In some areas of the country, the condominium market has crashed as a huge surplus of defaulted or unsold homes has wreaked havoc on the market. One market that comes to mind is Miami.

On the other hand, some cities are experiencing a building boom as empty nesters, retirees, and investors look for good values in real estate. In my area — Raleigh, NC — several all-new construction projects are in progress, providing state-of-the-art housing adjacent to everything: government offices, museums, businesses, shopping, and more.

If you are desiring all-new construction or conversion housing, the time to start, build, and complete the project can span several years. This means that you must do your homework before deciding whether a particular condominium is right for you. Let’s take a look at some things you should consider when buying pre-construction.

Why would someone buy something before it is built. For several reasons:

• Oftentimes, early buyers receive a discount as builders want confidence that their project is in demand. By offering a price slightly lower than the market rate, you could find a nice deal.

• Buying now and paying for it later could mean that your property has appreciated during the time it took to be completed. For example, if that two bedroom garden high-rise was contracted for $440,000, it could have gone up in price since. You’ll pay financing on its original value or if you are looking for a way to make some money, you could sell your unit and pocket the money.

When buying pre-construction keep in mind the following:

• What will your financial situation be when the project is complete and you’re ready to move in? Will you need a mortgage and, if so, will you qualify for one?

• Will interest rates be stable or are they trending higher or lower?

• If you are investing in the property will you live in it or rent it out? What are the rental rates for comparable units?

• When the project is completed, what will the neighborhood be like? Will there be other projects under development and what sort of local amenities will be found nearby?

Of course, when you buy pre-construction, your chances of getting what you want are greater if you act sooner rather than wait. Specifically, you’ll be able to choose the floor, floor plan, and unit location (will it face an office building or will you have an unobstructed view of the river?) if you act quickly.

Consider also your down payment monies, possible taxes (property taxes will come later), fees, and the like when buying pre-construction. Theoretically, your cash outlay should be small at first.

The end result of new or repurposed housing is that your home is brand new. You bought it at yesterday’s prices and, if you did all your research, you now possess a home that has appreciated significantly in value.

Resources

Arrange Home Financing

Home Buying Checklist

Repairing Your Credit

Understanding Escrow

Tags: condo, condominium, housing, mortgage, prec-construction

Most certainly, the national real estate landscape has quieted, with home prices and sales down over the past year. Even with the reduced mortgage rates, many people will find it difficult to secure a home loan.

Consumers who are locked out of the housing market can still get in with a little creativity on their parts. By leasing a home with an option to purchase the property within a specified period of time, home ownership could be within reach.

A lease option is a terrific way for people to get into the home they want right now and live in it as a tenant. Then, at some point within the option period, usually one to three years, renters can “opt” to purchase the home for a predetermined price.

What you should know about a lease option:

• Lease options are typically for a one to three year period. If you want the home during that time, you can opt to buy it or walk away and allow the landlord to sell it to someone else.

• You’ll be expected to pay an option deposit which will be applied to your purchase. In addition, you may be charged an amount over and above your monthly rent money which coupled with the deposit be applied to your home’s purchase.

• If you decide that you don’t like the home, you can walk away from it without obligation to purchase it. Depending on the terms of the agreement, you may or may not get the deposit and extra monthly payment monies back.

• A lease option allows you to accumulate money which will act as the down payment for your home. Many consumers find that coming up with thousands of dollars for a down payment is impossible. The accrued funds will act as your down payment.

Of course, you must have good credit in order to qualify for a mortgage once you exercise your lease option. Make sure that your credit reports are clean and your credit score is good enough to qualify for a loan. See a mortgage professional to get pre-qualified for a loan before exercising your option.

A lease option serves as a method of forced savings of sorts, money you’ll come up with on a monthly basis which will be added to your down payment. Not every seller will agree to this option, but in a slow market presenting a lease option could be one way that a seller gets out from underneath his property, but one to three years later.

Tags: lease option, lease purchase, mortgage

If you are planning to sell your home or simply curious as to what it may be worth, finding out its current market value is something that is easy to do. You need this information before listing your home, but getting your’s value can help you drop private mortgage insurance (PMI) if this is something you currently must pay.

There are plenty of free websites and online tools available to give you a ballpark figure including Zillow, Yahoo Real Estate, and Bank of America’s Home Value tool, but for accurate information you’ll need to obtain a CMA or competitive market analysis report to learn what your home is worth.

Components of a CMA

Your CMA will list certain information about your home, some of which might not be accurate. Therefore, it is important that you go over this information with your realtor, making corrections as needed. Your CMA will include:

• The number of bedrooms and baths in your home.
• Size of major rooms in the house.
• Total square footage.
• Property size.
• The home’s amenities, i.e. porch, screened deck, fireplaces, garage, etc.
• Age of the home.
• Property taxes.
• Listing agent when the home is on the market.

In addition, your CMA can include information about other homes in your area:

• Other homes on the market.
• Other homes which have recently sold.

CMAs can cover one or two blocks in your neighborhood or encompass a wider marketing area.

Of course, other factors which can determine a home’s worth are not included in the report, subjective information which can determine its worth:

• Street presence, including shrubbery, landscaping, and home facade.
• Interior decoration including your choice of colors, windows, doors, layout of rooms, etc.

A potential buyer’s emotional appeal is something which isn’t easily measured. You could have a stand out item — such as window seats — which would appeal to one buyer, but also find that your choice in room colors is a turn off to another buyer.

Although the CMA is a tool, professional input from an accomplished real estate agent can help narrow down the price range to a specific number that you, as the seller, will use when listing your home.

Please keep in mind, that the CMA is also available for the buyer to review, therefore it is important that the information presented is accurate.

Resources

Estimating The Home Values

Find An Appraiser

Tags: CMA, competitive market analysis, home appraisal, home valuation, real estate, realtor