By far the biggest influencer of price is location. We’ve all heard the adage “Location, Location, Location” Certain neighborhoods, zip codes or cities can drive up or down prices tremendously. But consider this, typically in highly “desirable areas” the areas immediately outside the official boundaries are just as nice, but can be had at a slightly lower price. These “location perimeter” homes can typically offer some of the best value. In Example, Tatum is the dividing line for North Phoenix and North Scottsdale. On the Scottsdale side of Tatum Blvd, homes sell for on average 10% higher than homes on the Tatum Side. We are talking a difference of a couple hundred feet. Homes are in the same school district, have the same taxes (This area of Scottsdale has Phoenix taxes), built at the same time, yet fetch an extra $30,000 for a Scottsdale mailing address. If you are looking for a deal and can sacrifice some vanity, scout out some good perimeter neighborhoods to maximize your dollar.
Another chance to get a good deal is looking at fixer uppers. Now, this isn’t for everyone but there is a ton of money to be saved/made here so here me out. Before you write off this option consider this scenario: A fully updated move-in ready home at 40th Street and Indian School (Arcadia Lite Area) sells for $550k. A home one half the size on the same size lot in the same neighborhood sells for $250k, but needs work. A contractor can completely renovate the home, put on an addition and give you a near BRAND NEW gorgeous home of the same size for around $225k. That’s a total investment of $475k for a home that’s now worth $550k. That’s a whole lot of equity to be had at move in!
REO properties are a great opportunity to get a good deal on a new home. REO (Real Estate Owned) properties are owned by banks, federal agencies or other lienholders who have taken the property back from the original homeowner. Sometimes these properties need a little work, but sometime these properties are upgraded and made ready for the market by the bank. For example Fannie May Homepath properties are typically upgraded and ready to move into where other foreclosures or short sales may be in very poor condition. In fact, Homepath homes are made available to primary owner occupants BEFORE they are made available tot he public – meaning investors can’t buy until you have had a chance to buy. No more going up against cash buyers and losing the perfect house.
Short sales occur before the bank takes back a property. When the owner owes more than the property is worth, the bank may be willing to allow them to sell it for less that what is owed. i.e. The Johnsons bought their home for $300k in 2006. Today they want to sell the house. They owe $255k, but the value is only about $215k. With certain special circumstances, the bank will allow the Johnsons to sell the property for around market value, and will take a loss on the loan. Many times the price of a short sale is slightly below market value, giving home buyers an opportunity to move in with instant equity. Do note, the short sale process is ironically long. It can take several months to go through the process, but can save you thousands of dollars along the way.
