* Buyers: What Should You Be Looking For?
Monday, July 19th, 2010MSN has a great article up at the moment — What Kind of Home Should You Look For? [which they picked up from MarketWatch]. The article is a great overview, but I’d like to take a moment to expand on some of the points a bit.
The article tries to discuss the main ways a buyer can get a “deal” on buying their new home. I think, however, they gave too little attention to the traditional way people buy homes — making a purchase of a non-distressed property from a unhurried seller. The overall relative strength of the Triangle’s real estate market means that many, probably still most, of the homes sold in our market are sold just like they always have been ["at retail" some would say]. Since this is the baseline, it isn’t talked about much in the article, but it’s important to realize this is still how most homes are sold in our market.
The first big group this article talks about is Bank Owned Properties. It notes that the average discount on such homes is in the 20%-30% range. There is a reason for this: most of these homes were not cared for well before the bank took them over, and being vacant for extended periods of time only makes those issues worse. Even in the best of these homes, one should expect to do some painting, carpet replacement and basic maintenance catch-up. My two major additions;
- Bank owned properties are almost always sold “as-is.” This puts extra risk onto the buyer as any problem becomes theirs. I strongly encourage my buyers to have bank owned property inspected promptly – sometimes even before an offer is presented to the bank.
- Banks almost always have their own forms, which they require in any transaction. These forms usually are very slanted towards the seller. The help of a professional is always a good idea when dealing with a bank-seller.
Next up is Short Sales – a situation where a private seller is selling the home for less than what is owed, and the bank agrees to eat the difference. The issues here are simple and straightforward. The buyer will generally get a small [maybe 10%] discount on the purchase price, but they have to work through the banks process to get there. In particular, they have to accept that the process will take a long time, and that the bank may still reject everything at the end
Finally, the article talks about New Home Construction. The writer seems to feel that the time for deals on new construction has passed. I’m not convinced that is the case. During the slump, developers had plenty of land, plenty of skilled labor, and little demand. Prices normally fall in those situations, and new housing should be no exception. In fact, in some markets outside of the Triangle, new construction can be cheaper than an equivalent older home, as price drops attempt to keep people in that market.
Where we are really seeing concessions here is in upgrades and improvements. Builders are reluctant to move on the price for the frame, but those granite counter-tops, better electronics and stainless appliances are certainly easier to come by. A skilled negotiator can certainly earn his keep with strong negotiations in these areas.
I think we [the author and I] agree that deals are out there. Like anything else in life, however, getting the best deal requires work. If you’re interested in exploring any of these markets, please send me an email, and I’ll start working to find the right new home for you.
