Everyone thinks that buying a foreclosed property is the best way to get a “deal” in today’s market.  Well, maybe, but maybe not.

To get to the point of being a foreclosed property, the original owner had to stop making payments for some time.  It stands to reason that if they were no longer making payments and knew they would lose the home, that they would also no longer do regular maintenance and repairs.  Why would they?

So in most cases you can expect a foreclosure to need a little or a lot of work.

Things like air conditioning systems usually haven’t been serviced or even had filters cleaned in some time.
Small leaks may have become larger ones.
Wood rot issues have not been addressed.
If the seller was REALLY unhappy about things he may have even damaged the home, or taken away anything he could carry – including appliances, light switches, and plants.
The bank typically sells foreclosed homes “as is”, meaning they are not going to replace missing appliances or make repairs.  So the seller has to plan on being able to do (and to afford to do) all those things after closing.

Depending on what is wrong with the home, the home may not qualify for certain types of financing.  Meaning that the new buyer will have to put down a higher down payment or even pay cash for the home.

Companies that specialize in selling foreclosed homes do it because the VOLUME of transactions makes them money, not because they make very much on an individual home.  They are incredibly busy and will not have the time to answer every question in a timely manner so don’t expect the best in customer service.

All that having been said, there ARE some great deals out there on foreclosed homes if you are prepared for all the obstacles in the search for them.  The old saying “buyer beware” has never been more fitting.

Is it time for YOU?

Now is the time to sell. Now is the time to buy. That may sound confusing, but it’s true. Everyone in the media says prices are down. And they are correct. That is exactly why buying or selling makes sense.

Here are 10 reasons you should buy or sell NOW:

1) Look at it this way. If the home you are selling will net you less, the home you are buying will also cost you less. If you wait till prices go up on your home, prices will have risen on the home you want to buy.

2) Another reason to go forward is that interest rates have stayed low. Once the economy bounces back, there is no guarantee that interest rates will remain at these rates. That not only means buyers can afford less home, but sellers will find buyers may be priced out of their home’s range.

3) If you need another reason to buy now, think about the homestead exemption. Buying now, while prices are low, locks your value in for homestead exemption. Your rates can never exceed the yearly cap percentage, calculated on the value of the home at its assessed value when you purchased it. So buying now, when prices are lower, will save you money year after year on taxes.

4) If you’re a buyer, you may be reluctant to buy now when everyone says that prices may go even lower. But if you look at the statistics in the areas you are considering you may find that prices have gone as low as they probably will, and may even be inching back up already.

5) Waiting longer to buy will not get you a “bargain”. True bargains don’t exist for the average home buyer. The so-called “bargains” to be had in the market will probably be in areas that were investor-driven, with highly leveraged owners who may have to sell short. But that doesn’t matter to the average buyer who is buying a HOME, not an investment.

6) Another reason it’s a great time to buy is that the selection has never been better. There is a greater inventory of available homes out there than in years past. That laundry list of “must-haves” is easier to find when there are more homes to choose from.

7) If you’re a seller it’s hard to make a move when everyone says “wait.” Yes, prices will go up later on. They always do. So get your calculator out again. Figure out how much it’s costing you to own and support the home each month. Don’t forget the taxes, the insurance, association fees and the maintenance costs. Add that to the mortgage payment and you’ll see how another six months or more will affect your wallet.

Ironically, it’s the best time to use a Realtor. With the slow-down in the market, agents aren’t running around with frenzied buyers constantly. They have more time to offer buyers and sellers. They also have access to current market data that can help a seller price and market a home effectively and can guide a buyer through the thousands of homes available to the ones that best meet the buyer’s needs.

9) Lenders are more eager than ever to help buyers and sellers. Sellers who find the next home they desire can sometimes get a bridge loan that enables them to buy the next home while waiting for the first one to sell – without a second mortgage payment. Buyers can find programs to meet almost any situation that will enable them to afford a home with a mortgage payment that fits their needs.

10) Finally, the market offers both buyers and sellers more choices than we have had for awhile. Waiting will likely only offer fewer choices and less appealing options.

So whether you are buying or selling, NOW is the time!

The first step in finding a “deal” is to define what a “deal” is. Is a “deal” getting the biggest price reduction off the list price? Is a “deal” the property that will appreciate the most over the next five or ten years?

Very often the best way to decide if a property is a deal is to look at supply and demand. If the supply exceeds the demand, as it does in most of today’s market, then there is a better chance of getting a price reduction off the list price. However, if the demand is not there, will the property appreciate over the next few years at an acceptable rate?

If the demand is high, then it’s unlikely that a seller will reduce the price very much, if at all. Yet if that demand continues in the future then the value of the property will generally appreciate at or above market rates, making today’s full price a “deal” in the future.

So how can you determine “supply” on a property? One way is to look at its “duplicatability”. If this home or neighborhood can be duplicated right down the road at the same price or close to it, then the supply may always be adequate to meet the demand. If the home or neighborhood is located in a unique area or has features that cannot be duplicated, then the supply is limited.

To determine “demand” look at features that will always hold appeal, such as location.

For example, navigable water is generally a sound buy – they aren’t making any more. But not all navigable water is created equal. Historic data on sales in one area can be compared to another to see what demand has been like over time. Other neighborhoods that have locations on or near the beach, or downtown, or historic properties also can not be recreated.

Within a neighborhood, properties also have locations that make them unique. A water, preserve, or golf course view may make them special. Lot size, mature landscaping, privacy, or reduced traffic can be important features. Getting a “steal” on a property with an inferior location may look great today but down the road the next buyer will expect to “steal” it as well because other locations will have greater appeal.

The next step is to look at the past sales. Look both at the recent and the long term sales history. Look at the list vs. the sales prices, the number of days on the market, and the price increases over time. Look at the overall number of sales in an area or among comparable homes. Uniqueness does not in and of itself mean there is a high demand. Again, the only home with that feature may mean there was no demand to build more and demand will probably be low in the future.

Remember the old rule of the three most important things in real estate: location, location, location. Great locations hold their value in “down” markets.

Of course practical considerations have to play a part. Even if you have champagne taste and a beer budget you can still find the best property within your price range that fits your criteria.

Do not forget to do your homework. Check with the county to find out what is going on in the area over the next few years. Additional developments, road expansions and extensions are all a part of the public record. All those factors will affect future supply and demand so don’t overlook them. Do not rely on a seller or realtor to supply you with information that they may assume you already have.

The next thing to do when the property has been identified you want is to write a “clean” contract. That means a contract without a lot of contingencies and concessions. Writing a good contract is a balancing act between price and terms. Sellers look at the contract and must see something that is of benefit to each side. So a contract that makes a lot of demands on the seller and asks for a really low price runs the risk of rejection without a counter.

Having the financing worked out in advance so that the seller has confidence in the buyer’s ability to close is a major term that a buyer can address prior to writing the contract. Understanding the clauses in the contract that pertain to inspections and such can prevent extraneous clauses from being added that only complicate the contract negotiations.

Finally, remember this. Unless you are an investor, you are buying a “home”. Certainly you want to know that the home is worth what you are paying and that it will hold its value. But it is a home – the play you and your family and friends will enjoy for years. Sometimes, the best “deal” is to pay retail for the best property you can afford and then sit back while it appreciates in value. In a few years your friends may call you a genius for that “deal” you got!

Hire a full time Realtor

What’s the worst that can happen if you use a part-time hairdresser? Maybe you wear a hat for a month but then it’s over and you can fix the problem. What’s the worst that can happen if you use a part-time brain surgeon? Let’s not go there.

Obviously when it comes to your health or other important matters you want the skills and advice of a full-time professional. Why should real estate be any different? After all, your home is your largest single asset.

At any given time, there are thousands of homes on the market in dozens or even hundreds of neighborhoods. No real estate agent will know everything about every one, but a full-time agent will be able to understand the trends that are taking place because they are out there every day.

Full-time agents spend time studying market information, attending seminars, pre-viewing homes, visiting builders, etc. All the things that take time. They spend time with home inspectors, lenders, and other related professionals. Not only do they take the required continuing education that the state demands, they earn designations that demonstrate additional skills and education.

Laws and regulations are constantly evolving. Required disclosures change, as well as contract language. A full-time agent will be better prepared to discuss those changes and their impact.

Technology has also demanded more skills of an agent. With over 80% of home buyers beginning their search on the internet, today’s agent must understand websites, virtual tours, digital photography, and search engine visibility. Most full-time real estate agents are willing and able to invest the time and money it takes to use technology in ways that benefit their customers.

Finally, you want a skilled negotiator in your corner, whether you are buying or selling. Negotiating isn’t a skill easily acquired or maintained if it’s only used occasionally.

That brain surgeon isn’t paid for the time spent that day on that operation. He is paid for the time spent becoming the skilled professional that will ensure a successful outcome. Whether you are choosing a brain surgeon or a real estate agent, you deserve someone whose primary focus is you!

Today’s market is a Buyers’ Market because supply exceeds demand. That’s the law that has dictated price since time began. There are more homes on the market today than in the recent past, giving buyers more to choose from. And that choice allows buyers to be pickier than ever before.

Let’s assume you have done everything to your home to “spruce it up”. You’ve made repairs, enhanced the landscaping, cleaned every square inch – inside and out, etc. Your home now sparkles and shows as well as any other home on the market.

So what’s next? Exposure. There are two groups of people your home must be exposed to – potential buyers and real estate agents. Over 80% of buyers use an agent to buy a home, so it makes sense to have your home listed in the MLS so that it is exposed to all the agents in the area.

List with the right broker and that takes care of the second group – potential buyers. Full service brokers offer typically more exposure than limited service ones. They spend more on marketing and that increases the likelihood your home will be seen by more buyers.

Brokers have the ability to expose your home to more potential buyers than you as an owner can. They have more resources. Their marketing efforts will be heavily slanted toward the internet, but will also take advantage of print media, visual tours, professionally done marketing materials, etc.

Probably the most important thing left to do is price it right. That’s a challenge and you need accurate and up to date information to make a good pricing decision. Your agent should be able to show you the facts on recent sales, pending sales, and what is actively being marketed that represents your competition.

If the property isn’t priced right you’ll get no showings because other listings will look more appealing. If you get first showings, but no one is coming back for a second look, it may still be priced too high. If other homes around you are selling and you are getting no offers, price is still the issue.

Don’t fall into the trap of offering other price incentives if you are not getting showings. You may be tempted to pay closing costs, homeowners’ fees, a decorating allowance, etc. But in order for those to be appealing you have to have the showings first. Price is the answer to that. You can always sweeten the pot during negotiations by offering money for closing costs or other incentives.

Price the home below other homes in the area if you want to make sure that you get as many showings as possible. That sounds like hard to swallow advice, but allowing a property to linger on the market with no activity is just as bad. Agents and consumers begin to assume there is something wrong with the home. Meanwhile, your monthly expenses for mortgage, insurance, maintenance, taxes, etc. keep piling up. It may be better to bite the bullet by taking a price reduction than to carry all those costs indefinitely.

Buyers are in the driver’s seat right now. Sellers have to be realistic when it comes to getting a home sold and look at the market objectively. Contracts are being written every day on homes that demonstrate real value to the consumer. Make sure that you have taken all the necessary steps to insure that your home will be one of them.

Buying a home is a big decision involving a large investment. Maybe the biggest one you’ll ever make. So make sure you make an informed decision.

It would be nice to be psychic or to have a real estate agent who is, but that isn’t possible. No one can just look at a home and tell that it is in tip-top structural and mechanical condition. You can get clues as to how well a home has been maintained, but even brand new homes can sometimes harbor flaws.

That’s where a good home inspector comes in. A thorough home inspection can look for cracks, leaks, mechanical or electrical problems, etc. Most sales contracts entitle the buyer, at their own expense, to conduct a home inspection. There are time frames that must be adhered to or the inspection results will not represent a contingency to the contract.

There are a number of inspections the buyer may choose to have done. The most common is a general home inspection. The home inspection will check to see that all major systems are in working order – both structural and mechanical. That means that the item is working in the manner it was intended to operate.

For example, the air conditioning system cools the home properly, the kitchen appliances all work, etc. He will also look for leaks around plumbing fixtures, windows, doors, etc. Electrical outlets and appliances will be checked.

The home inspector will check for obvious roof problems but if he feels a more thorough inspection is called for he will recommend the buyer hire a roof inspector. A roof inspection will include a check for current or past leaks but can NOT be an accurate predictor of roof life – even roof inspectors are not psychic and can’t predict the future.

The buyer is also entitled to have a WDO inspection. That’s an inspection for termites or any wood rot (caused by other wood-destroying organisms).

Radon gas is invisible and odorless and can only be detected by a certified radon inspector who uses the proper equipment and evaluates the results. Since radon gas is suspected of being a cause of lung cancer, an inspection for it will show if it is present in high levels, and so, it can be mitigated professionally.

Mold is a relatively new inspection item and is yet very loosely regulated. Most homes have some mold but the only mold that should be mitigated is toxic mold, unless a family member has an allergy or medical condition that is exacerbated by the presence of other molds.

Most sales contracts allow the seller to fix the problems, to give a credit for their repair or the two sides can negotiate a reasonable solution. Sometimes the result is the voiding of the contract. However, if both buyer and seller are realistic and reasonable they should be able to come to a resolution that satisfies both parties.