As the real estate market works its way through thehealing process homebuyers and real estate investors have found themselvesfacing a somewhat unexpected challenge: lack of available inventory topurchase, with only a 5.2-month supply of for-sale inventory in April,according to the NationalAssociation of Realtors.
But homebuyers and realestate investors willing to consider fixer-upper homes may find they arecompeting against fewer buyers and are able to buy at a lower price point –allowing them to build some quick equity with rehab. Of course buying andrehabbing a fixer-upper — not to mention the financing portion — comes withanother set of challenges. See 7 Tips for Finding, Financing and Fixing Beat-UpForeclosures where experts provide keys to successfully purchasing andrehabbing fixer-uppers.
“Low-priced foreclosure homes arestill plentiful in many markets,” said Daren Blomquist, RealtyTrac vicepresident. “While these homes may be in need of more work than a typical homeand are certainly harder to find now than in previous years, buyers andinvestors willing to put in a little extra legwork and sweat equity can oftenfind the best deals in their markets on these foreclosurefixer-uppers.”
A RealtyTrac analysis found that nationwidethere are more than 51,000 potential foreclosure fixer-uppers: bank-owned homesthat were built before 1960 and with an estimated market value below$100,000.
Advice onbuying fixer-uppers
Here’s some advice on buyingfixer-uppers from brokers who are part of the RealtyTracBroker Network:
“The best counsel for buyerslooking to purchase a fixer-upper is to find a skilled real estate agent,” saidRich Cosner, president of PrudentialCalifornia Realty covering Orange, Riverside and San Bernardinocounties in Southern California. “Select one that works full time in thebusiness and works for a well-known and reputable firm. These are the agentswho know where you will find the best possible property. Ask your Realtor forrecommendations on where to get your loan. In order to present the bestpossible offer to the bank owning the home, you will want to have the lenderpre-approve you for the loan. This is the only way you can compete with cashbuyers.”
Buyers looking for deals on fixer-uppers shouldstill be prepared to face stiff competition and act quickly, according toEmmett Laffey, CEO of LaffeyFine Homes covering Long Island and the five boroughs of New YorkCity.
“Be ready to act quicker than you ever have before,”he said, adding that buyers should be prepared to sign a contract immediatelyand remove all contingencies since demand for these homes is at an “all-timehigh” in his market. “Since prices for bank-owned fixer-uppers are below marketmany of the deals are all-cash. If a buyer is planning to obtain amortgage it is wise to waive the mortgage contingency clause to be consideredat all.”