When perusing through property listings, you may see the term “as-is”. So, you may wonder, what does the term “as-is” mean? It means the owner is selling the home in its current condition, and will make NO repairs or improvements or give the buyer any credits to fund these fix-its. “As-is” homes are often in disrepair, because the sellers can’t afford to fix these problems. Or, the seller died and left the house to inheritors who have little idea what could be wrong with it. Whatever the reason, the current sellers aren’t going to fix up the place before they sell it. They just want to cash in on the sale and move on. Regardless the term can be a warning to stay away or an invitation for opportunity.
It all comes down to more bang for your buck. Typically an “as-is” property will have a lower price to start with and there may be room for the sellers to consider even lower offers.
Cons of ‘as is’ homes - The downsides of an “as is” property are obvious and should not be underestimated. Any number of things could be wrong with the house that are not immediately apparent to the eye. You might think you’re getting a killer deal, but you could also be throwing your life savings into a scary pit. Around every corner may lurk a disaster and a goblin you weren’t expecting.
Pros of ‘as is’ homes - If you are a contractor or just handy with a hammer, if you are looking for a home to flip, or maybe just looking for an extreme bargain, “as is” could be music to your ears. Projects you are willing and able to do yourself increase the value of your investment.
Know what ghosts you are buying - Since they can be bargains, they are worth considering, although there’s one precaution you’ll definitely want to take: a home inspection. A home inspector examines the house from basement to rafters and will point out any problems plaguing the place—both current or potentially in your future, such as an old roof or outdated plumbing. You should always elect to do a home inspection, especially on a property where no one knew how the home was cared for and no one knows what happened right before the past owners left the property.
While “as-is” sellers have already made it clear they won’t lift a finger on that front, a home inspection still serves an important purpose for buyers. Once you’ve made an offer on a home that’s been accepted and have put down a deposit, you should arrange to have the property inspected from top to bottom. You will want the home inspection contingency written into your contract, so that if the inspector unearths problems that are overwhelming, you can walk away from the deal with your deposit in hand.
A home inspection costs vary by area but usually well under a $1000. Without exception, the cost of the home inspection is well worth it considering the headache you would have had in the future trying to make the house livable.
First-time homebuyers propelled existing-home sales in September, attaining a 34% share of sales for the first time in four years, the National Association of REALTORS® (NAR) reports. All major regions saw an increase in closings last month, and distressed sales fell to a new low of 4 percent of the market.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, hiked 3.2% to a seasonally adjusted annual rate of 5.47 million in September, from a downwardly revised 5.30 million in August. After last month’s gain, sales are at their highest pace since June (5.57 million) and are 0.6% above a year ago (5.44 million). Lawrence Yun, NAR chief economist, says the two-month slump in existing sales reversed course convincingly in September.
“The home search over the past several months for a lot of prospective buyers, and especially for first-time buyers, took longer than usual because of the competition for the minimal amount of homes for sale,” he says. “Most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of summer created more opportunities for aspiring first-time homeowners to buy last month.”
“A boom in first-time buyers drove September’s rebound from lower activity in July and August, and now sales of existing homes are back to last spring’s swift pace,” says realtor.com® Chief Economist Jonathan Smoke. “First-time buyers made up 34% of sales in September—the highest share in more than four years.”
Total housing inventory at the end of September rose 1.5% to 2.04 million existing homes available for sale, but is still 6.8% lower than a year ago (2.19 million) and has now fallen year-over-year for 16 straight months. “Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in,” adds Yun. “Unfortunately, there won’t be much relief from new home construction, which continues to be grossly inadequate in relation to demand.” Smoke says. “So listen up house hunters: If you are looking to buy your first home and you are in a position to buy now, this is the best time of the year to do so.”
Rising mortgage rates, overheating home prices, nothing for sale, pre-election jitters — the list of reasons to lose confidence in the housing market is growing.
In fact, the share of consumers who think now is a good time to buy a home fell 5 percentage points in September in a monthly housing sentiment survey (known as HPSI) by Fannie Mae. The only drop that was bigger was the share of consumers who think mortgage rates will fall.
“The decline in the survey over the past two months from the survey-high in July … adds a note of caution to our moderately positive housing outlook,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The starter home tight supply and rising home prices as well as the unsettled political environment are likely giving many consumers a reason to pause or question their home purchase sentiment.”
“Housing seems to have hit a soft patch, with residential investment likely posting a second consecutive quarterly decline last quarter despite positive labor market and mortgage rate trends”
-Doug Duncan, Chief Economist, Fannie Mae
The September employment report was mixed for housing. Wage growth is strengthening, but not as much as home price growth. Construction jobs increased, suggesting more housing supply in the future, but housing starts for single-family homes are not exactly robust. Construction spending fell in August and July’s numbers were revised down.
“A blah September jobs report gives no impetus for anything on the economy’s to do list: There’s no sign of an overheating economy that would justify a rate hike; no groundswell of construction hiring that would finally hint at a return to a normal pace of housing starts; no big wage gains that would give hope for renewed productivity gains. Just a stubbornly average report at a time when the economy is looking for a jolt of the spectacular,” wrote Redfin’s chief economist, Nela Richardson.
Pending home sales, which represent signed contracts to buy existing homes, have fallen for three straight months, according to the National Association of Realtors. Housing demand is strong, but supply is historically weak and getting weaker, as fewer homes come on the market in the fall and winter.
Submitted by Diana Olick CNBC Real Estate Reporter
Buying a home can be a high stress time and it feels even more stressful when you don’t understand the lingo being tossed around. From abbreviated words in listings to acronyms used by real estate agents and loan officers, sometimes it can feel like everyone is speaking a different language. Knowing these acronyms will keep you on the same page as everyone you are working with.
Good credit is critical to obtain the best interest rate and terms on a mortgage.
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