BiggerPockets


Advice on buying my first property

Forum Powered By:

9 posts by 7 users

To participate in forum discussions, create a free account or login.

Asim R.

Triplex Investor from Adelphi, Maryland

Jan 17 '13, 11:33 AM


Hi,

I'm buying my first condo in a few weeks. I plan to live there but, hopefully, in another year, I'll have enough saving to buy another condo for investment.

As a newbie, I have a number of questions. I'd appreciate if the experienced posters can share their views.

1) Why are some properties is listed as an as-is? I can understand the rationale behind some, as they require major overhaul. But, we saw some condos, that appear to be in decent conditions, based on a 20 minute tour.

2) For the as-is properties, should we expect to uncover some major issues during inspection?

3) By listing the property as-is, does the seller have still have obligation to disclose issues with the property?

4) If I decide to make an offer on as-is property, and the inspection uncovers some issues, can I back out and get my initial deposit? In order to make this happen, what conditions should I include in my offer letter?

5) As you know, the REO inventory has really declined, so I'm not able to find a lot of REO properties in MLS that I'd be interested in. However, on sites like Trulia, I see some properties, which are not in MLS, but are either available in Trulia or via Realtytrac.com. Are these properties which are available right now? Or are they will be available in the near future? I reached out to the agent listed on a number of them but never heard back.

6) What's your experience with realtyrac.com? Is it worth it to pay for their subscription? Can I expect to find REO properties listed that I wouldn't find in MLS?

7) One of the RE agents mentioned that the short sale properties require a lot patience. How long does it typically take to purchase a short sale property? In what steps the delays can occur?

Thank you very much for your insight!



Bill G.

Real Estate Investor from Springfield, Missouri

Jan 17 '13, 11:41 AM


There is nothing wrong with trying to buy "as is" properties, they are simply saying no warranty, buy it as is where is and what you see is what you get, nothing more. Owners are required to make disclosures on listed properties, an exception is when the owner has never lived in the property or has no knowledge, like a bank. Look at your purchase contract and make your offer subject to inspecitions, you'll have an inspection period, if you don't like what you find, call off the deal. I suggest you find comps with Realtors and not use internet valuation sites, in some places they are waaaay off. Good luck.



Steve Babiak

Real Estate Investor from Audubon, Pennsylvania

Jan 17 '13, 12:19 PM


The "as is" properties you're seeing are probably bank owned REO properties. The bank has not seen the inside, and isn't interested in making any repairs if they are needed - so they list "as is". Sometimes the property might be in decent shape, but I mostly see the banks' inventory as fixers. "As is" just means you get it the way you are seeing it.

EDIT: Banks are often exempt from seller disclosure rules; depends on the rules in your state.



Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Ivan Alfaro

Real Estate Investor from Atlanta, Georgia

Jan 17 '13, 12:57 PM


Firstly, I would stay away from condos as an investment...Even as a personal purchase for me, it would be a long shot because of HOAs, rental limitations, rules, etc. But everywhere I want to live is an investment to me so you can't take that to heart.

1) Why are some properties is listed as an as-is? I can understand the rationale behind some, as they require major overhaul. But, we saw some condos, that appear to be in decent conditions, based on a 20 minute tour.

Because foreclosed houses that sit are bound to have issues pile up. It could affect their ability to sell if they list all of it or they could just not care to waste money inspecting it since they're already losing money on it...I could be wrong on that second thought though.

2) For the as-is properties, should we expect to uncover some major issues during inspection?

Maybe...but if you check all the majors and have had some background in home repairs, it should help determine that. The majors include roof/attic, HVAC, mold, plumbing, foundation, kitchen, bathrooms, windows, insulation.

3) By listing the property as-is, does the seller have still have obligation to disclose issues with the property?

If I remember correctly, HUD homes disclose issues regardless of as-is. I don't think any other type of home has any obligation to.

An alternative to pulling out is to adjust the offer price, so you can have some leeway to cover repairs from your own pocket and have a lower down/monthly payment...Perhaps even from a 203k repair loan.

4) If I decide to make an offer on as-is property, and the inspection uncovers some issues, can I back out and get my initial deposit? In order to make this happen, what conditions should I include in my offer letter?

You can back out because it's your right during your 'due-diligence' phase of inspecting. If you have an agent working up the paperwork, this should already be in it.

5) As you know, the REO inventory has really declined, so I'm not able to find a lot of REO properties in MLS that I'd be interested in. However, on sites like Trulia, I see some properties, which are not in MLS, but are either available in Trulia or via Realtytrac.com. Are these properties which are available right now? Or are they will be available in the near future? I reached out to the agent listed on a number of them but never heard back.

A real estate agent would know if they're truly active. My real estate agent uses listingbook.com, so maybe if you become an agent and ask them for access, you would be able to get the same view mine does. For now, I let her handle all that.

6) What's your experience with realtyrac.com? Is it worth it to pay for their subscription? Can I expect to find REO properties listed that I wouldn't find in MLS?

Haven't touched it.

7) One of the RE agents mentioned that the short sale properties require a lot patience. How long does it typically take to purchase a short sale property? In what steps the delays can occur?

Anywhere from 3 months and higher. I had to pull out of 1 because the seller's agent was too incompetent and was planning on taking more than 4 months. I'll never waste my time with a short sale again unless all the gears are connected on both parties.



Prashant P.

Real Estate Investor from Philadelphia, Pennsylvania

Jan 17 '13, 01:54 PM


I have to disagree with some of the other posters. You have to look at a condo like any other investment and run the numbers. Just make sure to factor in the HOA fees. Also, look around on Craigslist or other sites to see what other condos are renting for in the community.

You want to be sure that you also add in about 3% to 5% every year just to account for HOA dues increase or an assesment.

As far as inspections go, you have to read the language in your purchase agreement. Alot for Fannie/Freddie homes say that you can get an inspection but it is for your own knowledge. Once you sign on the line, you are locked in.



Richard Sanderson

Appraiser from Portland, Oregon

Jan 18 '13, 12:23 AM


Asim:

I agree with Bill Gulley when he recommends finding comparable sales (comps) with local real estate agents or brokers. With free Internet sources for real estate valuation like Zillow (just for example) you don't know how recent their sales database is. As a former local assessor I know that many real estate information services like Zillow and CoreLogic get data from local assessors, but sometimes only on a quarterly basis. And because of other duties and responsibilities, assessors are not always up to date on property transfers when these updates are sent to subscribers.



Xing Zhu

Durham, North Carolina

Jan 18 '13, 12:42 AM


A short sale can take very very long. The best you can do during waiting is to forget about it.



Xing Zhu

Durham, North Carolina

Jan 18 '13, 12:52 AM


If you are buying a condo in a major development project, try to find the sale histories of as many units as you can within the project. Comps outside the project are of little use.

If it is a high rise condo building, the view from your unit is very important. Pay a special attention to corner units!


Edited Jan 18 2013, 01:00 by Xing Zhu


Asim R.

Triplex Investor from Adelphi, Maryland

Jan 18 '13, 07:19 AM


Guys,

Thank you very much for your detailed and quite insightful responses. This really helps.

Some follow-up questions:
1) How much would it cost to hire a RE attorney to review the papers? I'm in the metro DC area (MD side)

2) Other than the local RE investor's meeting and asking for referrals, is there another suitable way to find a reputable one? I could ask my buyer RE agent but I'm not sure if she is the best referrer.

Many thanks again!



(Don't Want to See This? Log in or Create a Free BiggerPockets.com Account!)

Ubg-book

Get the Free eBook from BiggerPockets

Get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly!

  • Actionable Advice for Getting Started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more!

Sign up below to download the eBook for FREE today!

We hate spam just as much as you


To post a reply or start a new discussion, create a free account or login.

Manage Keyword Alerts

View All Forums