What First Time Home Buyers Should Know Now

Okay peeps, listen up.  If you want to buy a home in the spring of 2013, you want to read on…

 

Inventory is at an all-time low.

First, we are coming to the end of the foreclosure boom.  You won’t find as many inexpensive bank-owned properties as you would have a few years ago.  And the bank-owned or REO properties still available are picked over and less desirable.

Second, many people, myself included, can’t afford to sell their homes.  Many of us bought at the height of the market and now owe more money than our houses are worth.  Therefore, folks are choosing to stick it out until prices rebound a bit more.

So what does that mean for the buyer?  Be prepared before you offer.  You need to have both a Realtor and a well-qualified (I can’t stress well-qualified enough) lender.  Just like in the early 2000’s we are seeing an increase of fly-by-night lenders.  So make sure you check their credentials, and if something sounds too good to be true?  It is.  Also, you want to work with people who answer all your questions and don’t blow you off.  A Realtor’s job is to be the face of the transaction, and bring clarity to the process.

Then, you need to have reasonable expectations of the home-buying process.  Buyers should expect to compete with other buyers – there will be multiple offers on any property you write on.  Buyers should expect to have to write on at least 2-3 properties, if not more, before your offer is accepted.  And buyers, you need to bring your best offer every time you write on a property.  The days of low-ball offers are rapidly retreating.

One item buyers should NOT sacrifice to get their offer accepted?  The home inspection.  If you do not make the purchase of your home contingent on the home inspection – which means, you can cancel the purchase agreement if you find something too egregious – you are just asking for trouble.  A $350 home inspection is worth every single penny.

 

Beware of home flippers.

Back in 2003, the Federal Housing Administration (FHA) enacted their 90 day “Anti-Flipping Rule.”  It was aimed at curbing what the FHA called “Property Flipping,” in which “a property recently acquired is resold for a considerable profit with an artificially inflated value, often as the result of a lender’s collusion with an appraiser,” according to the Federal Register.  The Rule basically said the FHA wouldn’t insure a home buyer’s loan if the property the buyer was buying had been bought by the seller less than 90 days before the new sale.

The Rule was waived back in 2010, and will stay waived until December 2014 – even though  many of those aforementioned bank-owned properties were snatched up by home flippers – some legit, some not.    However, even with the waiver, it doesn’t mean buyers are in the clear.  If the property you are buying has a price increase of more than 20% of what the seller paid for it?  There either needs to be records proving WHY the price went up – like an extensive remodel – or the buyer may need to pay for a second appraisal, to the tune of $400 or more.

 

Short Sales take a long time.

If you decide to write on a short sale property – where the seller is selling for less than what they owe on the property – you need to know two things.  One?  You need a Realtor with vast experience in navigating short sales.  To find a short sales expert, call your local brokerages and ask for one!  Two?  If you offer on a short sale property, be prepared to wait a long, long time for an answer.  You could wait up to 6 months before you hear back on your offer.

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    Where I Thrift

    Everyone has their favorite thrift stores, right?  Okay, you do if you love thrifting as much as I do!  Here are the stores where I enjoy popping tags:

    Saver’s in Bloomington – close proximity to Prestigious West Bloomington and Edina equals excellent, higher end thrift scores.  Remember, if you donate?  You receive a 20% off coupon you can use right away!

    Saver’s in Columbia Heights – it’s the nearest thrift store to my house, and they have the NICEST staff of any Saver’s in the TC, in my humble opinion.

    ARC Value Village – For me, ARC is hit or miss.  I either score BIG, or leave empty-handed.  Either way, I always enjoy perusing this tidy, friendly shop.