Buying a Fixer

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Have you ever seen the movie The Money Pit? This was a great 80's movie that shows an exaggerated reality of a couples not so great home purchase. Obviously, this is not the norm situation, even with a "fixer-upper". But you get the idea that they have gotten way in over their heads as far as their initial expectations about the home.These days with TV shows like, "Flip or Flop and "Fixer Upper", we all think that a home that needs work would be the best way to save some money on a purchase, but this is not always the case. Yes you might be saving money on the list price on a property that needs a little "TLC", as some realtors describe it, but there are other considerations that need to be made before you sign those purchase docs.

Get an Inspection from Someone who has Experience with these kinds of Homes

During the first few days of your buying process, you will have an inspection done on the property. They will look for all kinds of issues with the home and they will be able to give you a good idea of what you should expect as far as any future maintenance and immediate maintenance is concerned. This individual should have experience working with fixer-uppers because they will be best suited to tell you about the home's specific issues. As they walk through the home, make sure to follow them as they will be pointing things out that you may have otherwise missed with an inexperienced inspector. Also, make sure to have a list of your own with items on it you wish them to check. Such as: roof, plumbing, electricity, foundation, general structure, windows and doors. Don't forget to take copious notes. These are all pretty standard but since you are looking at investing a good amount of money to fix up, you will want to be sure to dot every "I" and cross every "T".

Adequate Funds Earmarked for Fixes

Decide what kind of a fixer you will be able to proceed with. There are different levels of fixer uppers ranging from, a full "gut job" to simple cosmetic fixes. In addition to the funds needed for your total purchase, including your down payment and closing costs, you will need to have banked a significant amount of money for these inevitable repairs. The last thing that you will want to do is assume that you will be able to just "live" with the condition of a fixer until you have saved more money down the road in order to rehab, that could be more than you bargained for.

Loans for Fixers

Depending on what type of loan you qualify for, FHA or Conventional, the bank will have to approve the condition of the home in order to lend to you. Typically they will send out their own inspector to see what type of condition the home is in. As far as FHA's are concerned, they are easier for buyers to get qualified for, but these types of loans can be tricky because the banks are much more critical about issues with the home. Most of the time, they will want certain fixes to be made prior to the close of your escrow. Conventional loans are a bit more lenient. This loan is harder to qualify for but once you have, they are much more forgiving about the lending requirements for the fixes of the home.

The moral to this story is Do Your Homework! Make sure your expectations are reasonable and you understand this type of home purchase and the possible pitfalls.

How is the Real Estate Market?

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There's a lot of speculation that goes into people's various predictions of the Southern California real estate market. Some say that the market has "peaked", while others say that, "home prices are still rising with no end in sight". And some are left questioning, "could both be somewhat true?" These are the thoughts that one could be considering when deciding whether or not to make a move in the real estate market. Beginning your journey through the buying or selling process can be overwhelming in and of itself, so having the answers to some of these questions will help to put things in perspective and enable you to confidently move forward in your action.

"The Market Has Peaked"

This refers to the highest point that the prices of houses have risen to in a specific period of time. This statement could be true, but the truth is we don't yet know if the housing prices are at their peak yet. They could continue to rise or they could start falling. There are quite a few variables to be considered when deciding if houses have hit their highest point. I believe the best way to know this is by looking backward. You can see it in hindsight where the housing prices peaked within a certain period of time. But use this only as a relative measure to the many other factors that should be at play in your decision on whether it's the best time to buy or sell real estate.

One important variable that might help you to see things more clearly are the interest rates. The interest rates definitely have a crucial impact on the housing market. You will want to keep an eye on this as the rates can sometimes price you in or out of an area that you may have your eye on.

"Housing Prices are Still Rising"

Bottom line is, in a "normal" real estate climate, housing prices will always rise year over year. There have been few exceptions to this rule, but far and away houses gain value each year. If you look at any standard housing market table, you will be able to see that as far back as you can get reference for, housing prices tend to go up. Typically about 11% on average. There have been some slower rising years, being 5% or 6%, but nevertheless you will eventually see return on your investment in the long run. Like every investment, it has it's ups and downs, but generally speaking, investment in real estate will be a safe place for your money.

In addition, there are other variables that may help to gauge where the market is currently. A big consideration is in the law of supply and demand. When there are less homes available for purchase on the market, seller's can demand higher prices because there's more competition. Conversely, if all of a sudden people start putting their houses up for sale, so much so that there are more homes on the market than buyers, that will drive the prices down. A good real estate agent will be able to educate you on what the specific neighborhood homes are selling for in your area. In doing this, it will help you to get an idea of how much you will pay or what price you will need to list your house at so it will sell in an appropriate period of time.

Although it is important to consider these questions when thinking about a move in the real estate market, the number one variable for timing is YOU. When the timing is right for you and your family, we would love to help you through your process. Call us anytime for more information about your real estate options in today's market!

You can also visit our website: http://joshandshellyrealestate.com/