GREAT IDEAS FOR FIRST TIME HOME BUYERS!

This dinosaur has awakened!  This is my first ever blog, and I want to direct this to first time home buyers.  As most of you probably know right now, this is the absolutely best time to buy a house; you have inordinately low interest rates, coupled with extremely low prices.  In the market I currently work in – Worcester County Massachusetts, prices have been depressed for about 4 years now.  Unfortunately, there are a number of potential buyers that are sitting on the sidelines because they’re afraid they can’t buy or aren”t qualified.

The simple fact is that if you’re paying and comfortably affording $900.00 –  $1,100.00  per month in rent in an apartment, you certainly can and should consider buying a house. One of the biggest objections I hear is that, “we don’t hav enough money saved up”.  Rubbish!!  If you have saved up 3 – 5% of the purchase price, you can buy.  Unfortunately, if you only put this low amount down, the banks hit you with what is called PMI – this essentially is insurance where the company pauys if you default on your loan. I look at it as you’re renting the rope that could ultimately hang you.  But we use an even better way of doing this:

What we do is work with you and your agent to find a home, with the right number of bedrooms, the right square footage, the right neighborhood, the right number of bathrooms, etc.  Once we find a property in the area you are looking for, we agree on a price for the property to be sold to you in a fixed up condition.  We will sell this to you always for less than its worth!  Every property that we sell has at least 15% equity in it.  For example, a foreclosed 4 bedroom single family in Shrewsbury may be worth $250, 00.00 fixed up, but the bank is selling it for $135,000.00 because it has stolen copper, a leaky roof, mold, a non working boiler, and water damage.  We’ll buy it and totally renovate it.  We’ll have an agreement with you that we will sell it to you for $210,000.00.  You pocket an instant equity of $40,000.00.  Essentially, you are buying your home for less than the appraised value!   

The best part of what we do for you is there is absolutely no risk on your part!  After we identify a house that you may want, we buy it and do all the construction and renovation work.  We have a purchase and sales agreement with you, and in it we detail the work that is to be done.  We never take any money whatsoever from you!  There are two risks here, and we absorb both of them; the first risk is that you aren’t happy with the construction that’s done.  If the work isn’t done in a workmanlike manner, or we do not do what is in the purchase and sales agreement, you have the right to end the agreement.  The second risk is that the property won’t appraise so that you have at least 15% equity.  In that case, you have the option of either buying it from us for 85% of the appraised value, or just terminating the agreement.We are guaranteeing the buyer to have at least 15% equity in the property.  If not, we’ll either reduce the price or you can just walk away.  Simple. 

Why would this be important to you?  Well, if we buy it for you and put your name on the deed and mortgage before we fix it, when you finance this out, it gets treated by most banks as a refinance, meaning that you put nothing down.  Not only that, but since we guarantee 15% equity when you buy, based upon the bank’s appraisal, you pay absolutely no PMI insurance.  Its a way for you to get the house you want, below market, and without coming up with a lot of cash.

But that’s not for everyone.  If you want a house already fixed up, I would suggest to you that you first look at all of the on line real estate sites.  That will give you a good idea as to what’s out there for real estate deals.  Work with an agent or broker that is reputable, that returns calls, that doesn’t try and pressure you into something that you don’t want, and that will present your offer, and won’t try and talk you into putting in a higher offer.  When I first started as a young man, I met a broker who told me that she did not want to embarass herself by putting in my extremely low offer.  Not only is this wrong, its illegal!

Which brings me to my next item:  Don’t be afraid to put in an offer that is substantially below what they are asking.  Just because someone lists the property for an outrageous sum, that may not be what they’re looking for.  Ask the broker how many days on the market the property has been on, how many price reductions have there been, and if it had been under agreement before that.  Usually, when I’m scoping deals, I won’t bother with property that’s been listed for a great length of time (180 days ++) that did not have a price reduction.  Usually, that usually means an intractible seller.

Buy only what you can afford.  Rule by the pocketbook, not the emotion of the house! Buy the worst house in the best area, not the palace in a war zone.  Well, that’s it for now.  Let me know how I did with my first blog.

About superrealestatesteals
We're a medium sized construction company and real estate holding company ( not brokers) that specializes in the acquisition, renovation, and turn around of distressed or bank owned single family houses and multi families. We are developers, investors, and landlords operating in the Greater Worcester and Middlesex County areas of Massachusetts. Our construction company is one of the larger rehab firms in Massachusetts. My background is that I have a Juris Doctorate Degree, am a CPA, have an MBA, and 3 Batchelor's Degrees in Economics, Finance, and Accounting.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: