Home Buyers have more options to their advantage today than they did a few years back. Interest rates are much lower and there are deals to be made. The challenge is what deal is right for which Buyer. Hopefully we can sort that out.
Owner Sellers Using a Real Estate Agent: This is the traditional old fashion sale that has been around for years and will continue to be around. Homes may be vacant or occupied. These are the sellers who have kept up their payments, done what they had to do and for whatever reason are selling their home. They have to compete with all the discounted, leveraged, foreclosed, short sale, lowered value sales that are out there. These owners know the history of the home and in Arizona must disclose the history of the home in relation to repairs, damage, and anything affecting the condition of the home itself. For repairs and expectations for having a home in excellent condition these, next to new home sales, are the best sellers for Buyers wanting a home to be move-in ready without need of repairs, fix up or changes. Through outside providers these homes can come with a one year warranty on most concerns. It depends on the provider as to what is warranted and what is not.
For Sale By Owner: Again these sales have been around and will continue to be around. There are pros and cons with a FSBO. Homes sold through a Real Estate Agent helps to remove a lot of risk. There are laws, code of ethics, state board requirements, local board requirements, and company requirements Agents must adhere to. Owners not using a Listing Agent may either be unaware or less scrupulous. There have been some deals here; there have also been some real horror stories as well. Imagine going to court for a murder charge without an attorney and only having a stack of law books before you. You may get lucky, you may not. What warranties are there? What protection is there? Who can you sue if things go wrong? Unless you are a well informed, experienced buyer who knows real estate laws inside and out, this may not be as good a bargain as you think.
New Home Sellers: The builders who have constructed a new home that has never been occupied. These homes come with a builders warranty from the ground up. There are warranties on construction, the roof, finish, manufacturer warranties on appliances etc. Depending on the phase of construction Buyers may get to pick colors, flooring, carpeting, cabinets, appliances, etc. In Arizona there is protection required by the Registrar of Contractors on workmanship. Generally there is no disclosure with the home unless it has been sitting vacant for a lengthy period of time. There are a variety of builders from individuals, to larger national builders. East with their own advantages and disadvantages. For the buyer wanting to pick out location, colors, style, etc. choosing a new construction home can be a good option.
REO/Bank Owned/Foreclosed Sellers: These are the homes that are having a large impact on the housing market. They have driven the value of homes down dramatically. There are some good and risky deals with these homes. Sometimes the owner left angry and with all the appliances. I have see homes where everything except the kitchen and bathroom cabinets are removed. Yes, bath tubs, toilets, carpeting, air conditioning units, furnaces, and even water heaters have been removed. Everything down to the light switches. Some owners have punched holes in that walls, and left water running in closed sinks and tubs. Sometimes showing these homes is an adventure. You never know what you might see. Some have left everything behind, to include a car in the garage. The banks have no clue what the history of the home is, so rarely is the a disclosure. Most will only sign off that they have no knowledge. Nearly all these sales are "As Is." What you see and what you don't see is what you get.
Fannie Mae and Freddie Mac Sales: Fannie Mae and Freddie Mac are like REO sales, except they usually, not always, but usually do a little work on the home to make it more habitable. Fannie Mae's HomePath and Freddie Mac's Making Home Affordable Program help home buyers. Many of these homes, not all, come with incentives to the Buyer such as Buyer assistance, two year warranties, etc. Less risky than REO's, yet more risky than traditional and new home sales. Though less than HUD and short sale homes some sweat equity will be needed on many of these homes.
HUD Home Sales: These are similar to Fannie May and Freddie Mac in that they are being sold by HUD. Electronic bid is required with a $1,000 earnest money payment up front. A Real Estate Agent must be used for these sales. To learn more visit the HomeStore. Many of these homes need work on them to get them into a livable condition. For cash buyers and investors these are good buys. Programs are also available for buyers needing loans to fix up homes to make them livable on a case by case basis. For buyers looking for sweat equity to HUD homes can be a good buy. For those looking for a ready to move in home with warranties and pristine condition, HUD homes may not be what they are looking for.
Short Sales: This like REO's can be risky. If the owners can't afford to pay the mortgage, most likely they couldn't afford to keep the house up. Short sales require the creditor's approval. Many short sale homes will require the buyer to put some sweat equity into the home. Like HUD homes, buyers looking for a short sale home to be in pristine condition may be disappointed.
With all the choices in the market today there is something for everyone. Being a knowledgeable buyer about each type available home will save questions, reduce disappointment, understand or reduce risk, narrow the number of homes looked at, and add to a more enjoyable process.
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