It’s truly a buyer’s market right now for those that are financially able. If you’ve been wanting to buy a home for a while this could be your opportunity to get an awesome deal. Here’s some things you may want to look out for.
I’m currently in the process of buying my first home! I’m buying a 3 bedroom, and 2 bath home that needs virtually nothing done to it for $85,000. It may take some patience, but you can get a great home for rock bottom pricing if you’re diligent about what you want.
Before you go hunting there’s a few things you should figure out so you can really compare prices. A house that looks like a good deal might really be a train wreck.
Fixer Uppers
The agent that shows you the house will most likely tell you with only a little work this could be a great house. However, make note of repairs that need to be done. Things like paint, and carpet are not a big deal, but other things could be. New drywall, water damage, and other seemingly ’small repairs’ could end up being very costly. If you don’t know how to fix it then it’s best to move on.
Flood Zone Houses
Many houses will be cheaper if they’re in a flood zone. I live in an area that can be bone dry, and then ankle deep in water over night. Mother nature is fickle, and you don’t want to be using your couch as a life raft. Your insurance will be much more expensive to boot. If your house is a wood frame, and it floods you could be in a lot of pain. Almost any house remotely close to a body of water will be considered ‘flood zone’. Now, if the house you’re buying is on a high point of the street it may still be very unlikely to flood. That doesn’t mean the insurance company will not charge you an arm, and a leg. It simply means that if you really like the home it should be relatively safe.
As Is housing
The majority of the housing available are foreclosures or short sales. There’s nothing wrong with buying these homes as long as you do some homework. Your bank will most likely require inspections anyway, but if you’re paying cash it’s up to you! As is means that after you buy the house the owner and the bank will fix nothing. It’s your problem. You can buy a one year insurance policy from a private company for $350 in case of anything going wrong. If you suspect things like the hot water heater or the air conditioner not to last it may be a good plan. They’ll pay for 100% of repair/replacement minus a $50 deductible.
Taxes
Pay close attention to the tax status of your home. Depending on many factors you could be paying several hundred dollars a month more than a similar home in a different location. While it seems they’re the same your expenses could be up by $200 a month by purchasing one home over another. Don’t expect the taxes to drop dramatically based on what you paid. While they may appraise the house slightly lower don’t expect to pay taxes on a 2,200 square foot house based on your $40,000 short sale price.
Wood Frame versus block construction
Many people are leery of a wood frame house, especially banks. Personally, I think they are just as structurally stable as a concrete block home. I lived for most of my life in a two story wood frame house inbetween the bay, and the beach. It weathered many storms without damage. Infact most of our neighbor hood was composed of wood frame homes, and they’re still standing strong. It’s up to you, but purchasing a wood frame home could be much cheaper. As, now block construction is much more desirable asthetically.
Swimming pools
Don’t expect a home to be more valuable based on having a pool. Think of this more as an expense. It will cost a lot of money to maintain, run the pumps, clean, buy chemicals, and pay for insurance. Due to the fact of drowning being such a high risk with pools your insurance will eat a hole in your wallet. If you don’t really want a pool it may be best to skip it over. I didn’t see it as being worth the trouble. I’ll just go to the beach instead.
Extras
If a home’s price seems inflated compared to another keep in mind the extras included. Does it have wood floors, ceramic tile? Stainless steel appliances or hardwood cabinets? These all cost a pretty penny. If you’re happy with plain old white cupboards, cheap carpet, and stick tiles your home price will reflect it. If you want these extras it will be easier to buy a home with these items already. Personally, I made sure to find a home that was mostly ceramic tile already. So, I would not have to do as much work later. Keep in mind you can also refinish your cabinets instead of replacing them!
Location
Location is a big portion of the price of your home. When you buy a house that’s fifty feet from the beach you are not paying for the home. You are paying for sand. A home in a densely populated area will be more money, because of availability. If there’s no more available land in that area then the housing prices will reflect that. If you purchase a home slightly out of the clutter your home will be cheaper. This will also probably be less noisy, less traffic, and a better experience in my opinion. I looked at a home in the center of town that was virtually identical in size to my home. The only difference was location was better, but the extras were not as nice. The taxes though were three times as much money.
Utilities
Homes that are not hooked up to city utilities will be much cheaper. Even if this doesn’t bother you now, keep in mind that when the city decides to run piping they could force you to hook up to it. Even if you like your private utilities. I don’t like well water, so I made sure to get a home on city utilties.
Older houses
A home that’s aged will not be as pricey as a brand new home. This doesn’t mean that the house is not solid, just that it may need some updating to make it modern. If this doesn’t bother you then don’t be afraid to purchase an older home. While many people will argue that older houses have problems, so do new ones. Just talk to all the happy new owners of chinese drywall homes.
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