
- Crawlspaces and basements
- Under sinks in kitchens and bathrooms
- Attics
- The back of closets
- Anywhere there isn’t airflow
Be aware. Do a little research… even trolling Google, Yahoo or Bing for a few minutes can yield a lot of good knowledge. of course, getting professional advice isn’t a bad idea either. And remember, almost every property is going to have SOME mold. But, if the humidity and moisture levels are in line with what they should be, there is good airflow and the space is kept clean, the mold can’t get a solid foothold and take over the house.
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Deals in Bankrupt Subdivisions?
- Thursday, 03 September 2009 09:50
- Written by Lane Bailey
- 1 Comment
- Image by Getty Images via Daylife
I recently took some buyers out looking at houses in an area with a lot of bankrupt subdivisions. The houses were, in many cases, quite attractive and priced very competitively.
But there are a lot of considerations that buyers need to weigh before buying a home in a subdivision where the developer has gone out of business…
We’ll start with the dangers…
- The amenities may not be complete… and they may NEVER be complete. If you are buying a property because of the pool or tennis facilities, and those items aren’t there, they might never be built.
- There is NO telling what might be built on the currently vacant lots… The bank that gets control of the lots wants to SELL them. And they likely aren’t going to quiz the buyer as to their plans for the neighborhood. Your 5,000 square foot home could get a 2,500 square foot neighbor.
- Warranties may just fly out of the window… Defunct builders won’t be around to honor warranties, and the bank that sells the property isn’t going to warrant the builders work. Also, since the builder may have had financial pressures while the were building the homes, the quality might be challenged.
- Important items like HOAs and CCRs might not have been assembled… This can be remediated by the residents… maybe. The residents can form a Home Owners Association (HOA) and put together Community Covenants and Restrictions (CCR), but depending on the local laws, might require 100% of current residents to enact.
- The community might have a stigma… from having been bankrupt. This could affect future resale value… especially if the community isn’t built out completely.
But there can be a reward…
- Price… That is the real draw. One might be able to buy in a community and type of house that could otherwise be unattainable.
- Opportunity for appreciation… If the neighborhood turns the corner and gets built out appropriately, the reward could be higher than average price appreciation. Buying under-priced property and then selling at market is a good business decision.
Do the math!
While searching for a home, make sure that the home meets your needs… and the neighborhood meets your needs… AS IT IS. Also, don’t forget to weigh the risks. What if smaller homes are built in the neighborhood? What if there are no amenities? What if the guy next door is able to build a tar-paper shed in the back yard?
For some buyers, these properties represent a GREAT value. For others, they represent a big risk. By honestly examining lifestyle and options, one can determine if a home in a bankrupt subdivision is a good value for them.
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Strange People… muttering… muttering…
- Tuesday, 01 September 2009 23:56
- Written by Lane Bailey
- 0 Comments
Have you ever hung out around the County Courthouse on the first Tuesday of the month?
The County Courts CAN make for some great people watching on any day of the month (ok, any weekday…), but the first Tuesday on the month here in Georgia is a little more special. There are deals to be had… property deals.
OK, maybe there are deals to be had. Honestly, there wasn’t much action on the foreclosure auction front… but I’m getting ahead of myself.
The the tax record on the County’s website said that the sale would take place at 8:30am…
First up were the tax sales. They started a moment after 10:00am. There were six parcels to be auctioned off. Five of them sold… and might have been good deals. The final property was unable to attract a bid, and there were a few chuckles from the assembled thirty or so people. None started above $1500 (except the last one) and the final bids ranged from just under $10,000 to just under $30,000… I wasn’t there for those properties and hadn’t done any background, so I don’t know if they were good deals or not…
A few minutes later, some attorneys started showing up for the foreclosure auctions. The banks involved had predetermined their minimum pricing.
Each lawyer would stake out his spot and begin “the chant.” It consisted of the legalese that they were required to read before accepting bids. They were quietly “speed-talking” the required verbiage in their own space… bidders wanding near to try to figure out which property they were representing. They would each briefly mention the address of the property and the tax ID… before anyone knew what they were doing there.
It was largely the same crew of bidders, even though there was no actual bidding…
- Mr. Bored This guy would mention his bid as if it was bothersome. As he was outbid, he would slightly top the new bid… trying to sound like he would rather be anywhere but here…
- Miss Aggressive She actually punched the air with several of her bids. It was funny as she outbid Mr. Bored… the juxtaposition between her excitement and his “duty to respond”…
- Mr. Business He effectively combined boredom and excitement… It was obviously a duty for him to bid, he seemed to not care about the outcome. At the same time, he was quick to react…
- Mrs. Pre-occupied Perhaps she couldn’t be bothered to bid. She would bid… but it just seemed that she was annoyed that the auctioneer expected her to stop her other conversations to pay attention…
In the end, I’m sure I missed some of the sales. There were anywhere from 2-7 lawyers chanting at any given time. But the one thing I did notice… nothing was sold. One of the properties that I was familiar with was going for something between two and a half and three times what it would fetch on the open market…
Deals DO come up at auction. But, you have to know the properties and what you are willing to spend to get them… BEFORE you get there. And you have to know the players… who will be auctioning off the property.
from Gwinnett Garage Guy
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