I purchased my home in October 2006 at the height of the market. Most people ask me if I knew the market would change, why did I buy then? Well, here's the deal. Home is where you hang your hat. If you're buying to live in for an extended period of time, in my case 5-7 years, you will more than likely benefit from appreciation. Besides, I had to move. I was in an apartment with 3 other people and my fiance was not used living in a urban setting. He hated it and for his piece of mind, we moved to central Jersey, which causes me to commute 45 minutes to work everyday, which sucks. But I have a hybrid, so I'm not suffering financially, just that I give up so much of my time on the road. The turnpike and Parkway are my best friends. thank God for Audiobooks. (sigh)
If you purchased at the height of the market, 2-3 years ago, and you expected to resell shortly there after, you might be trouble b/c real estate is circular. . .all good things must come to an end.
Here's our situation now. We still have low rates and prices have come down considerably, yet buyers are still holding out. Here is what is going to happen to those buyers who wait. They are going to end up paying the same or slightly less, regardless of the purchase price.
Two classic Examples:
Purchase Price 1-2 years ago: $375,000
Same House Now: $340,000
Person A: 375k x 6.125% for 30 years with 10% down=$2050 Principal and Interests
Person B: 340k x 6.5% for 30 years with 10% down=$1934 P&I
Now Most people say to me; well I just gained $35k in equity, which is not true. Banks are not inclined to refi b/c the market has changed.
Here's a link that further illustrates my point.
http://www.realstorynj.com/njmarketfacts.php
Yes, i'm a realtor; yes I might be bias. I think owning real estate is still the key to wealth, but the numbers don't lie.
Now to get back to your original question what should you look for or what you should reject. . .it depends on what you are loking for. First thing I would do is pair up with a realtor b/c we pay to have access to MLS systems which carries 92% of the properties for sale, foreclosure and short sales included. Banks don't ask as realtors. They hire an REO company i.e. a realtor to put the house for sale. then decide on key words or phrases that would get the best results:
Bank owned, short sale, "as is," priced right, fixer upper etc.
I just had a bank accept and reject my client's offer even though my client paid for a home inpsection and had the utilities turned on in her name. Short Sales are not easy transactions and you have to buy the property in the as is condition. Bank will not offer credit or negotiate price.
I hope that helps.
before buying a home...
Linear Mode
