By Elaine VonCannon, ABR, SRES, Associate Broker, Notary, Team Leader, Property Manager, Award Winning Agent
For those who are buying a home right now, there are several important details on locating the best property that are being ignored and must be considered. Many homebuyers are looking for a primary residence.
As I take homebuyers out in search of a residence, I have noted a pattern of behavior that is becoming more and more common. Homebuyers are looking for the deal of the century. They are basing their buying decisions solely on price. Yet as they focus on the best price that can possibly be negotiated, (which does matter) they lose sight of other parameters that need to be applied to the purchase of a home.
Purchasing a home in the right location for a person's chosen lifestyle, and eventual resale value, should be paramount in the homebuyer's mind. Yet price continues to be the main focus in buying property.
Short Sales and Foreclosures: Property Pricing Realities
Between foreclosures and short sales there are good home buying deals to be had, but home buyers must remember that on these types of purchases banks will generally not go below 20-25% of appraised values.
In the case of purchasing foreclosed properties, homebuyers should be cautious about the condition of the home. If a homebuyer is purchasing a foreclosed property, it is wise to enter into the deal with capital for improvements, because these homes have been neglected due to lack of money. Some foreclosed properties have been intentionally damaged by angry homeowners who have had to abandon their homes under stressful financial circumstances.
With regard to short sales on homes, banks may take up to six months to approve a short sale. Some lenders are folding in the middle of the process, which adds more time to complete a short sale, because negotiations must begin again with the new lender.
Short sales and foreclosures do factor into property pricing. When a home in a neighborhood is sold for less than it is worth, pricing drops in that neighborhood.
So, with pricing in many markets at a three to five year low, why do home buyers continue to focus only on a great deal? Why have the cardinal rules of real estate purchases been pushed to the side? Location, resale values and lifestyle, which I refer here to as staycation, are just as important as price.
I will give an example of some of the major markets where I sell real estate, James City County, Williamsburg and Norfolk, and give a brief overview of how the rules of real estate purchase apply in these markets.
Williamsburg and James City County
For the avid golfer or person entering retirement, or even the family looking to raise children in a good school district, Williamsburg and James City County offer a wonderful lifestyle. There are numerous golf courses, dining, entertainment and continuing education opportunities. In addition Williamsburg and James City County offer one of the top school districts in Southeastern Virginia. In my experience over the long-term selling real estate in this market, resale values remain strong in well-established neighborhoods. In an age where the staycation, or staying at home during scheduled vacations, is becoming more common, Williamsburg has plenty of choices for quality entertainment. These include Busch Gardens and Water Country USA, Jamestown Settlement, the Colonial Williamsburg Foundation, and numerous outdoor festivals and events that are free and open to the public. All of these factors should inform the purchase of a home in the Williamsburg and James City County real estate market.
Economic, Commercial and Residential Development in Norfolk, VA
In Norfolk, Virginia, where I have closed several residential property deals recently, the opening of a light rail system with stations in Ghent, downtown, and South Norfolk, has created tremendous real estate opportunities in both the residential and commercial sectors. In neighborhoods where light rail train stations will be located, resale values on properties purchased are sure to rise eventually. There are several reasons for this upswing in value. Urban professionals and families are embracing this state-of-the-art transportation system, and public and private organizations and investors are preparing for the influx of new traffic by updating existing properties and committing to building new projects. Taking light rail will cut down on time spent in traffic jams, and leave more time for recreation and spending time with loved ones - a desirable lifestyle for many. With access to Chesapeake Bay Beaches, the Elizabeth and Lafayette Rivers, boating, swimming and recreating on or near the water are widely enjoyed in Norfolk, a world-class port city. Waterside is a main staging area for national and international festivals, and new light rail stations will be located nearby. Norfolk is an excellent place for a staycation. All of these factors should inform the purchase of a new home in this location.
In summary, location, resale, and lifestyle need to come to the forefront once again when individuals are deciding on where to purchase a home. Price will always be an important factor in the purchase of a home, but it should not be the only deciding point.