Lehigh Valley Real Estate Blog

Lehigh Valley Home Buyer's Won't Make An Offer On A House Needing Updates

A lot of the homes currently for sale in Lehigh Valley require some type of updating whether it be the bathroom, kitchen, windows, carpeting or other household systems. If a Lehigh Valley Home Buyer is interested in the house they will take the updates into account with their offering price. Right?

 

Typically, a Lehigh Valley Home Seller will list their home with the thought that if a buyer is interested and they are concerned about the updates they will just make a lower offer.

 

Having worked with many home buyers, here is where I believe the flaw is in that thinking.

• Most of the home buyers are using FHA financing.

• The odds of FHA financing go up as the home price goes down.

FHA financing requires a minimum of a 3% investment by the buyer. FHA also allows for a 6% seller’s assist to help pay the closing costs. Many of the transactions, which use FHA financing, usually ask for some amount of Seller's Assist.

What this means is that the buyer has very limited funds. They can afford the mortgage but they don’t have a lot of available cash. If they can get the house for $10,000 or $15,000 less they will save about a $100.00 per month on their mortgage but they still don’t have the money to do the upgrades. If the upgrading outweighs what they feel the future can afford, then they won’t make an offer because the mortgage savings isn’t enough to do the upgrading.

Now, contrast that with a buyer who has access to funds. They can say “if I can get it for this much I’ll do the upgrades”. I had a home buyer out a few weeks ago who was looking to purchase for $300,000 cash. The closer the house got to her limit the more it needed to be exactly what she wanted. For a house with a price of something like $240,000, she was willing to completely redo the kitchen, bath, or both. For $289,000, it had to be exactly what she wanted.

 

The problem is that the cash flow buyers are far and few between. So, what happens is that a buyer, who has limited cash funds, will go after a house that may not be in the exact neighborhood they want or be as large as they want but will have some of the major upgrades done (new kitchen, bath, roof, furnace, windows…etc).

 

What does the Lehigh Valley Home Seller do about this? They are willing to take less for the house but they are concerned about dropping the price because the home buyer will always offer less or they want to try and hold-out in hopes of getting their asking price. In the mean time, the days on the market is going up.

 

My experience is that if the house is priced correctly to attract the largest amount of home buyer's, the offers still tilt in favor of the seller.

 

I recommend dropping the price to catch the "lower end of the pricing range" buyer. That is the home buyer who is willing to take the house , needing the upgrades, because it it has other positive features they like. They'll worry about the upgrades later.

 

A difference in $10,000, on a home price, may bring a complete new set of Lehigh Valley Home Buyer's into the home who are willing to make an offer even though the house needs upgrading.

 

The Lehigh Valley Home Seller may already be willing to accept this lose so why not go after the home buyers that will be less picky about the updates? If priced correctly, multiple bids are still happening since buyers are usually looking at the same properties. This may not mean a higher price in today's real estate market but it could mean a contract with better terms with respect to the inspections, deposits, and other contract terms.

 

Visit www.LehighValleyHomesOnline.com for more information.

Lehigh Valley Home Buyer and Mortgages

In view of the recent financial problems throughout the country, a common question I am getting asked is whether or not a Lehigh Valley Home Buyer can still get a mortgage.

The answer is Yes! If you are interested in purchasing a home, then financing is still available. Of course, you need to qualify for the mortgage and the qualification process has definitely gotten harder.

A few years ago, if you had low credit and no money it didn't matter. You could do 100% financing and include the closing costs in the mortgage. Looking back, it was easier to get a mortgage to purchase a house then it was to get a landlord to agree to rent out a property to some of these potential buyers. Fannie Mae and Freddie Mac had relaxed the guidelines to the point that almost anyone could get a mortgage. They couldn't rent an apartment but they could purchase a house. Something was wrong with the system and it all came to a head a few weeks ago.

Hence, the current housing problem. Many buyers had no stake of their own in the picture. They did 100% financing and buried the closing costs in the mortgage. Not one cent of their own money was at stake if they moved out of the house. Even so, many destroy the houses before they leave because they are mad at the bank.

Anyways, FHA financing is still available. To qualify for an FHA mortgage, a potential home buyer should have at least 3% of their own money. In 2009, the guidelines are supposed to increase the needed money to 3.5%.

If more money is available to a potential home buyer, then other financing options are still available. If interested in purchasing a Lehigh Valley Home, contact me for the names of some mortgage companies that are still willing to lend money to a qualified home buyer.

Home For Sale In Bethlehem, Village of Edgeboro

Savor breezes and stately tree-lined streets from the front porch of this charming home in the beautiful, historic Village of Edgeboro in Bethlehem. A pristine hardwood floor welcomes you into the foyer and large living room of this early 20th century home, which features a beautifully crafted, antique marble mantle. The eat-in-kitchen, with solid-wood cabinets, opens to the bright dining room, which offers an abundance of natural light. Upstairs boasts 3 nicely sized bedrooms with spacious closets and a very large bathroom with built-in vanity, also flooded with natural light and loads of storage space. Large basement with toilet and plumbing, which can be finished. Amenities include central air, a well-maintained one car detached garage, and a nice backyard. The proximity to historic Bethlehem and routes 22 and 78 complete the picture. All of the appliances remain with the property.

Visit Washington_Ave.LehighValleyHomesOnline.com for more information.

---