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I'm looking for advice from homeowners and I guess realtors (preferably with an agenda i.e. just wanting to make a sale)...
I just accepted orders to stay in the area for the next 60 months (total) and our lease is up end of November.
Should we buy now? Or should we wait until the prices drop more? We seem to get different advice from anyone we ask. Some say prices will keep dropping, the news keeps lambasting us with sky is falling prognostication, others saying its impossible to get a loan now, while a few optomists insist now is the perfect time to buy and that what we hear on the news doesn't specifically apply to this area (????).
Anyway, we'd have an interest in Chesapeake or VAB, likely in the high 200-low 300 range.
Well, I bought and sold when the going was good, so my opinion would be, if you find a home that you like and the price is fair, go ahead and buy it or make an offer and if the seller really wants to let it go because of relocation or another reason that makes sense, then it would be to your benefit.
I may not a professional Realtor or a professional financial planner or a professional loan expert, but I did stay at a Holiday Inn last night
I have bought and sold more properties in Va Bch over the years then I even care to count and I can tell you with out a doubt it is always a good time to buy or sale real estate as long as you have did your homework.
Sure you have to know how to play the game. You have to look at both the long and short term trends in the local market and compare them to what goals you hope to achieve during a certain time frame.
Now it appears you are looking to buy a residence to live in for the next 5 years. Dont go out in the market place looking for that perfect home for you and your family. Look for something that meets the standards that you are looking for and will enjoy living in for the next 5 years, but do not come emotionally attached to a certain home just because it might be perfect for your family now.. The most important thing is to look for a home that when you walk away from it in 5 years it will put the most money in your pocket...look at this house as just a 5 year rental.
What you want to do is find a house that you can buy that has built in equity. IE find someone that has to sell their house and is willing to sell it below the neighborhood comps. The larger the amount of equity you can walk in with the larger safety net you will have for market adjustments over the next 5 years...in other words let the previous home owners money play the market not yours.
No one really knows what the housing market is going to do over the next 5 months let alone the next 5 years. You may buy a house and the market in that neighborhood drops a few more % before leveling out and/or turns the corner back upward again...no big deal because its not your money you put into the house that is being eaten away its just a little bit of the equity that was already in the house.....or the market may adjust higher sooner than than expected...if so great you just made more than then expected off of the house again due to the equity in the house that was already there.....
So again play the game, dont let it play you... You want to look the final agreed upon selling/buying price of a certain home and then compare it with the appraised value of the property before any down payments are made. Then also look at the city assessment of that home and also compare it with the rest of the neighborhood. Then go back and compare the assessment of the neighborhood for as many years that you can depending on how old the house/neighborhood might be to the neighborhoods around it. Then you have to throw in zip codes and school districts and so on and so on but the bottom line I am trying to make to you is.......... look at this home as a 5 year investment. That way in 5 years depending on if your transfer out of the area or decide to stay local you can then sell this property take the equity and put it toward your dream home or at least have a larger nest egg for personal goals (kids education etc)
While every Real estate agent would like to have a sale. Most Realtors should be looking out for their clients best interest. Thats why you should have a professional working for you. Buyers rarely pay the agents commision, so you definetly want your agent working for you as a buyers agent. You need them to do the leg work so that you can make the best possible decision. There are many reputable lenders out there, you need to get more than one good faith estimate. Wachovia may be able to do a certain type of loan that Bank of America can"t do or vice a versa. Right now you are in the drivers seat, go see whats out there and then make a qualified decision. There are many nice homes out there in your price range which were not there 2 years ago. good luck
I may not a professional Realtor or a professional financial planner or a professional loan expert, but I did stay at a Holiday Inn last night
I have bought and sold more properties in Va Bch over the years then I even care to count and I can tell you with out a doubt it is always a good time to buy or sale real estate as long as you have did your homework.
Sure you have to know how to play the game. You have to look at both the long and short term trends in the local market and compare them to what goals you hope to achieve during a certain time frame.
Now it appears you are looking to buy a residence to live in for the next 5 years. Dont go out in the market place looking for that perfect home for you and your family. Look for something that meets the standards that you are looking for and will enjoy living in for the next 5 years, but do not come emotionally attached to a certain home just because it might be perfect for your family now.. The most important thing is to look for a home that when you walk away from it in 5 years it will put the most money in your pocket...look at this house as just a 5 year rental.
What you want to do is find a house that you can buy that has built in equity. IE find someone that has to sell their house and is willing to sell it below the neighborhood comps. The larger the amount of equity you can walk in with the larger safety net you will have for market adjustments over the next 5 years...in other words let the previous home owners money play the market not yours.
No one really knows what the housing market is going to do over the next 5 months let alone the next 5 years. You may buy a house and the market in that neighborhood drops a few more % before leveling out and/or turns the corner back upward again...no big deal because its not your money you put into the house that is being eaten away its just a little bit of the equity that was already in the house.....or the market may adjust higher sooner than than expected...if so great you just made more than then expected off of the house again due to the equity in the house that was already there.....
So again play the game, dont let it play you... You want to look the final agreed upon selling/buying price of a certain home and then compare it with the appraised value of the property before any down payments are made. Then also look at the city assessment of that home and also compare it with the rest of the neighborhood. Then go back and compare the assessment of the neighborhood for as many years that you can depending on how old the house/neighborhood might be to the neighborhoods around it. Then you have to throw in zip codes and school districts and so on and so on but the bottom line I am trying to make to you is.......... look at this home as a 5 year investment. That way in 5 years depending on if your transfer out of the area or decide to stay local you can then sell this property take the equity and put it toward your dream home or at least have a larger nest egg for personal goals (kids education etc)
I agree with what the poster is saying, although I am always skeptical of the term built-in equity. I saw this in an ad for a house once, that the buyer would already have built-in equity if they bought it. In reality, a house is only ever worth what someone will pay for it. So if you bought that house for $400K, I would highly doubt you could turn around and sell it for $50K or whatever more, otherwise the sellers would have done this. It's true, if you find someone desperate to move you can get a better price, but remember to receive that equity you have to sell it at a higher price and you really have no idea what the market will pay for it.
This area has fared better than Florida or California, but simple economics tells us that there is an oversupply of homes from rampant building and much fewer buyers (no more interest only loans, people scared with the economy the way it is, etc.). Salaries in the area are low too to support the prices the way they are now. No one has a crystal ball, but there is no way I would buy right now. IMO prices have a ways to drop or at the very least stay exactly the same for the next 3-5 years.
Five years is a ways off so who knows what will happen, but my guess is with realtor fees, closing costs, etc., you would be lucky to break even considering inflation. But there are other benefits to buying like being able to do what you want to the house, tax benefits, etc., but don't expect to use the house as an ATM like so many have done in the past.
Bottom Line: If I were you I would rent for the next year or two, save some money, and then buy when prices have dropped.
P.S. I have actually been impressed with the realtors on this board. I thought I would hear a lot of salesman type posts from them, but most of them have been honest and have good opinions.
Sixty months is a long time. Find the house you want, and make an offer. Don't pay full price right now even on the lowered prices. I would still offer a little less. Believe me, I rented in the past apartments and townhouses. Now that I am back in a house after being out of one for so long, I can tell you that I would never rent again.
My husband says buying a house is unlike buying a car.. the prices go up.. so if you are going to be in the house for more than two years (because you'll get taxed if you don't) it is usually a good investment. Make sure and get a home inspection and try and look for the best value.. if you can get a newer home that needs some minor updating ex.. repainting inside.. replacing flooring, hardware, lighting.. chances are you'll be happy with your outcome both in the bank and pride-wise. Look for newer windows, heat pump, good shape roof, clean inspection report, fairly good neighborhood if you're going to be reselling it. Those are the things that cost a lot to replace or get. Hope it helps : )
My husband says buying a house is unlike buying a car.. the prices go up.. so if you are going to be in the house for more than two years (because you'll get taxed if you don't) it is usually a good investment. Make sure and get a home inspection and try and look for the best value.. if you can get a newer home that needs some minor updating ex.. repainting inside.. replacing flooring, hardware, lighting.. chances are you'll be happy with your outcome both in the bank and pride-wise. Look for newer windows, heat pump, good shape roof, clean inspection report, fairly good neighborhood if you're going to be reselling it. Those are the things that cost a lot to replace or get. Hope it helps : )
Prices always going up may have be true in the past, but we are in a time now that has never happened before in history. Prices basically doubled/tripled in the past 5 years here for no real sound reason. They will/need to correct. If you bought now, you would be lucky to sell at the same price two years later, let alone all the fees. Let's say you bought a $300K place, with 6% realtor fees that eats up $18K, plus closing costs like $5K (or whatever it is), and if things are like they are now you would probably have to pay your buyer's closing costs (although if you bought the person you bought from would probably pay your closing costs so that is kind of a wash). The point is, buying/selling/moving is expensive. In the past, houses on average would increase. In the next two years I can't imagine they would go anywhere but down. With the way things are now, I would say you need to be in your place 5-7 years to really break even.
But if you do buy, what the poster has suggested I agree with, cosmetic stuff you can do easier, but new roof, heat pump, etc. is expensive so look for a house that has a lot of the majors upgraded. Also, I have learned that around here schools make a huge difference. The best school districts will make it easier to sell once that time comes.
I agree with what the poster is saying, although I am always skeptical of the term built-in equity. I saw this in an ad for a house once, that the buyer would already have built-in equity if they bought it. In reality, a house is only ever worth what someone will pay for it. So if you bought that house for $400K, I would highly doubt you could turn around and sell it for $50K or whatever more, otherwise the sellers would have done this. It's true, if you find someone desperate to move you can get a better price, but remember to receive that equity you have to sell it at a higher price and you really have no idea what the market will pay for it.
This area has fared better than Florida or California, but simple economics tells us that there is an oversupply of homes from rampant building and much fewer buyers (no more interest only loans, people scared with the economy the way it is, etc.). Salaries in the area are low too to support the prices the way they are now. No one has a crystal ball, but there is no way I would buy right now. IMO prices have a ways to drop or at the very least stay exactly the same for the next 3-5 years.
Five years is a ways off so who knows what will happen, but my guess is with realtor fees, closing costs, etc., you would be lucky to break even considering inflation. But there are other benefits to buying like being able to do what you want to the house, tax benefits, etc., but don't expect to use the house as an ATM like so many have done in the past.
Bottom Line: If I were you I would rent for the next year or two, save some money, and then buy when prices have dropped.
P.S. I have actually been impressed with the realtors on this board. I thought I would hear a lot of salesman type posts from them, but most of them have been honest and have good opinions.
Very good post, and this gives the OP another point of view...and I dont want to get into a big debate because that leads away from trying to help the OP but I must say this....real estate can be a frustrating game to play at times and you bring up some good points, you could buy now and fast forward a few years and state to yourself...wow I wish I would of waited another year or two before I bought because I could of paid less money for this style of house......but on the other hand you could wait a year or two and not buy and then look back and say...wow I wish I would of bought that house a year or two ago it would of saved myself a lot of money compared to what I have to pay for it today........Its all a game of chance...maybe you beat the dealer or maybe she beats you....
Even in todays market with everything tightening up as far as loans, credit scores, down payments etc there are still many programs out there to help the home buyer....
Yes there were a lot of foolish people that jumped into the real estate game a few years ago by maxing out (or over maxing....LOL is that a word) their loan amount to buy their dream home with zero down, many with crappy adjustable rates or higher than normal rates due to so so credit ratings or silly interest only loans etc and many are paying for their mistakes now. Even with taxes in every city at the lowest we have seen in many years there are people that can simply not make their mortgage payments and foreclosures are an every day occurrence, heck just look in the local classified section of the paper everyday and you will see a number of foreclosures in every city and in every price range from 50K to over 1 million. Look at the number of REO properties that are available today. Many of them can be picked up for pennies on the dollar.
In my honest opinion even in our local market which is much better than many places across the USA right now a person would be foolish to be looking at normal resales in todays market before that person exhausted every other avenue..IE short sales REO's etc....but even standard MLS resales in Va Bch alone you are looking at somewhere around 3000-3500 homes for sale right now (well last time I looked)...That is a huge number....So great deals are out there just due to the competition
Now back to the OP I still think you would be smart to buy in today's market but as I stated dont be afraid to look for those deals...in fact insist on them if you hire a Realtor to assist you on your search..... be it REO's or standard resales and make sure you walk away from every counter offer that did not suit your liking...(again dont get emotionally attached to a certain house)....Heck even dealing with REO's in todays market has eased allot and most banks are happy to counter offer to potential buyers to include any and all Realtors fees, closing cost etc to people that have better then average credit scores and the proper down payment requirements. Banks are not in the business to sell houses so they have no emotional ties to any property like resales do, so the bank could care less if the house that they now have the note on has a wall that shows marks where little Johnny has grown up over the years....they just want to satisfy the outstanding loan.......So in todays market a buyer should never have to worry about realtor's fees (seller pays standard 6%) or having to pay full closing cost...I would not accept any counter offer that did not include at least the buyer paying 3% at closing unless the deal was just to good to walk away from...
So getting back to the built in equity...look for those deals....The poster above I quoted does not understand "my" built in equity theory...and that is his opinion and I respect him/her for that...but you have to look at the big picture again......
He stated..
Quote:
Originally Posted by chesapeakesim
a house is only ever worth what someone will pay for it. So if you bought that house for $400K, I would highly doubt you could turn around and sell it for $50K or whatever more, otherwise the sellers would have done this
That statement is very true but this is not a house you are looking to buy and flip again in 30 days....so say you found a house that the appraisal is at 400K but the owner has to sell the house for whatever reason and he is wiling to sell it for 325K and the seller is even willing to pay closing cost etc....(and trust me there are deals like this out there every day) so you as the buyer are walking into that house with 75K of equity plus whatever you put down as a down payment....now yes it would be foolish to think you could turn right back around the next day in todays market and re-list the house for 400K and find a buyer to pay 400K for it.....true you did have many people buy houses cheap toss in a few bucks to fix them up and flip them quickly for a higher price but mostly those days are over for now...but again that is not your goal. Your goal is to stay in this house for 5 years. That 75+K of equity you show "on paper" of having in the house is now what works the market......If the market continues to tumble for some reason you have a 75K window of error before a penny of your money is touched, if the market rebounds (which I think it will) and the local market returns back to the normal 3-5% increase every year in 5 years you will have yourself a nice profit on the house when you go to sell
If you do decide to buy , invest $400 for a home warranty to cover major breakdowns, ask the seller for a home warranty when negotiating.
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