Do you recall the first time you purchased a home?
Do you recall how polite that question was asked. "Is this your first home?" It could also be worded as "Are you new to the market?" The question could also be asked in a few other different ways. The question comes down to this: ( Can I dump a property onto your lap that nobody else wants? )
For this blog I'm going to be straightforward, blunt, maybe even rude. If you take the time to read this carefully and think about it. Take it to heart and even pass it on, you could save yourself or someone that you know a pile of MONEY and grief. A first time home buyer can be a mark or a target for an experienced house flipper, marketing agent, or investor. These ruthless people could buy a property, rent it out for ten years or so, put as little as possible into the upkeep on the property, have tenants run it into the ground then sell it to a first time buyer as a fixer upper for full market value.
Why sell it to a first time buyer? Answer... Because no one else is dumb enough to buy in! Houses cost money. They can even be referred to as a money pit. Everything in a house costs money! Walls need repainted, carpet wears out, hot water tanks get old and needs replacing, appliances break, windows need updated and the list goes on and on.
When you take the time to ask yourself what type of person is selling the house that you are interested in, there are only a few to choose from. A property investor, a homeowner who is ready to sell, a home owner who has to sell, a builder, a property flipper, a bank, or an agency or an agent acting on the part of one of them.
If an investor is serious about building up a portfolio of investment properties they know that they must keep up the properties so that they can get the highest possible rent along with good reliable long term tenants. These people are in for the long haul. These are not the people who will flip a property for a quick profit. They probably have nothing to sell.
A homeowner who is ready to sell. Here, think of mom and dad getting old and needing to downsize. They have lived in the house for a long time, raised their family and are ready to move on. The home is usually in need of being updated but it is structurally in good condition. There should not be any deep dark secrets. These places could be a good buy!
The homeowner who has to sell. This happens. Here is what we could be looking for: A couple going through a divorce, the death of the income provider, bankruptcy. Usually these houses are in fairly good condition and need to be sold quickly. These places could be a good buy!
A builder. New houses! Who doesn't want a new house. Fresh paint, new carpets, new appliances, modern decor, just inspected. If you are into "new" this is a good thing, but I caution you here. New, comes in two forms, there is "new spec" and "new custom" In new spec the builder builds the house that he or she thinks will be easy to sell and the house does not get put on the market until the house is finished and ready to move into. Here builders often cut as many corners as they can, they opt for cheaper trades, cheaper carpet, cheaper tiles, affordable appliances, you get the point. But they want full price for the "New" house.
A custom home on the other hand is a home where the buyer of the home goes to the builder and tells the builder exactly what they want. These houses do cost more and the buyer gets the house that they want. They can specify the quality of the paint, carpet, tiles, choose the appliances that they want. These are not usually for a first home buyer unless they have the money to afford such a home and know exactly what they want.
A Property flipper. These ones look for homes that are below market value or way below market value. They buy the house, fix it up, get it inspected and put it back on the market at fair or above market value hoping to turn a nice profit. These people are usually skilled people and can do a satisfactory job of fixing up a house by themselves with very little help. If you come across one of these recently renovated homes it's usually a safe bet as a first home purchase.
A bank. Banks are not usually into investing in property. They want the property sold so they can make their money on having someone else pay them interest through a mortgage. Here, think of a bank foreclosure. You can also think of government foreclosure due to unpaid property tax or something like it. These places can also be picked up for below market value.
So here is your warning: Do your homework! Research the house that you are interested in. Look for crime reports in the area, research if there has been flooding in the area? Are there mine shafts under the property? Ask yourself what type of property seller you are buying from.
Then make sure you have a subject to professional home inspection by new owner on the sales contract. You should then put your money into a professional home inspection. Make sure you get a copy of the original house drawings and go through them with the home inspector to make sure that any and all renovations to the property were done properly and according to code. Don't be one of the people who has a horror story that they can tell about how they got screwed when they purchased their first house.