Karen Pannell

Getting a Good Deal in Real Estate

In 24 years of selling real estate I have worked with a lot of different people with different motivations for buying a home. The most interesting buyers have always been the ones who were focused on "the good deal". Of course, everyone wants to get a good value - I'm not referring to those buyers. I'm referring to buyers who want to "steal" a property. The tragedy of this kind of purchase is that it focuses on price alone. The price may be low, (hence the perceived good deal) but there is always a reason the price is low, i.e.: small master suite, small kitchen, lack of closets or storage, etc. These homes always have one area that is "knock your socks off". Add the reduced price and you've got "SOLD"! Keep in mind, if a house has an "issue" when you buy it, it will still have that "issue" when you sell it, and you too will likely end up selling at a reduced price. Here are the top three issues to consider when getting a good value:

•1. Resale: You make money on a home when you buy it.

This is first and foremost in my mind when assisting buyers. My hope is that I will again be their agent when they get ready to sell, and I do not want to tell them that I can't get top dollar for their home because they made a bad investment.

•2. Make sure it's a place you want to come home to everyday.

I recently sold a home for a gentleman who had lived there only one year. (b/t/w, I did not sell him this house.) He bought in an area outside of town (because he could get more house for his money) and then realized he loathed the daily drive, and disliked the community. He told me that he hated coming home every day. He sold his house at a loss just to get out of there!

•3. Be certain the house meets your physical and lifestyle needs.

If having a place for the kids to play is a priority, then keep it a priority NO MATTER WHAT! If you find yourself making a concession in that priority area, then is it really a priority? Knowing what is really important to you will help you get the best value. The floor plan of any home you choose should be functional. In other words, you should not have to cut through rooms to get to a bathroom, and the floor plan should flow - you shouldn't feel like a mouse going through a maze.

After you have looked at a few homes, you will start to get a feel for the standard room sizes and amenities available in your price range. Your REALTOR can give you guidance regarding pricing trends and values in any given area. Ask your REALTOR about the number of days on market for every house you consider making an offer on. This tells you how long the existing market of buyers have been rejecting the home. Answer the questions: "Why has it not sold?" "Is the problem solvable?" "Do I want to devote my time and money to solve it?" Also find out what the original listing price was and how many times it has been reduced. Sometimes, you will encounter homes that have been reduced as much as 40% from their original asking price. Don't kid yourself into thinking you are getting a good deal just because you are buying at the reduced list price. The market has already rejected that house at the higher price, which is why the house is still on the market. Your REALTOR can provide you with all the data you need to make an informed decision. Getting a good value is important, but first and foremost, it has to feel like home!

I am one happy pilgrim! November finds the real estate market in Central Kentucky alive and doing well! October Residential sales were up 22% over the same period last year as well as townhome sales up 27%. The average sales prices also up $10,000 from $128,930 in Oct. 2008 to $139,263 for Oct. 2009. New construction sales also experienced a dramatic upward swing - 31%, likely due to the $5000 new home tax credit. Attention Home Buyers - You better be ready to talk turkey! The only thing that appears to be going down in this market is the inventory. LBAR stats show residential new listings down 8% over the same period last year and townhome listings down 26%. Since the announcement of the extension of the $8000 first time home buyer tax credit and the addition of a $6500 tax credit for non-first time buyers, sales will likely continue to rise as inventories decline. If you're on the fence, better hurry before the "deals" get gobble-gobbled up! And, don't forget to Give Thanks this week for our many blessings! We've got it good in Central Kentucky. Happy Thanksgiving!

kp

Wow! I was amazed when I saw this ad running on television last night! The ad cited a story that ran in one of today's popular financial publications. The old adage of "If it sounds too good to be true..." certainly applies here. The ad went on to say that only renters should call today and that "all others" should call tomorrow. Funny thing is, I saw that same ad on TV the day before, and the day before that! This type of advertising feeds on the greed of consumers- the desire we all have to get a "good deal". Don't allow yourself to get sucked into this feeding frenzy!

After checking the Lexington Bluegrass Association of REALTORS database, I found that the least expensive home sale this year in Fayette County was for $8500. This was a one bedroom, one bath "shotgun" style house. Yes, it was a foreclosure and the listing agent's remarks indicated that the heating and plumbing had been stripped out of the house. The house had 609 sq. ft. and the lot size was 1,962 sq feet. Is this the type of home you envision when you see or read these ads? I think not. These type ads always show a beautiful two story home with an inviting front porch. The reality of purchasing a home in $8500 condition is this: you must pay cash - making it out of reach for the average consumer! Lenders require a home to have plumbing and central heat. It must be safe and habitable. Also, let's think about the language of the ad. If there really were an enormous number of habitable homes for sale in our area for $1000, what state would our economy really be in? If that were the case, few people would have the financial capability to spend over and above what their family absolutely needed to survive. God forbid!

Yes, there are still "good deals" out there. To take advantage of this you need 1) to have a source of funds, either cash, or a lender who is willing to give you a line of credit secured by other assets. You also may be able to find a private party who will finance your endeavors. 2) be handy, or have a partner who is able to do or oversee all the repairs these properties require. If you have ever done any major repairs to your home you know it always takes longer and costs more than expected, so keep this in mind as you plan. If you're intending to occupy the property as your primary residence there is a "repair loan" available that allows you to borrow up to $30,000 for repairs. There is a lot of paperwork on your end, but it is worth the effort. There are still some great values in real estate. Call me and I'll help you navigate your way to your dream home!