After writing about short sales making up a major chunk of the Sacramento real estate market and what they are, the next question that follows of course is if short sales are a good deal for the buyer.
The answer is, it depends.
It depends on a lot of things, the most important being of course – will it even go through? I had the unfortunate experience yesterday of having to withdraw one of my listings because the home had two mortgages on it and the first lender could go into auction and sell the home to recover all of their principal. The second note however might not get anything. In other words, the first lender had no motivation to sell short and the second lender was getting nothing anyway.
The other thing the answer to the above question depends on is of course, what are the comps? How much are the comparable properties in the neighborhood selling for? The seller of the short sale may have paid exorbitantly more and the place might not even be worth a look unless it really is a good price for the buyers.
Thirdly, and probably the most importantly, what condition is the home in? Chances are, if the sellers haven’t been able to pay the mortgage, they haven’t been able to make any repairs to the home. How many of these repairs are serious?
If it were me, I would look elsewhere. There are many properties on the market that are not short sales that are still good deals. To look for short sales in particular seems to me a huge undertaking of patience for not a very high return. But if you are determined, they sure are out there!
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See for yourself. Here are the latest statistics hot off the MLS:
Total number of homes for sale on or before July 31, 2007: 11,016 with a median price of $329,960
Total number of homes pending sale between July 1, 2007 and July 31, 2007: 1038 with a median price of $315,000
Total number of homes sold between July 1, 2007 and July 31, 2007: 928 with a median price of $330,000.
The median price is up only $2,000 from last month and sales have fallen since June 2007. In June, Sacramento county recorded 1068 sales.
Average days on market remain between 50 – 60 days.
Lots to look at and flat prices. Good time to buy!
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Okay, fellow Sacramento Realtors® – what is with pricing a home at 199,999? I understand you want to stay under the $200,000 mark, but seriously! At least refrain yourself and set the listing price at 199,900. The buyer gets the idea.
Even Metrolist has started to add a home at $200,000 on both sides of the $200,000 price.
A smart fellow Realtor® looks for a certain amount above and below what his buyer wants anyway – the amount varies with the market. But if my client says she’ll buy a home up to $300,000 I will usually search between the parameters of $240,000 to $320,000. Who knows? The sellers might be motivated!
So instead of letting this drive me nuts, I did some research. Turns out there is a reason behind the 99 cent pricing (Thank God the MLS doesn’t have cents!) and the roots are economic. Go here for the entire story.
But feel free to call and scold me if I ever add too many 9s. Unless it’s a million dollar home. I’d make an exception there -wouldn’t you? But then, I’m the last Realtor® in Sacramento not impressed by 9s.
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When shopping for houses in Sacramento as a first-time buyer, which zip code is preferred?
I got a call from a potential buyer the other day wanting to look at houses that she had picked from the MLS herself (I love it when buyers are involved in the process from the start and don’t wait for Realtors® to do the research) and the two themes I saw repeating were 95608 and 95821. Personally, I like 95821 because there are some pretty great deals out there for first-time buyers. But my client has never lived in Sacramento, so I want to really make her feel at home. Any ideas?
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This has got to have been the most painful episodes I’ve watched on TLC’s Property Ladder. A young couple – they were 21, I think, bought a home in Del Paso Heights hoping to flip it and make some money. After an agonizing hour, the show ended with them having made maybe $10,000. Bad contractors and just wood rot threw them overboard and they may have walked away with the $10,000 if they were lucky.
Sad. But not the only case of flipping houses here in Sacramento gone wrong. This year, in early spring while I was out previewing properties in the Colonial area, almost every other house on the market was someone’s ambitious flip gone wrong. Failure, when it relates to homes, is extremely painful to watch.
So what can you do to avoid these mistakes? Here are a few ideas:
1. Know the neighborhood – know the prices like the palm of your hand. If you don’t know what the houses are going for, it gets easier to let optimism get you carried away. Also, make sure you can get to the neighborhood easily. Anything more than an hour’s drive is too far.
2. Do the math. This should probably be number one. If the math doesn’t work out for you to make a profit that’s substantial, do not do it. The carrying costs might eat into that profit and probably will. The best math will not save you from a market crash, so do more than your homework and leave some wiggle room.
3. Get to it! This is the biggest piece of advice I can give you. Vacant homes are a liability. The sooner you can get done and get out from under the mortgage, the more profit you can make. Time is literally money. Treat it as such.
More tips coming up! Mostly from experience, so believe them!
Posted in All the Rest, Neighborhoods, Sacramento | Add a comment »
Okay, so it wasn’t on this blog, but I had been advertising my property for rent and I’m glad to say after just a month of moving out of it and three long weekends of prepping it (I say prepping, but we painted, refinished the floors, painted some more, cleaned, landscaped, etc.) it’s finally rented for $1300 a month!
Which is pretty good. But here’s what a lot of people are not aware of with the current market – sales suck, but rents are good. All those people with foreclosed homes have to go somewhere! And chances are they will end up back in the same neighborhood they left.
So, for the first time in a while, rents have inched up a little! Although the aim of buying an investment property is always to make it cash flow, that’s not always the case in Sacramento. But in this market, that dream might just become a reality! So, come on investors – there are a lot of houses out there just waiting!
Posted in Investment Properties, Neighborhoods, Sacramento, Sacramento County | Add a comment »
One of the maps I’d like to put together here is a Sacramento blog map.
There are quite a few good blogs out there in Sac. I have a short list of them on my blog roll at the Sacramento Real Estate Blog, but I’m sure I could come up with several more great ones with a little research. I just bumped into this awesome Sacramento Food Blog, Sacatomato, for example.
One service I’d like to offer to the local blogging community is not just to create a map of the blogs, though that’s interesting in itself, but to perhaps develop over time one of more maps of points of interest that bloggers suggest. Sacatomato might want to work on a restaurant map, for example. Or I might work with Walk Sacramento or the Sacramento Walking Sticks to put together either waking maps or maps to starting points for walks that others are sponsoring.
The more I look at the possibilities for creating maps for the Sacramento County region, the more it appears to me that the real ultimate goal of this project goes way beyond the real estate maps that the site began with (and that I’m continuing to develop).
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Map of the Week this week goes to Sacramento County’s “Cities in the County” map, which has links to the city government information in each case, as well as links to the city maps themselves. Can you name the seven cities?
Well, sure, if you look at the map you can.
What’s our mnemonic device, students?
“Can Everyone Find Good Ideas Regarding Sacramento?”
I wonder how the folks in Isleton feel about being quaint?
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