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Buyer Boo Boo's

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vargasteve

Thread Starter
Junior Member
Joined
Jan 21, 2002
Professional Status
Certified Residential Appraiser
State
California
Putting together a brochere on buying boo boo's. Explaining possible points to consider when purchasing a new / newer home. Such as traffic locations, sunlight exposure & home orientation, disfunctional floorplans, unstable soil areas, and also spending more on addition / expansions that $ will contribute towards value to mention a few. I was wondering if fellow formites might discuss common mistakes, and poor choices that are seen over & over again?
 

Caterina Platt

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
New Mexico
The theory of progression and regression. Or in blunt terms, hasty ego largess= pocketbook foolish. While it certainly feels good to have the nicest, biggest home amongst the paupers in the mini tract houses around you, no Joe Firstimer, you did not find a bargain that no one else saw. Your house was priced properly when you purchased and it is not equivalent to the superior neighborhood of larger homes 12 blocks away.

The reverse, that shabby little deferred maintanence party that everyone says is the blight of the area? That's the bargain. Buy it now and fix and build on to your heart's content. You won't be proud at the closing table, but after your project is finished you'll have more equity than most around you.

Sorry, I'm feeling rather trite and sarcastic tonight. I know I'd word it much more flowery and professional in a flyer.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
To Caterina's I will add: BUYER BEWARE!

That 'lowest priced house in the area' may also really be priced right, or {gasp} too high! Overly optimistic first-timers need to get legitimate bids on 'fixer-uppers', and be aware that they might find ugly things behind the wall-board they are planning on tearing out.

Yeah sweat equity is good stuff, but the time and affort to rehab a house should NOT be understimated either, and "Know thy limitations" ought to be tattood on the buyers forehead in reverse so they can read it every morning as they brush their teeth.


I assume you are intending to build a "why you should hire ME to watch out for YOU" brochure.

I'd also emphasize the "single biggest purchase" aspect and what penny wise pound foolish can do to a buyers financial health over the rest of their lives....
This is a great idea!
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Among the items I suggest to clients in a consulting situation regarding buying of residential property is as follows.

What will the area look like in 10 years? Will it look pretty much the same, or will that state highway be twice as wide, like up to your front door. Drainage problems. If there is a ditch nearby, there is a drainage problem. How about the neighbors? Talk to them. And look up the prior sales price (in disclosure states).

If the buyer wants to modify the property after buying, perhaps the time to get an estimate is before buying, not after. And advise the owner this part of the investment will not bring a dollar for dollar return in all but the exceptional situation. How many times have I had someone complain what a bozo I am for appraising their $100,000 house which they just spent $50,000 on for only $120,000.

I am researching a sale of $620,000 last week. The property sold in 2001 for $500,000, which was my appraised value in 2000. There have been no changes. It is a chicken farm and the income will not support the higher value. The buyer is clearly unaware of the prior sales price and I predict this person will have a really tough time making this ostrich fly.

ter
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Definitely meet the neighbors prior to closing. The dog that barks incessently may have been at the vet the day they looked at the home. The neighbors may be the "neighbors from hell". Also, talk to the people across the street, especially the "little old ladies". They know everything. There may be a lawsuit involving the HOA that you don't know about, or the WalMart going in on the vacant lot on the next corner.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
In rural settings, know thy neighbor is very important. I recall a few years ago when two neighbors fought it out. One's fence was cut top to bottom between every post for a 1/4 mile. The other's barn burnt with a combine in it. A hit man then offered to kill one upon behalf of the other and so they went to the police who wired them, and caught the hit man but that did not patch up things between neighors. One cruised the fence line on a 4 wheeler with an Uzi.

Since then the Uzi man has gotten very mellow. Seems a couple of years ago he was drug by a speeding car while he was trying to push someone out of a ditch during an ice storm and was crippled for life with some serious head injuries and broken bones. He gets around quite slowly but surprisingly, instead of bellyaching about everyone and everything, his personality has changed 180 degrees. I hate to say it, but it improved him. I really think it is not brain damage, but simply made him realize what was really important in life.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Not getting a home inspection, especially when the appraiser says: hmmm, you better get that checked out before closing. It just doesn't look right.
 

Roger

Junior Member
Joined
Jan 24, 2002
Professional Status
Certified General Appraiser
State
Missouri
My tip:

Visit or otherwise inspect the property around midnight on a Friday or Saturday night.

It is sometimes amazing how a neighborhood can change when the sun goes down and the lights come on.
 

Caterina Platt

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
New Mexico
Lee Ann said:
To Caterina's I will add: BUYER BEWARE!

That 'lowest priced house in the area' may also really be priced right, or {gasp} too high! Overly optimistic first-timers need to get legitimate bids on 'fixer-uppers', and be aware that they might find ugly things behind the wall-board they are planning on tearing out.

Yup! You're right! The lowest price home in an area is often not the diamond in the rough. I failed to expand on that one, didn't I? These little cash cows are rarer than the first example I gave. One has to thoroughly inspect the surrounding neighborhood, it's stability in values and visual appeal, etc. The area has to support at a minimum average overall market appeal before taking on a project house becomes a good idea. Once the surrounding area has been determined to be supportive of higher values than the subject 'el dumpo', I'd recommend the buyer spending the $400 or so on a structural just to ensure they know what they're taking on. Contractors bids are good indicators as well, however you have to be able to trust the bid is truly required work. Just like the unethical mechanic or dentist, some folks out there use these 'scary unknown' situations to create $work$.

"know thy own limitations", excellent advice Lee Ann!
 
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