February 2009 Vol. 4 No.2
• Tread Carefully When Considering a Foreclosed Home • See Debbie on NECN • February's Home Value Improver • About Us

Tread Carefully When Considering a Foreclosed Home

There are certain times in all of our lives in which the timing is just fundamentally unfair. Unemployment leaves us with lots of time, but no money to go on vacations. You finally find those long lost favorite jeans, only they don't fit anymore. When real estate prices are dropping, we can't all snap up houses cheap because we don't know the state of our own budgets.

You've seen me write in this newsletter about how easy it is to get caught up in emotions and react to media hype- especially when it comes to money. This is happening more and more with the low real estate prices and high number of foreclosed properties. People who have never considered investing in real estate are suddenly expressing interest in flipping" homes - buying them low, fixing them up and selling them for a profit.

If you're in a great financial position and want to buy a home, consider yourself very fortunate. However, if you are thinking the low real estate prices are a good reason to start dabbling or investing in the market, tread carefully. Before you go ahead and make any moves, think about the risks of buying a foreclosed home:

  • The house may not be in good condition.
    Sure the notion of someone defaulting on a beautiful home that has been outfitted with fancy appliances that you pick up for a song is a good one. However, it's likely that before a person foreclosed on a loan, he or she had money problems for a while, so home repairs were probably not a priority. Many people spend a lot of money fixing up foreclosed homes that have fallen into severe disrepair, and any savings you gain from buying a foreclosed home could be lost in the cost of home repair.

  • Lots of competition.
    If you've ever thought of getting a great deal on the biggest investment of your life, chances are that you're not alone. There are investors, real estate professionals, and contractors who buy and sell foreclosed homes frequently. You will be competing with them for these houses.

  • What you see (or never see) is what you get.
    Once you get the home, there is no room for negotiation in terms of repairs. If you thought the house had sewer, but it actually has septic, too bad. Many of these houses need to be bought sight unseen. There are stories of houses with pets left in them, concrete in the drains, and other horrific discoveries from people buying foreclosed home. So the money you save on buying a foreclosed home is often put right back into repair.

  • There may be an emotional price.
    One woman in the Boston area bought a foreclosed home and saw the family moving out. She was so affected by their unhappiness that she always felt the home had a bad feeling and was never really comfortable there.

  • Do you want to be a landlord?
    You may end up needing to rent out the house. Think about the hassle factor: you'll get calls in the middle of the night, need to chase down rent, etc. If not, are you ready to pay to hire a management company? Just like mom always told you, there is no such thing as a free lunch. This old expression holds true when it comes to buying foreclosed homes. Look before you leap!

See Debbie on NECN
1-09 NECN

Debbie Siegel recently was interviewed by New England Cable News about the unexpected increase in home sales in December. Is it a sign that the worst is over? Not so fast. Here is an excerpt from the video:

[Debbie] Siegel doesn't think that momentum can be sustained. "The rising jobless rate will trump any impact of lower prices."

See what else Debbie had to say!

February's Home Value Improver

When You Can't Sell Your Home

Unless you have been living on a desert island for the past few years, you know it's not a good time to sell a house because of the economy. If that upsets you, there is a lot you can do that will enhance your quality of living while also improving the value of your home - even if a sale is not in your near future. Many of us are leery to undergo major projects in this economy, though. Perhaps you'd like to see what just a few thousand dollars will get you.

Look down.
One way to feel better about your living situation is to change some flooring. Is that old tile in your kitchen that was poorly installed by the previous homeowners getting you down? Look at your options for flooring. Some of the laminate out there right now is really nice, and the faux tile is quite convincing! Installing wall-to-wall carpeting in a 12x12 room can cost as little as $400.

Tear down a wall.
One of my clients completely transformed her 100-year-old Arts & Crafts Colonial by opening up a doorway between her kitchen and living room. They did it for less than $2,000, and ended up not only improving the value of their home (open floor plans are very popular), but decided that they liked their home after all and did not want to buy another one.

Upgrade your kitchen counters.
Replacing a tired counter top with some gleaming granite can make an old kitchen seem shiny new again. Some of your many surface options include granite, cement, which now comes in many, many colors, engineered granite such as Silestone, and marble. This will probably run you more than just a few thousand, but it's an investment you will get back when you sell, and it will make your kitchen look better.

Clean the yard.
You can have a wonderful feeling of pride when you pull up in front of your clean and well-kept yard. Now that we are close enough to feel the spring thaw, focus on improving that oft-discussed curb appeal.

You've probably read lots of new-agey magazines that talk about the psychological benefits of decluttering, and I'm not sure about those. But I can certainly vouch for the aesthetic value you gain from the exercise. You'll be doing one of the top three things real estate agents advice clients to do before they put a house on the market, while making your life more organized and simple. And, it will only cost you a few trips to the local home organization store.

So President Obama has signed the stimulus package. We won't know for a while if it truly helps the country climb out of the worst recession it's seen in years. For many homeowners, the question is whether the package will help them keep their homes, catch up on payments and feel more secure financially. Again, we just don't know.

Is it a good idea to print money and hand it over to the very insitutions that helped drive the economy into this mess? I'm not sure. We're in a time when most of us have more questions than answers, when we really have to wait and see.

While you're waiting, please feel free to call or email anytime for information on any mortgage topic!

Best regards,
Debbie Siegel
Westchester Mortgage

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