It's a common misconception that foreclosed homes are priced at pennies on the dollar. Well, if you consider this phrase to mean 99 pennies on the dollar, then you may be correct. Generally, foreclosed homes are listed for sale at their approximate market value, according to the home’s location and condition.
Some foreclosed homes sell for very low prices, but in most of those cases the homes were razed in order to make room for new construction. More commonly, high-priced homes in affluent areas sell for a few percentage points less than their current market value. If this is the type of deal that you are looking for, then definitely consider purchasing a foreclosed home.
A good real estate agent will warn you up-front that the costs associated with buying a foreclosed home can be significant. The buyer may be required to perform very costly repairs before occupying the property. Also, these buyers may be unable to take advantage of low interest-rate specials offered by lenders.
If you are considering the purchase of a foreclosure, be realistic in your expectations and prepare to expect the unexpected. Many buyers are thrilled with their home after purchase, but others are forced to complete months of costly repair work before they can move in. As long as you investigate the possible options, including the available mortgage and assistance programs, you will be an educated consumer prepared to make an educated purchase. Buying a home is often the largest investment that you will ever make, so you need to feel secure in the knowledge that you have invested wisely.
A common misunderstanding among potential buyers is that unless they are prepared to pay cash on the spot, they cannot purchase a foreclosed home. This is simply not true. Some lenders offer special loan programs aimed at borrowers who intend to buy a foreclosed home.
Lender appraisals and inspections may sometimes make it difficult to obtain a mortgage for a foreclosed home that has been damaged or is in need of significant repair. Consequently, the same federal agencies that put the homes up for sale may be willing to extend financing to potential buyers. These agencies will sometimes give the buyer grant money or a low-cost second mortgage loan to be used for the repair of the home.
In sum, you do not need to pay cash. However, you may need to borrow a specific type of mortgage loan, depending on the home’s condition and price. We’re happy to help you identify and obtain the proper type of mortgage for your foreclosure search.
When you price your home correctly, your home is more likely to sell quickly and for your asking price. Therefore, you stand to make a better profit than if your home stays on the market for a long time and eventually sells for much less than an inflated asking price.
In addition to the benefits of fair pricing, you need to consider the disadvantages of over-inflating a home’s listing price. These disadvantages can include:
- Fewer showings by agents due to lack of agent interest.
- Fewer interested buyers due to budget restrictions.
- Appraisers’ concerns that the price is higher than that of comparable properties in your area.
- Overpricing that makes lower-priced homes more attractive. In effect, this helps other homeowners who have listed their home at a lower price.
To set an accurate listing price, follow these steps:
- Go to several open houses in your area to determine the pricing structure being used by other sellers and to find out what features they are highlighting in their homes.
- Try to assess a per-square-foot price for your home based upon other recent sales and current listings in your area.
- Look carefully at the reality of the real-estate market. By carefully assessing the market conditions, you may be able to determine just what housing price the market will comfortably bear.
Remember that pricing your home correctly will mean that you can move out without having to carry the home for several months and subsequently lowering your price in order to sell.
What’s the best way to determine the right price for your home?
Ask a good real estate agent to do a competitive analysis report. We can help you with this if you like! Just contact us!
As a homeowner, you cannot afford to lose money on the sale of your home simply because you did not take the time to price your home according to its true value. Under-pricing will leave you full of regret – and overpricing will leave you with a home that won't sell. Home pricing is a balancing act because you must take into consideration not only the true value of the home, but also the local market conditions.
Here Are a Few Key Points to Keep in Mind When Pricing Your Home
- The price that you paid for your home has little impact on the actual value of your home today. This is particularly true if you have lived in your home for several years or more.
- The profit that you hope to gain from the sale of your home has absolutely no impact on the true value of your home.
- You must remove emotion when determining a fair selling price for your home. To potential buyers, your memories are not worth a price increase.
- A real estate appraisal is a good way to determine the ballpark value of your home. However, an apprasier doesn't take your specific market conditions into account when appraising.
- The value of your home is really determined by the buyers and the amount that they are willing to pay.
“There ARE bargain condos in Virginia Beach – you just need to know where to look.” A friend of mine blogged this a few days ago, and I can confirm it’s true! A condo just ½ mile from Town Center – listed for $80,000 as a short sale – just went under contract. Not only are there bargains, but many are actually Virginia Beach waterfront condos. If you’re looking for this kind of hidden jewel, I can definitely help. Here are suggestions for discovering your hidden treasure!
Oceanfront / Boardwalk Area
The Virginia Beach Oceanfront and Boardwalk area is a very popular destination, and properties in this area command a premium. It’s good to look at properties that are not necessarily beachfront, as they will save a significant amount of money. Right now there are small efficiency units available within a very short walking distance to the ocean for as low as $123,500. These are typically 600 square feet in size and under. Larger units will usually start around $185,000 depending on the location. A few condominium complexes are highlighted below.
Pacific South Condos
Pacific South is a high-rise building at the Southern tip of the boardwalk / oceanfront area, and typically offers a great value even though it’s fairly close to the ocean – about 2 blocks walking distance. Some of the higher floors in Pacific South do have an ocean view. South facing units have a view of Rudee Inlet, and North facing units have a really nice lake view (and a partial ocean view if you’re up high enough). It’s not uncommon for units to sell in the $250,000 to $300,000 range for a two bedroom, two bathroom configuration. Right now, the only property available is a nice sixth floor 3 bedroom 2 bathroom condo for $300,000. Monthly condo fee for this unit is $399. Pacific South is pet friendly too, with restrictions.
Harbour Point
For those looking to be in the Oceanfront area, but not necessarily on the beach itself, Harbour Point offers a great alternative and a beautiful setting on the southern tip of the Oceanfront area, near Rudee Inlet. This is a gated community with views of the inlet and boat docks for some units. Properties available for sale right now in Harbour Point range from $195,875 for a small efficiency unit with a $340 per month condo fee, all the way up to a $359,000 two bedroom, two bathroom condo with a water view and boat slip – still a great value. No pets are allowed at Harbour Point.
Chesapeake Bay Area
The Chesapeake Bay area of Virginia Beach offers a less busy, lower tourist traffic area than the Virginia Beach Oceanfront, and for this reason is desirable for those who want to be near water and beaches, but don’t necessarily need to be near the boardwalk.
Of the condominium complexes in this area, two stand out in terms of bargain prices and proximity to the water: Chesapeake House and Cape Henry Towers. Both are waterfront buildings with walk-out beach and water access.
Cape Henry Towers
As of this date you can buy a first floor condo in this building for $110,000. Of course, you get what you pay for, as it’s a small efficiency/studio type condo, but it’s still waterfront. The same unit on the 14th floor is going for $245,000. Mandatory monthly condo fees start at around $300 a month for quite a few amenities, including master insurance, common area maintenance, etc. This building has pet restrictions and may not allow pets at all.
Chesapeake House
This condominium community is also waterfront, and has the added benefit of allowing pets – rare for a high-rise building. Not only is this a definite plus for a buyer with a dog or cat, but it’s excellent for resale value, as it opens up the property to more prospective buyers. As of this date, the most affordable condo in Chesapeake House is $159,000 – a very small sixth floor efficiency/studio unit, but still waterfront – an ideal place for the buyer that doesn’t need much space. Condo fee for this unit is also extremely affordable at approximately $163 a month. A larger unit is available on the 7th floor for $249,000, but still an efficiency/studio condo with a view of the Chesapeake Bay.
Bottom Line
Bargains on Virginia Beach waterfront condos DO exist! These are just a few of the many Virginia Beach condos offering a waterfront or near-waterfront location at an affordable price! You can search them all from HR Marketwatch, or send me a message and I’ll notify you as soon as new Virginia Beach Condos are available. As always, if you have any questions, feel free to contact me.
Your Turn! Have you found other hidden treasures like these in Hampton Roads?
(Blog posted June 9, 2010. Some info reposted with permission from Jody Cowdrey. Thanks Jody!)
Making an offer may be the most stressful and puzzling part of the home-buying process. How do you know if the home is listed at a fair price? How do you know if the seller would have been willing to accept less than you offered?
This is where having a good real estate agent gives you a huge advantage. This is because a real estate agent can obtain the information needed to perform a comparative market analysis. This analysis is based on current market trends and recent sales in a given area. By performing a comparative market analysis, the agent is able to give you an expert recommendation on an offer price. Without a comparative market analysis, it can be difficult for a buyer to determine whether a home is listed at fair market value, if it’s over-priced, or if it’s a superb deal.
Here are some tips for determining how to make an offer on a home in Hampton Roads. If you’ve had experience with these situations, please share in the comments section. It’s important to learn from each other!
Is the home over-priced? In some instances, sellers choose to list their home for a price that is higher than what they anticipate receiving. Since you obviously cannot ask the seller what his or her bottom line is, you will need to identify local trends before establishing an offer price. Hampton Roads is a big area, and trends can vary by city, and even neighborhood. However, for the most part, Hampton Roads is currently a buyer’s market. If you find that a home is overpriced, offer a price lower than the listing. However, be sure to offer a price that will make the seller feel you are seriously interested.
Is the home under-priced? You may find the price of the house you want is less than the price of comparable homes based on a competitive market analysis. When this happens, the seller may be expecting you to make an offer higher than the listing price. Keep in mind that when a home is listed below its market price, an offer equal to the listing price may seem insulting to some sellers. Your agent can help you find a balance between the listing price and an offer that will satisfy your needs as well as the seller’s.
You can find more information to make the home-buying process less stressful in our free Hampton Roads eBuyersGuide.
Looking for a great deal on a foreclosure in Hampton Roads?
They’re out there, but be prepared for what could be a long, unpredictable journey before closing day arrives. If you’re interested in purchasing a foreclosure locally, here’s what you should know.
Patience Is Required. It may take 60-90 days or more to close. Typically, nothing can be done to speed up the process. The bank is not usually motivated by the possibility a buyer could lose interest and terminate the contract. They know another buyer will eventually come along, and they are swamped with other foreclosures. Your only other option may be to find another property.
Do you have time constraints? – Foreclosures are not recommended for people under time constraints. Do you have to move or be out of your house by a fixed date? If so, you could find yourself in a sticky situation if the transaction takes longer than you expect.
Expect a deal, not a steal. – On average, foreclosures in the Hampton Roads Market close for 97% of the listing price. You might find a foreclosure listed at a great price, but don’t expect to talk the bank down drastically from that figure. You aren’t likely to get a foreclosure for fifty cents on the dollar. Banks use listing agents to help determine the appropriate price of a property. They take into account the property condition, recent sales, and other important factors.
Look at regular listings, too – Just because a foreclosure’s listing price is lower doesn’t mean it’s a better deal. The bank will be extremely hesitant to pay for any repairs, so you’ll have to foot the bill. If needed repairs are extensive, you could end up spending more on the foreclosure than you would on a regular listing.
Get an inspection! – Don’t expect the bank to make any repairs. You still want to get a home inspection to protect yourself, though. If you find significant issues with the inspection, in most cases, you’ll still have time to back out of the contract.
You’ll probably need a termite treatment. – Mortgage companies require a letter stating the property is free of active termites. Typically, the bank won’t have records of past treatments. Hampton Roads is one of the most termite-prone areas in the country, so most properties show some sign of termite damage. If evidence of termites is found, a termite treatment will be required. As the buyer, you may need to pay for it, either before or at closing.
Foreclosures can be tricky to finance. – Appraisers aren’t just looking to justify the price of the contract. They have to ensure the property is safe, sound and sanitary. Additionally, appraisals for VA loans are often more stringent than appraisals for FHA and conventional loans. An experienced real estate agent can help predict whether a property will pass appraisal. Roadblocks may include:
- Broken windows
- Exposed wiring
- No appliances
- Holes in ceiling or walls
- Evidence of leaks
Though the journey to a foreclosure purchase could be long, it may be worth it in the end. You just have to prepare for the unexpected, have patience, and do your homework. Your best ally is a knowledgable, patient real estate agent that will help you through the entire process one step at a time. Interested in learning more?
Your turn – have you purchased a foreclosure? Please share any tips you may have!
If your income and credit qualify you to rent an apartment, then you may have a good chance of qualifying for a no-down-payment loan. Fortunately, lenders realize that most people don’t have the money for a 20% down payment just lying around. So, no-money-down programs do exist. Just remember, when you are in the market for one of these loans, it’s important to carefully research lenders and their loan programs. If you like, I can suggest knowledgeable, trustworthy professionals to help you learn what programs may work for you.
So what’s so great about a no-money-down loan?
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A no-money-down loan may mean reduced closing costs. Sometimes the lender is actually provides the borrower more than 100% financing, which may help cover some closing expenses.
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Today’s interest rates are low. A loan program that doesn’t require any money down usually has higher interest rates than conventional loans. But since rates are low to begin with, buying a home with a no-money-down mortgage loan has never made more sense.
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If lenders can’t or won’t assist a borrower, a government program might help the borrower to qualify for a zero-down loan or a down-payment assistance program. These loan programs are often very competitive and are usually open to current or former members of the military or lower-income families.
Just Be Aware:
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Lenders who offer these loan programs may require PMI (private mortgage insurance) or other security measure and fees. PMI is insurance meant to offset losses in case a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property.
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A no-money-down loan program usually has higher interest rates than a conventional loan.
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It’s important to research and consult a knowledgeable, trustworthy professional who specializes in no-down-payment loans.
Your turn! Have you utilized a no-down-payment loan? If so, how did it help you? If not, do you have any questions?