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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!
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!
And you thought anything more than $200,000 was too much to pay!
I just read about this house in the Sacramento Bee this morning and I must say - WOW! The virtual tour is worth taking a look at, if just to see opulence translated into real estate.
The Tuscan Villa is considered one of the most expensive listings ever to hit the Sacramento real estate market with 10 bedrooms, 10 baths and a total of 15,000 square feet of living space. My personal favorites are the “Great Room” and the gourmet kitchen. (Any home that has anything called “a great room,” I want to buy.)
It’s beautiful. Just beautiful.
Anyone with approximately $9,000,000 to spare on a house? Call me to see it!
These neighborhood came up during a preliminary search on the MLS for investment properties, that is, places that someone might want to rent out. The best homes for renting obviously are those that have at least 3 bedrooms, but having said that I own a 2 bedroom that has been doing quite well.
If I were an investor looking for something to buy at a great price that would rent well with about 20% down, I would be looking at the following (There are other neighborhoods as well, these just have higher inventories):
95864 (Arden area)
95841 (Just off I-80 and Madison)
95621 (Citrus Heights, always a favorite amongst landlords)
95758 (Elk Grove around Laguna)
I will post more as I see them, but if you are going shopping soon, I would focus on these places. There are some good deals here, especially the bank-owned properties.
It’s a fine balance - between answering calls and showing properties and scheduling appointments for listing homes. But John finally had to break down and put something on this blog.
Don’t worry - we won’t let it die! I’ve been fiddling around with the other blog a lot and haven’t devoted the attention this one deserves. But then, sometimes I have to fend off the terrible bubble-heads from taking over the other one! One in particular (or two, I’m not sure) have been going around to other blogs and posting mean comments about me.
Hey, I’m never one to turn down publicity. Especially if it brings us more business. And I’m definitely getting the sense that real estate sales this year will continue into the winter months.
Good for John for taking his vacation in summer.
John LockwoodJuly 31st, 2007
El Dorado County, Listings, Maps, Placer County, Sacramento County
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I’ve fixed a few bugs and added data to support more community pages.
We now have basic community information and active and sold listing maps in place for:
There’s still a long way to go on the bug fixing and improving the look of the pages. I was learning how to do map mash ups at the time, and at the same time sometimes being too clever with the fonts, so it’s none too pretty, but I can clean that as we go.
Recently I complained that I had bought a book called “How to Finance Any Real Estate Anywhere” and found the concepts just too hard to understand. (Really, it’s like math - if you can’t add, you can’t multiply!) I mean, I knew that the author knew what he was doing. He just couldn’t explain it well enough on the page.
So anyway. I picked up Frank Gallinelli’s “What Every Real Estate Investor Needs to Know About Cashflow” and found it absolutely fascinating. If you like numbers (or if you like the RIGHT numbers) and analyzing the heck out of every deal, this is the book for you.
The writer also has a website where you can buy software that can track your investments and a few other free calculators. Worth a visit.
This was our first investment property bought by my husband near Fruitridge. It is a 2 bedroom, 1 bath home, fairly typical of the neighborhood. About 1000 square feet with one purple bedroom and one blue bedroom. The kitchen was green - all in high-gloss paint. But since it was his first home he bought it from HUD in early 2001.
For $50,000.
It was a foreclosed home and everything was in pretty bad shape. But my husband understood instinctively that the rent in his apartment would continue to go up. The payments on this home however would remain the same.
He bought it with $500 of his own money. Since it was a foreclosed home, and he was a first-time buyer he put the rest of his 10% downpayment - $4500 on a credit card (getting a first trust deed for $45,000) and no one noticed. He moved in.
This is what we proceeded to do with the property: we fixed the holes in the walls, refinished the original hardwood floors, changed the drywall in the bathroom, replaced the windows, repainted the inside and the outside, changed the light fixtures, put in a new sprinkler system, landscaped the front and back, tore down the back patio. Then we refinanced and pulled enough money out to use as a downpayment on another house.
In today’s market, that first home is still valued at right around $235,000. Do you want to venture a guess on the return on our original investment?
But it doesn’t end here. We now have monthly mortgage payments of about $1100. The rent we collect is $1050. In a few years, the home will be paid off (or leveraged again to buy another piece of excellent real estate) and we’ll do it again.
So tell me first-time buyers, would you buy a home that looked like this?
… in 2008, according to the real estate section in the SacBee today.
In spite of all that negativity I feel pretty good about myself. Or maybe it’s because of it.
The more there are of the scared types, the better the arena for the real investors. Perfect! Who was it that said that: Be scared when others are greedy and greedy when others are scared.
They’re scared. It’s time.
… if you’re not a client. In fact, you don’t have to like either John or me if you’re a blogger.
You just have to admit we’re here to stay.
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Information believed accurate but not guaranteed. The views and opinions expressed herein are the beliefs of their respective authors.
Interested parties should independently research and verify the information presented herein.