If you are a contractor or investor with lots of cash, just find it and buy it. You can find them for under 100K around here. Godspeed and all that.
If you are a first time buyer, or an ordinary, first time move-up buyer with one home you live in and a little bit of savings, forget it. It does NOT go the way you think it goes. Just doesn’t. Trust me. You won’t, but I am right.
If you are going to try to buy through an internet provider, just know that there are going to be costs. Like…1.95% ‘up front fee’, for example. That’s cash, up front, and you still have to get loan approval. Most cheap houses? NOBODY will lend on them. NO-BOD-Y.
If you want to go it on your own, you had better know how to find out what the REAL cost will be. Or get out the crying towel. These days in real estate, there are usually up front ‘money on the table’ outlays of cash, some of which are not refundable. Just call a realtor. And don’t call one to USE one, call one to compensate them for the help they will give you. I’m tired of hearing horror stories of people losing thousands because they didn’t know or wouldn’t listen. Really! It really bothers me when I hear this stuff, but on the other hand, if they have been advised well and they continue to blunder, well…that’s on them.
Want to just buy a piece of land and build…because land is 20K an acre? Just know that you can’t finance that land. You’re going to have to pay cash for it, even if you family member is “standing by” to build a house on it for you. And dare I say this? Your family member is not going to make you the priority if he’s doing the build on a discounted basis (or has a job he has to go to every day). And if you didn’t have that kind of cash to get you into a home the traditional way, how are you going to get it to pay cash for land?
Oh, I know. Buy a foreclosure house! NOT! If you find a cheap foreclosure house, trust me, the repairs will be astronomical. And you don’t have discretionary funds, remember? Oh, and this is important. You can’t finance it. Ya gotta pay cash. And, you know those seller disclosures you get with homes listed in multiple services? The ones that tell you what’s wrong with the house? Not gonna get one with a foreclosure, and if you DO, all of the boxes will be checked with ‘no representation’. That means: I don’t know and/or I don’t care. So you won’t know whether the foundation has major issues, the structure is termite ridden, half of the structure was not permitted, the septic system is collapsing, the well is contaminated…you know, those little details.
So you get to spend a LOT more money on inspections than you might otherwise spend, only to decide you don’t want the house. I call that a colossal waste of money! UNLESS you are a contractor or investor, flush with cash.
Want a fixer-upper? Great! You’d better like DIY home improvement projects, because you’ll be living in one for years! Now, I have clients who do love DIY and are good at it, and have the patience and love of restoration to enjoy the long term, patience-sapping experience. Not many people do. So. If you go this route, plan ahead. Know that if you run out of patience and money, you’ll have a heck of a time selling a partially restored fixer-upper. And depending on the nature of the ‘fixing’, you may have to wait for a cash buyer to show up. By the way, I can spend five minutes with you and know whether or not you can handle it. Yes, I’m that good.
See, this stuff is important! Real estate agents…the good ones…can walk you through the processes so that you don’t trip over your own feet, even if you ARE looking for a cheap house. And please please please remember, you are hiring an agent for her/his expertise. That’s what you’re paying for. So don’t let non-Realtor people yap into your head and ruin your deal. This happens so often that when I hear about a family member being involved, if that person is not willing to meet with me and talk it out with me? I don’t want the transaction. Why? Because they NEVER make it through to closing when the family member wants to be a behind-the-scenes puppet master. Usually they do not understand the process and don’t want that to become obvious to the professional.
I have done many transactions where I DID meet with family and talk things through. What’s the first job? Make sure everyone is on the same page. Listen, if you and your family member are at odds, stay out of the market until you reach consensus. Real estate agents do not get paid until the property closes. That means if you argue and tug back and forth with family throughout the transaction, not only does the real estate agent have to sit down and wait for you to get bad advice from a non-agent, but we also lose the deal and get NOTHING for our time. I know you like to be paid when you work, so please, remember that our time ALSO has value. So, bring your family to me first. Then I get to decide if the deal has a snowball’s chance….you get the idea. I love nothing more than a tight, loving family, working together. But one behind the scenes giving bad advice? No.
I have helped buyers purchase low priced homes many times. Some are investments; some are homes to be brought back to life to be loved and lived in. I love these transactions, because I hate to see homes fall into disrepair and be destroyed. But you have to know that there is a way to approach and close these purchases and a way to completely blow the deal.
Which would you rather do?