Josh Lewis, BuyWise Mortgage and Dustin Steeve, CEO, Lighthouse Escrow discuss how to become a homebuyer on this first part of seven about the basics of what you need to understand to become a homeowner.Verify your mortgage eligibility (Jan 21st, 2022)
In this video, Josh discusses trying to find a deal in the housing market.
- What factors could help you get a deal?
- Why it is difficult to find a discount on a home in a hot market
- Why home flipping is a risk in the current market
– Okay, I wanna pivot now to some, maybe a little bit more detailed questions.Verify your mortgage eligibility (Jan 21st, 2022)
So here’s one about shopping for a home and pricing of the home. If you don’t care about school districts and you’re good at fixing things, so you’re okay for a fixer-upper.
Are there any ways to leverage those conditions to get maybe a better house, besides sort of the obvious, right?
And just to give some, so this was a question submitted by a friend of mine, just to give some context to the question, school districts matter because the better the school district the better your kid’s education and so that it’s this weird relationship between the property taxes help fund schools, higher property taxes means better-funded schools, which means better education for your kids, which means more people wanna live there.Verify your mortgage eligibility (Jan 21st, 2022)
So that drives the property value up. You see how it kinda goes up the ladder like that, right? So, your house theoretically appraises a more highly ’cause it’s more desirable if it’s in a better school district.
But you might not care about that because maybe your homeschool or maybe you’re going to be sending your kid to a private school, whatever the case might be.
So you can leverage that theoretically in a negotiation to maybe get a better price on the house. But Josh I’m curious to know besides, you know, those sorts of obvious reasons, do you see ways that kind of deep data can be leveraged?Verify your mortgage eligibility (Jan 21st, 2022)
– Not really, the market if you look, you know, I started doing this in 1995 and there it was hard getting school data. It was hard getting transportation data. It was hard getting data on any of the services around your home.
Now, all of the major websites and most realtor portals can give you that information. Oftentimes you’ll walk into an open house and then they’ll say, “Hey, here’s the grade of the schools in this area.” And each one, the elementary, the middle school, the high school, all of them and let you know that.
So the internet age is interesting in a lot of ways that information is out there. The thing that I would say when I saw this question, my response to it is, you may not care about schools. So it would allow you to get a nicer home in a neighborhood that doesn’t have as good as schools, but the market cares.Verify your mortgage eligibility (Jan 21st, 2022)
The market knows, so you may get a discount, get a nicer home in a neighborhood with lesser schools. But when you go to sell, you’re going to also give that discount to the next buyer. It’s pretty rare that you find someone that is just totally unaware and be willing to pay full price for it.
And you know, the second question on that was, “Hey, if I can do some fix-up, can I find a fixer and save some money?” You absolutely can. What I like to tell people, having flipped a bunch of homes and often out looking in the market when you shift.
So in 2008, I can literally say banks had more homes than they knew what to do with, that they owned that had already been foreclosed. And if you wrote them an offer, no matter how absurd you’d get the house. By 2011, each one of those had five or six offers from different flippers.Verify your mortgage eligibility (Jan 21st, 2022)
And they all knew their numbers, but whoever’s willing to pay the most, so now the seller has options, but you could still get a discount. By 2013 or so, we came to a pretty balanced supply and demand market and it was harder to get a discount on those distressed properties. So when you’re in a distressed market and people can get discounts on nice homes, you can get really big discounts on not nice homes.
When you switch over to a market where we’re in right now, the discounts for the repairs that need to be done to a home.
If you see a home that some did a full remodel on one year ago and it sells for top of the market, the discount to that for the same model match home is usually smaller than the cost for the previous person to make their home that nice.Verify your mortgage eligibility (Jan 21st, 2022)
So I see people making that mistake all the time that they’re like, “Hey, I’m getting this house for 80 grand under market.” You’re like, “Cool, that’s 125000 dollar remodel those people did to make the other one worth that.”
Now, some people will pay it because they get to do it to their taste in their way and they like the process. Now, the question here was, “What if I’m good with a hammer I can do this myself?” By all means that 125000 dollar remodel was probably a 65000 dollar remodel.
If you can do it yourself, in oftentimes what we see is home sell at basically fair market or even slightly over that when you factor in the repair costs.Verify your mortgage eligibility (Jan 21st, 2022)
So, someone is getting a great home for themselves at fair market and they get to do their rehab the way they want it, or they’re slightly even overpaying but it’s pretty rare, it’s difficult. I have a couple of friends that are still flipping full time right now.
It is hard to find a property that you can get enough of a discount to actually do the repairs and make a profit off of. So I would just be super careful. Neither of those are things that would prevent you from getting a discount or couldn’t be used to get a discount.
It’s just the ability to get a discount to market in this type of market. It really, it’s shoe leather. It’s how much work you’re willing to do. Look at a lot of properties, get out pound doors.
Hopefully, find someone before it gets listed. There are discounts in any and every market and those are two ways that you could get them. Just be careful because there are pitfalls with both of those.Show me today's rates (Jan 21st, 2022)