What a great time to purchase Real Estate!
by Ron Accornero
We are currently in a buyer's market and this is a great time to buy real estate.
The market currently has too much inventory and homes are staying on the market for long periods of time which has made sellers reduce their prices. As we get into the holiday season this trend may get worse.
Many homes are still going to the short sale market and are creating comparables which are lower than existing prices and are causing prices to continue to decline. Some of these short sale homes are selling for as low as 30% less and is creating havoc with sellers. Appraisers are using these comparables to appraise property and it is causing appraisals to come in much lower which is also causing problems with the loans.
The ideal situation is to find a steal in a great neighborhood. There are many well-kept homes in the market that are not going through short sales. Buying one of these homes is a good decision. A home that has not been cared for is usually not a good buy in this market, unless you buy the home at an unbelievable low price. You sometimes hear people say, "you should buy the worst home on the best street." That was true at one time and may be true again, but with the high inventory we have today it is not the best decision. In this market you can buy the best home in the best location at the lowest price.
If you are in the investment market, now is the time to buy rental properties. Most of the homes in Southern California that you can buy below $350,000 are going to rent for $2000 per month and with 20% down you will receive a small profit each month. With 25% down you should realize a $400.00 per month net profit. Within 10 to 15 years these properties will more than double in value and provide a nice investment for you as well as a great retirement vehicle for your future.
If you happen to buy in the short sale market, there are some hazards you need to be aware of:
Buying a short sale is slightly different than buying a regular purchase because you are required to sign a Short Sale Addendum which states that the property remains on the market until it closes. It also states that the bank may accept any offers up until the property closes. Even though the property is approved by the bank for a short sale, it stays on the market like an open listing until it closes. Which means that you may make an offer on a property and think you have the home at an unbelievable price until the day before it closes and then another higher offer comes in and takes it away from you? In addition, you are stuck with any charges like appraisals, or inspections that you may have done. Banks have tended to stay with the offer in process, but the short sale contract does give them the flexibility to switch buyers.
In other words, "Buyer beware". If you venture down the avenue of short sales it would be wise to use a realtor who understands your liabilities and can protect your contact.