If rising prices have you thinking twice about buying a home, here are some ways to purchase a home for half the price.
Think deals on real estate are gone due to rising home prices? Think again.
"A savvy buyer with the proper funds, patience, and the right guidance can certainly find opportunities to buy a home for half price," says Warren Johnson, a real estate agent with RE/MAX Property Center in Paramus, New Jersey.
Qualifying for government programs, shopping for rock-bottom foreclosures, and renovating extreme fixer-uppers are some of the ways you can get a great deal on a home. Here are some ways you can use these tips to buy a home at half the market price, and pocket your savings.
Good Neighbor Next Door Program
Are you a full time police officer, firefighter, EMT, or teacher? If so, you may be eligible to buy a home for half price through the Good Neighbor Next Door program (GNND), according to the U.S. Department of Housing and Urban Development's (HUD) website.
However, there are a few requirements you'll need to keep in mind before signing up.
"The program is for HUD homes only," says Greg Cook, a California-based first time homebuyer specialist with First Time Home Buyers Network. A list of these homes can be found on HUD's website, and through the program, a buyer can actually get a home for 50 percent off of the list price.
What's even better is that you only need to put as little as $100 down if you get an FHA loan for the mortgage; although, standard down payment requirements apply for other mortgage types.
HUD also requires that qualified buyers sign a second mortgage for the discount amount (half of the market price). No interest or payments are required on this second mortgage as long as purchasers fulfill the three-year occupancy requirement. If you move out before the three years is up, you will be held liable for this second mortgage.
Additionally, there are restrictions on which neighborhoods you can buy a home, explains HUD's website.
"The home they purchase using GNND must be in the immediate area of their station or school," says Cook. Plus, the purchaser cannot have owned a home in the previous twelve months, and they can only use the program once, he notes.
Shop the foreclosures with cash in hand
A home under foreclosure means the previous owners haven't made their payments and the bank is selling the property, according to HUD's page on Foreclosure Process. And when it comes to buying a foreclosed home at half the list price, cash is king.
"The most significant way that a buyer can increase their chances of getting a foreclosed home for half price is by having 'cash'," says Johnson. "Banks love cash buyers because it takes the potential risk of a buyer not qualifying for a mortgage out of the question and allows for a very quick closing."
And cash buyers prepared to close quickly are in an even better position to get a home for 50 percent off.
That's because banks don't want the responsibility of maintaining a property after a foreclosure. This includes paying taxes, winterizing the house, cutting the lawn, or the liability of someone getting hurt on the property, Johnson explains. They simply want to sell the property quickly to a qualified buyer.
Find an extreme fixer-upper in a good neighborhood
If you're serious about buying a home at half off the list price, don't let big renovation jobs scare you.
"The best way to find a half-price-home is to search for one with major, but manageable defects," says Jeff Patterson, who blogs about home renovations on his website, homerepairtutor.com. These defects may include things like holes in roofs, missing porch roofs or copper plumbing, as well as dated kitchens or bathrooms.
"These things scare off traditional buyers, but the savvy person isn't afraid and will notice this opportunity when they see it," says Patterson.
Discovering a distressed property in a good neighborhood is a big plus, says Johnson.
"It is likely once you renovate or cosmetically improve the house [that] you will find yourself with a great deal of equity or a significant return on your investment," says Johnson.
Patterson agrees, and suggests actively looking for extreme fixer-uppers that are also foreclosures.
"You want the foreclosed house you're buying to be the worst on the block," he advises. "This means it has the biggest potential to rise in value, yet the surrounding homes won't limit its value."
By Sarita Harbour, Yahoo Real Estate