Maricopa best place in Valley to buy new or newer foreclosed homes

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As recently as two years ago, sellers had all the advantages in the housing market. Now that buyers have the upper hand, the plethora of options, pitfalls and opportunities can be overwhelming and confusing, particularly as buyers weigh whether to purchase a foreclosure or buy a new home.

Buying a Foreclosure Has Risks

Foreclosures might appear as flawless, bargain busters, but, beware, said Cathy French, vice president of sales and marketing for Standard Pacific Homes.

“When homebuyers are out house hunting, I’d say they should be looking for the hidden things,” she said. “If they are looking at a foreclosed home, are there liens on the property? What’s wrong that you don’t know about?”

French said the horror stories of hidden problems – leaks, termite damage, heating or cooling failures – abound right now. These problems often remain unrevealed because foreclosure sales do not require home inspections, and the owners either have been gone for quite awhile or neglected caring for the property in the pre-foreclosure days.

“Normally foreclosure sales are as is,” French said. “You can do an inspection, but there is nothing contingent on it that it will be fixed.”

If home buyers are intent on purchasing a foreclosure, it would be beneficial to have a full home inspection so that they are aware of what they are buying and are aware of what repairs they will have to fund.

Valley real estate agent Mike Tucker recommends hiring the most experienced home inspector you can find to do an extremely thorough inspection.

“If you don’t have a good home inspector that knows what they are doing and who is going over there and taking a good look at the home, you could find yourself with a huge laundry list of problems you need to fix,” Tucker said.

Roy Meshel, president and managing partner of State Mortgage, which provides home loans to buyers throughout the Valley, said one advantage to foreclosure mortgages are lending options for funding such repairs. State Mortgage offers a rehab loan program.

“For this program, if the property is not in perfect condition, we can help them fund the repairs of the home,” Meshel said. “If the price of the house is a great value, then to have the extra money to fund repairs or do small upgrades is a huge advantage.”

Something else to consider with foreclosures is the number of other foreclosures in the neighborhood that could negatively impact the overall neighborhood home values.

“How many foreclosures are in the neighborhood, and who owns them?” French asked. “Are they owned by investors? Are they going to sit there vacant for awhile?”

French also recommends checking in on the homeowner’s association in the neighborhood of the foreclosure. In many cases, due to the high number of vacancies, HOAs are falling onto difficult economic times, and the association might not have the cash from fees to fund community upkeep.

For those considering bidding on short sales, French warned buyers need to consider time frame.

“The banks can often compile bids for up to six weeks to two months, and then they might not accept any of the bids and you’ll have to start over,” she said. “If you need to be in quickly, you better be prepared that it might take a long time.”

Buyers who are committed to purchasing a foreclosed home need to be ready to wait out the process, real estate agent Tucker said.

“You have to be very patient as a buyer when you are dealing with a foreclosure property,” he noted. “The time and what is necessary to close the property is pretty complicated.”

He said short sales, when the property is still owned by the resident and not the banks, can be even more drawn out.

But foreclosures can be a good deal. French advised those looking for a monetary investment, not a family home, might be better off looking to foreclosures.

Tucker echoed that sentiment. “For under $100,000 for a newer built, but foreclosed home, Maricopa is the only place in the Valley,” he said.

But be careful when moving in to a foreclosure, as neighbors might be miffed if a buyer has purchased the home at a bargain price, thus hurting the values of the other homes in the area.

Mortgage expert Meshel recommends foreclosure house hunters tread carefully when making an offer on a house.

“They should do their research of the comparable sales so they can go in with the smartest offer,” he said. “Mortgage-wise the benefit of buying a foreclosed home is the lower price – a foreclosed home provides buyers with a lower monthly payment.”

New Homes

While they might not be priced quite as low as a foreclosed home might be, there are many advantages to purchasing new homes – and a good price is still one of them, particularly in Maricopa.

“The price in Maricopa for new homes is still the best in the Valley, absolutely the best,” French said.

Along with the sale price, buyers of new homes get a home warranty that guarantees that any problems not readily apparent during shopping are taken care of by the builder.

“For people’s peace of mind when they close, it can be a lot less stressful to buy new,” Tucker said. “They are not going to have to worry about the warranty on the property itself.”

French noted that Standard Pacific’s warranties are two years, and along with warranties issued through the Arizona Registrar of Contractors, others can last up to seven years.

“There aren’t any surprises there. If something goes wrong, we fix it, and since we’ve built it from scratch we certainly know the history of the house,” she said.

There is also the support and service that comes along with building or purchasing a new home. “We are there to help along the way,” French said. “For builders, we are there in the neighborhood and we are taking care of the homeowners’ association.”

With new homes, owners will walk into a clean space with appliances and everything guaranteed on purchase ready to roll. That is not always the case with foreclosures where owners have had an opportunity to take appliances and leave.

According to Mr. Meshel, that could be a determining factor in whether to buy new or foreclosed.
“With a new home you have the advantage of not having differed maintenance,” he said. “You know exactly what you are getting.”

Unlike the animosity that can grow when people move into a foreclosed home, there is an advantage in the sense of community a homebuyer purchases when they buy new.

“You become part of the neighborhood,” French said. “It’s a home that you can take pride in; it’s not like ‘oh, what a deal I got!'”

Standard Pacific’s The Villages at Glennwilde even boast all primary homeowners as residents. The company refuses now, as it did during the boom times, to sell any properties to investors. “We are selling to primary buyers only,” French explained. “It was a big selling point for us in Maricopa and we took a lot of pride in that we are here not just to sell homes but to build the neighborhood.”

Other selling points for new homes include the purchasing incentives and kickbacks to buyers. Don’t be afraid to negotiate with the builder to use those incentives to your advantage, French said. Do not simply settle for their standard incentive package.

“It’s better to use incentives towards closing costs,” Ms. French said. “If you ask builders directly what the incentives are some will be upfront and say our whole incentive is $15,000 and you can use $5,000 toward closing costs, for instance.”

Also be aware of how much builders are paying their real estate agents in co-broker fees.
“Standard Pacific pays, and we always have, 3 percent of base price, but there are others that will go as high as 12 percent to Realtors,” she said. “We give the discount to the buyer. The buyers need to be aware if they are out there looking, who is getting the discounts.”

Finally, when looking to purchase a new home, French also warns to be aware of what might be missing. There could be extras that might have been part of the original floor plans that have been nixed since the market took a nosedive.

“You still have to look at standard features,” French said. “A lot of builders are taking them out now but still keeping the costs of them in the sale price.”

Valley realtor Tucker advises all clients to stick to the tried and true basics of home buying.

“The No. 1 thing above anything else is cost, is price,” he said. “The next thing you can look at is location.”

For first time buyers with a good amount of savings for a down payment, now is an ideal time to buy.

“Interest rates are really good right now,” Tucker said. “With the way things are shaking out, they will be pretty stable. The overall feel is that if you want to buy, you buy for the long term.”

For more information on Standard Pacific Homes, visit www.standardpacifichomes.com. For more information on State Mortgage, visit www.statemortgage.net. To reach Mike Tucker, visit www.mrazhomes.com.

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