If you’ve ever given much thought to buying a vintage property, you should be aware of certain advantages and disadvantages before following through with the purchase of one. Let’s explore these in detail:
1) Lower Price - As you search through listings of homes for sale, you’ll find older homes selling for less than newer ones. This feature makes it an attractive option for homebuyers on a tight budget. However, the opposite can be true in certain metropolitan areas where land costs are high.
2) Construction - You’ll find the workmanship and construction materials used in older homes to be higher in quality. Most older homes feature thicker beams, solid fixtures, heavy wood doors, and thicker walls.
3) Established Community - It’s easier to experience the ambiance of the neighborhood by walking down the streets of an established neighborhood. With new homes, you only have architectural drawings and empty dirt lots to look at.
4) Established Landscaping - With older neighborhoods, you can stroll through the community and enjoy full grown trees, bushes, and mature landscaping. Newer homes will take years to fully develop.
5) Charm - Older homes tend to display greater details and character such as built-in cabinetry, artistic crown moldings, and classic wood floors. Newer homes usually lack these charming details unless you’re willing to spend money to upgrade it.
Although there are many benefits to owning an older home, there are also drawbacks:
6) You Need To Invest Money To Upgrade The House - Unless it’s been remodeled, an older home will come with well used appliances and fixtures. Plan on replacing worn faucets, water heaters, and outdated lighting.
7) Higher Energy Costs - While older homes use more durable materials for construction, they aren’t the most energy efficient. Be prepared for higher heating and cooling costs with an older home. Decor - Older homes tend to have outdated wallpaper, paint colors, and flooring. Be prepared to spend lots of time removing and upgrading the decor to suit your taste.
9) Floor Plan Layout - Older homes were built for a different time period so you’ll find smaller rooms and a less functional layout. Unless you plan on remodeling your home, you’ll have to use your creativity to fit a flat screen plasma TV or home office.
10) Resale Value Is Less - Although older homes are more affordable, they also have lower resale value compared to newer homes of equal size and features.
If you’re in the market to purchase a fixer upper home, what criteria should you use to select one? While the concept of making a profit by fixing and turning over homes seems attractive, the outcome can be financially devastating if you select the wrong type of fixer-upper.
The ideal property would require very minor fixing up such as removing outdated wallpaper or linoleum. However since there are many other buyers and investors looking for simple fixer-uppers, you’ll have a hard time locating one. But don’t give up hope, there are certain fixer-uppers other buyers will overlook, especially if they’re visibly unappealing from the street.
In contrast to the minor fixer-upper, you’ll find homes in need of major repairs including structural changes, adding rooms, demolishing walls, and much more. Unless you have a relative who’s a contractor, you’re smarter to skip these money draining properties, especially if they contain major health violations (like mold) or are unlivable due to extreme damage. Let’s explore the 3 reasons you should pass up these type of properties:
1) Bank Approval May Be Difficult - A bank may deny your loan until you complete a minimum number of repairs. If your budget can’t afford these repairs, you won’t be approved for a loan.
2) Repair Costs Can Exceed What You’re Willing To Spend - If the reason you purchased a fixer was due to financial limitations, how will you come up with the money for additional repairs? Don’t be fooled into thinking a basic cosmetic fixer won’t need some minor reconstruction work. If you still decide to buy a home needing significant remodeling work, be sure you set aside additional funds for future projects.
3) Are You Prepared For The Daily Disruption? - If you’re a first time homebuyer, you may not be prepared to take time off work to supervise a contractor’s progress and deal with unplanned delays. The daily interruptions can have a negative impact on your family relationship so be sure to discuss this with your family.
The best choice among fixer-uppers would fall somewhere between the two extremes: a cosmetic fixer in need of reasonable repairs you can complete yourself or with the help of a handyman or contractor. Select a house needing minor improvements such as repainting, replacing wood flooring, or replacing a toilet. Avoid major remodeling such as new copper plumbing or a new foundation. Once you locate a home that fits your needs, be sure to:
1) Consult with your local city’s building department to determine if the changes you want to perform are acceptable. Most cities have restrictions and codes regarding wiring and plumbing remodels, setback distance, height limits, and other restrictions.
2) Consults with a professional such as an architect, contractor, or engineer before you start the process of adding a second floor or extra bedroom. This will reduce the chances of investing time and money into a project that may not be feasible.
3) If you plan on purchasing a fixer with a partner, make sure to sit down and discuss how all parties will deal with the inconveniences and headaches associated with remodeling such as time off work and supervising contractors.
When considering your next home purchase, you’ll want to pay close attention to the property’s location. When you buy a home in a desirable location of town, it will be much easier to sell as more people are willing to purchase it. This will definitely raise your resale value and you benefit from a higher profit margin. However if you buy a home in less searched for locations, the resale value will be lower due to less demand. Let’s examine some of the neighborhood features that can raise the value of your home.
1) Local School District - Higher rated public school districts increase the demand for homes in that community. If you plan on sending your kids to the local public schools, you’ll want to put this at the top of your criteria for the ideal neighborhood. If you’ll be using a private school for your children, this feature may not be so important.
2) City Crime Rate - Living in a community with low crime is a great feature. You’ll find that metropolitan areas have a higher crime rate compared to rural areas. If you decide to live in a rural area because of the low crime rate, be aware that you’ll invest more time on the road traveling to work and other activities.
3) Quality of Shopping and Amenities - You’ll find that communities with a greater variety of shopping and activities attract more homebuyers to that area. This in turn increases the resale value of homes in that community.
4) Home Size - Be sure to buy a home with a square footage similar to those surrounding it. A larger home located among smaller homes will sell for less than if located in a community of similar large size homes. You may be tempted to buy one because of the increase affordability, but be aware the tradeoff is your home will not appreciate as quickly since most home buyers attracted to that area are searching for smaller sized homes. Homes that are uniquely remodeled and out of character for the community will also have a lower resale value as the property clashes with the uniform styling of other homes next to it.
5) Is The Neighborhood Becoming More Popular? - Does the neighborhood look up and coming? If you take a tour of the community and see homeowners remodeling their homes, new landscape, and new stylish boutiques opening up, that’s a good sign the community value will increase in the future. If you get in at the right time, you could end up with a higher profit margin when you sell. A visit to the local city planning department will tell you if a community is undergoing a renovation.
Purchasing your next home should include detailed research on its location. If you’ve been renting for most of your life, deciding on a location may not have mattered because you could rent another place. However, when it comes to choosing a home to live in for the next several years, a good location goes a long way to helping you live comfortably.
Once you settle into a home, the last thing you want to do is move again soon. Your focus is on getting comfortable with your new neighbors and the surrounding community. Buying a home with an ideal location also raises your resale value for bigger profits.
Every person has their own wish list of the ideal neighborhood to live in. Be sure you pick one that meets your particular needs. Let’s go over the five features you need to be aware of:
1) How Safe is the Community? While we all prefer to live in a city with low crime, there’s always a trade off for this feature. Rural areas tend to have less crime than metropolitan areas. But are you willing to settle for less amenities and the convenience of having resources close by?
2) Amenities and Accessibility - These are important factors that make a big impact on your daily schedule. Daily activities such as work, children’s school, daycare, market, doctors, public transportation and entertainment consume a large portion of your time. Living farther from these resources means longer drive times and less free time for other activities. Think carefully about how much time you want to spend traveling.
3) Appeal of the Community - Some of you will prefer uniform master planned communities while others prefer the historic charm where a variety of home styles are displayed. Neighborhood characteristics such as the landscape, trees, and surrounding restaurants should match your tastes.
4) Schools - The quality of the public schools will be an important feature if you have children. Even if you don’t plan on having children, your home will have a higher resale value when you do sell. If your kids will be attending private schools, this feature may not be as important.
5) Taxes and Hazard Insurance Costs While buying a home, it’s easy to forget about other mandatory costs such as property taxes and homeowner’s insurance. Check with the local tax assessor’s office or ask your Realtor how much the property taxes are for that area. You can call an insurance agent to get quotes for homeowner and car insurance premiums for that neighborhood.
It can be a thrilling time. If you decide the time is right to purchase a house it can be one of the greatest decisions you are likely to ever make. You ought to have your economic affairs in order and know what you can have enough money for a house. But, before making decisions too quickly, you need to be mindful and take the correct financial steps to ensure your financial expenditure in a new house is a success.
The very first thing you should do when considering the purchase of a residence is to prequalify for a house loan. There is no cost associated with the prequalification process. Your mortgage lender will need your personal information such as income verification, property assessment and history of credit. After reading through your finances, your bank will begin the process and will be able to tell you how much money you will be able to borrow. By undergoing the prequalification process, you will know just exactly how much you can pay for, saving you the difficulty of considering houses that are out of your budget range. Prequalifying has a few benefits. First, prequalifying will grant you the power to bargain with a home owner which may well help save you thousands of dollars. Second, prequalified prospective buyers are given preference over others in a multiple offer scenario. Also, you will need to be prequalified in order to work with a real estate agent. Finally, you’ll be applying for the correct loan amount primarily based on your prequalification.
You ought to also take into consideration that your mortgage should be no more than 25% to 34% of your monthly gross income. You ought to set a house buying budget. Although prequalification will guide in analyzing how much cash you can borrow, you should go through your finances and decide what you genuinely have enough money for. Make a decision on the characteristics you would like for your new dwelling to come with. Then set a prioritized list of those attributes. Determine how much money you can allow for the down payment. A usual down payment can range from 5% to 25%. Frequently, the seller will pay out the closing costs but you may need to factor those into your budget if it is your responsibility to cover closing costs.
The final step in investing in a property is to get preapproved for a mortgage. The process of getting a preapproved mortgage happens after you have found a house. This activity is very similar to prequalification, but is much more thorough. Your lender will analyze your financial background in great detail. You may be required to go through an additional application process. This entire operation is completely unique to each lender. One lender may preapprove you for an amount of money less than another loan provider would. Various loan companies have their own underwriting and preapproval process to determine how much money to provide to property buyers. You can use your preapproval amount of money as a bargaining tool in bargaining down the cost of the property you have selected. Sellers will frequently come down a few thousand dollars on a house if they understand that they have a real agreement.
After completing these things you will have a better idea of what your financial situation looks like and what your budget will be like once you buy a home. You will be in a far better standing to negotiate with the seller once you have taken these measures. Using these steps will help you to make wise decisions when shopping for a home and will help you avoid getting “house poor” by purchasing a home you weren’t able to really afford to pay for.
Purchasing a home can be an exciting experience. But as you explore the homes in the community you want to move into, reality sets in that you won’t be able to afford the ideal home of your dreams. You may have to lower your expectations for a smaller square footage, less bathrooms, or a smaller yard. You may even have to have your kids share a bedroom.
Now just because you have to reduce your expectations doesn’t mean you can’t find opportunities to buy a great starter home. One great strategy is to locate a home in an up and coming neighborhood. These opportunities are easy to spot by driving through a neighborhood and seeing if any remodeling activity is going on. Checking out the habitats of local artists can also lead you to an up and coming community.
While a starter home may not have all the ideal features you want in your dream home, it can get you in the door of the real estate market so you can start building equity. Hopefully with the right market conditions in the future, you can save enough to buy a bigger and better place. This strategy works great if you expect your income to increase in the future. Even without a better paying job, you can still move up into a better home using the equity from your starter home. In spite of the benefits of purchasing a starter home, there a three facts you need to be aware of:
1) Puts A Dent In Your Savings - Buying a home is one of the largest investments you’ll ever make. You’ll have to put a large sum down, plus there will be other expenses such as: moving costs, closing costs, property inspections, property appraisals, and realtor commissions.
If you think buying a smaller home in a nice neighborhood will save you money, you may be in for a surprise. Land costs in nicer areas can be expensive depending on which community you plan to buy into.
2) Apply For A Home Loan With Favorable Terms - As you compare home loans, try to apply for one without a prepayment penalty. This allows you the option to prepay your mortgage faster or sell your house when you want to. When shopping for a mortgage, you can save money by applying for one with minimal or zero points.
3) Be Prepared For A Down Market - With today’s tough real estate market, be prepared for a possible drop in value over the next few years. This means you won’t have much equity and may have to sell your home for a loss. Be prepared for a potential loss or a tough time moving into a larger home.
Even with these disadvantages, a lot of homebuyers continue to get into the real estate market by purchasing a starter home. They know the joys of being a homeowner far outweigh the potential problems.
Buying a home can be an emotional experience; however, you should not let it keep you from making wise decisions, especially when it comes to having a home inspection performed. If you do have a home inspection done, you need to remember that it should be only one of the factors to determine whether or not you should purchase a home. You must weigh the outcome of the home inspection report against the positive features of a home, the money available from the buyer or seller to take care of the repairs, and the real estate agent’s negotiating power to have the items repaired without shrinking her client’s net bottom line.
If you’re thinking about purchasing a brand new home, you would expect everything to be in perfect working condition, like new. But you wouldn’t expect to discover any dark stains on the flooring, sagging wood frames around doors, cracked foundations, clanging plumbing-just a property in tiptop shape.
However, if you’re thinking about looking at a second hand home in great condition, expect that it won’t be around for sale for very long. Many homebuyers desire to buy a second hand home. Most homebuyers know that purchasing a secondhand home allows you fast relocation, predictability, and the ability to know what the landscaping and schools are for that particular community.
If you’re thinking about moving into a brand new community, you’ll find some of the mature elements of an established community missing. The best thing about living in a brand new home is that the community will be brand new. Of course you would expect to see a different outcome of the inspection report from a newer home compared to an older one. Discovering cracked tile in a new home does not add character to a brand new home. The homebuyer will want to have it taken care of before moving in. However, if a homebuyer is buying an older property, you would expect to see this condition. Most homebuyers expect secondhand homes to possess some defects and wear.
A home inspection will tell you the condition of a home’s heating system, air conditioning system, plumbing, electrical system, the roof, attic, insulation, and condition of the walls, ceiling, floors, windows, and doors. When you purchase a home, you expect many of these systems to be in good running condition. You’ll find that most purchase contracts will have wording that indicates the buyer will accept the property in its existing condition. It is because of this as-is condition paragraph that motivates most homebuyers to include a home inspection contingency clause in their sales contract.
As you review the inspection report, you need to remember that if you change the original contract with a new contract, the new contract will be considered a counteroffer and will become the new contract on the table.
If you’re searching for the perfect starter home in Southern California, check out these Santa Ana Homes For Sale and use a local Santa Ana Realtors to help you find one.
If you’re in the market to purchase a home, it’s a good idea to consider your lifestyle needs in the next few years. It’s so easy to become preoccupied with our daily living activities and pick a home that only suits our current needs. But you need to be aware there are 5 main factors that can influence the quality of life in your home. Let’s go over 5 tips to help you find the right home:
1) What’s your Dream Lifestyle? - Does the nightclub scene suite your taste? If so, you probably want a home close to the hot spots of town where you can walk home. if you’re a business traveler, you may want to consider a town home or condo in close proximity to the airport.
2) Number Of Household Members - If you don’t plan to marry, live with a partner, raise a family, or have your parents move in, a home with less square footage may be fine. But if you expect your household to grow, be sure to evaluate other features such as quality of public schools, number of bedrooms, bathrooms, and lot size.
3) How Will You Use Your Home? - If you have a certain hobby, work at home, like to entertain, or cook a lot in the kitchen, you’ll need to find a home that suits those particular needs. If wouldn’t make sense to buy a home with just a carport when you have a home business that needs a garage to store products.
4) What Activities Do You Plan On Doing At Home? - Are you a handy person who dreams of restoring a vintage home to pristine condition? Do you dream of working on a backyard arboretum? Then a home in the suburbs with a big yard may be what you’re looking for. But if you like to throw big birthday bashes and parties, a metropolitan home may be more to your liking.
5) Buying a Home For An Investment? - If you’re financially challenged and only able to buy a smaller home, a good strategy would be to purchase a smaller home that needs minor cosmetic work in a good area. Over time with a little investment of effort, you could restore the property to mint condition and sell if for a large profit. Then you can use the profit generated from the sale to fund the purchase of a larger home or even investment property such as a duplex.
By addressing these 5 lifestyle facts, you’ll be able to select the best property to suit your future needs. A great exercise would be to imagine where you’d like to be in the next 5 years. Practice this with a friend or partner and let your imagination run free without being unrealistic. You may be surprised to discover additional lifestyle goals that will define what type of home you want.
As a buyer, it’s easy to get caught up in the frenzy of bidding on a home. However, it’s important you don’t give up many of the standard protections you should have in a contract. It’s not uncommon for many buyers who are desperate to win the bid, to make a higher offer with very few contingencies.
If you try to purchase real estate in a market where there are tons of desperate homebuyers, you’ll find that many desperate buyers will sacrifice many contingencies including the home inspection, sale of an existing home, and the appraisal just to be able to win a property. While many homebuyers turn to this desperate tactic, they should be prepared to encounter several defects and problems once they move into the house.
If the buyer of a home decides to waive any home inspection, he or she is giving up their right to find out if a property has any defects or issues prior to moving in. Many homebuyers think that if they play hardball by insisting a home inspection be done prior to escrow closing, they will lose out on winning a property. If you think you’re going to use this strategy, you want to be on the lookout for potential problems and be aware of what you’re sacrificing. If there were issues with the house’s roof, you could be in a bad situation where you’ll have to fork out several thousand dollars to repair it. If you discover rotting wood in a home, you’ll have to pay contractor lots of money to fix it. If there’s a problem with the plumbing in a home, you’ll have to be the one to upgrade it. The home you desperately overpaid on to get will now cost you extra money to fix up.
If you currently own a home and need to sell it before you can buy another one, you should definitely put your house on the market first prior to purchasing another one. Unless you have lots of money saved in the bank to purchase a home, you could be forced into a bad situation when you have two loans to pay on each month if you can’t get rid of your existing house. You may also be forced to take a lowball offer on your existing home because you feel the need to get rid of the property soon. You would be in a much better position by selling your existing home first. If you’re thinking you may be homeless because you don’t have a property to move into, you should know that you can also stay with family and friends during this transition time. Your real estate agent can also include a special clause in your sales contract giving you time to find another place. If you’re in a real estate market where the sellers are in control of the negotiations, you’ll be in a strong position to negotiate what you want.
Another tactic that isn’t recommended is when a buyer is willing to write the sale of a home not being contingent on an appraisal. This strategy is equivalent to handing a signed blank check over to the sellers. This strategy will only work for people with lots of money. For example, lets say a buyer finds himself in a bidding war and makes an offer on a property for $25,000 more than the asking price. If the bank appraises the property $20,000 less than the asking price, you’ll have paid a lot more than the property’s worth. The bank will only loan a certain amount of the value of the property and the buyer must come up with the difference.
Decor - Older homes tend to have outdated wallpaper, paint colors, and flooring. Be prepared to spend lots of time removing and upgrading the decor to suit your taste.