Is Now A Good Time To Buy?

It's Bargain Time for the DIY'er! (maybe)

Depending on your point of view, it's either a good time to buy or a bad time to sell. The "inventory" of homes on the market right now is large. This alone will depress prices. This is, in part, due to the market screaming to a dead stop because of the lending crisis, not to mention the rise in "short sales" as people try to bail out on huge huge payments before the Bank takes the house in a foreclosure. Add in foreclosures themselves and your have a "buyers market" condition. Bad for sellers but good for those positioned to take advantage of the bargains to be had. The average price reductions in most areas is -32% per the latest www.Zillow.com figures I just saw.

So, there are bargains to be had, right? Yes and no! This is a treacherous market to tread for the unwary. If you are looking at foreclosures, called REOs (Real Estate Owned) offered by the banks, there are bargains to be had but you had better know your stuff or you will end up with the proverbial "Money Pit" for your efforts.

Most often, REOs fall into the category of "distressed" homes. Some are rentals that are being divested, others are homes families have lost due to economic conditions and the sub-par lending problems. Rentals are often "ridden hard and put away wet" and have not had the best of care. These will usually require some TLC to get them back into shape. Possibly a lot of TLC!

The foreclosures, many times have entirely different issues, including outright sabatoge.

Ethical people will just suck it up and move on. Those that are ethically challenged will often make the lender the target of their own mistakes and bad judgment. This can take the form of zero maintenance of important components that can have a negative impact on the value of the house all the way up to actual sabotage. I have inspected homes that have had cut electrical wiring, intentionally broken water and waste pipes, cemented up or filled with gravel main drain lines and more. Other homes have had all the cabinets, plumbing fixtures and even the heating and cooling systems removed or stolen.

Theft is a big issue for REOs. The obviously abandoned and boarded up home is a great target for thieves that will remove all the copper piping and wiring for sale as scrap. A few hours of clandestine work can return several hundred dollars from the scrap dealer. The bank makes this even easier by turning off all the utilities for them.

Unless you are very good at inspecting a home for hidden defects, these things can provide some unwelcome surprises for the starry-eyed first time buyer trying to capitalize on a perceived "bargain" home. Don't let it happen to you! Get a qualified professional Home Inspector to go through the house and detail all the faults. Follow up with the "specialist" inspections like sewer camera, chimney and foundation inspection. A professional Home Inspector is constrained by the rules and limitations of their Standards of Practice (SoPs) and can only do a "visual inspection of the readily available portions of the stucture." If a defect is not visible, they cannot comment on it. The condition of the sewer piping under ground and inside walls, the interior of chimneys and the condition of anything else they cannot see will not be included in their report. These "hidden or concealed" defects can be very expensive to repair.

As an example; I recently inspected an REO for my step-daughter. The house was rough but workable. I recommended a sewer camera inspection since the age and condition of the house and the visible waste plumbing under the house indicated that no upgrades or repairs had ever been done. This meant that the original clay pipe main sewer line out to the street connection was still in use. There were some large trees, including some Ficus trees that are known "sewer line killers" present on the property. It was a pretty good bet that the main line would have "issues" from tree roots. Kids being kids, they gambled and did not have it done. They did not want to spend another $300. Unfortunately, (but not unpredictably) they lost the bet.
Yesterday, I got the call. All the toilets were stopped up and they had to have the home warranty company come out to snake the main line. Of course, given that it was a "home warranty" company, they did a crappy job and did not properly clean the line. (They are notorious for this sub-par work in my experience.) Don't get me started! LOL

Now they are looking at many thousands of dollars in repairs to get the main line replaced. Maybe not such a good deal after all?

There are some very good deals to be had for the experienced DIY'er in this market but you need to get any potential purchase properly and fully inspected by a qualified professional before moving forward.
Good Luck!