Low-Cost Foreclosures Offer Best Values
Birmingham, AL-Consumers should buy their next home cheap and buy it soon, according to Judith Haney, a 26-year veteran real estate appraiser. The reason? Ms. Haney says the Federal Reserve has held interest rates at zero for nearly a year in an effort to stimulate the prolonged slowdown in America's economy.
In her 2010 New Year's Day Real Estate Value Forecast, Ms. Haney states on her website (judithhaney.com) that lower-cost foreclosures and fixer-uppers are still the best value for consumers shopping for deals. And, when combined with low interest rates, the time could never be better, she advises.
Ms. Haney supports her buy-now advice by citing lender incentives including low downpayments, no closing costs, free appraisals and credit reports, renovation loans, and other sweetheart offerings by Bank of America, Fannie Mae, Freddie Mac, Veterans Administration, HUD and Wells Fargo, who are eager to dispose of their large inventory of foreclosed homes.
"The problem with postponing a decision to buy is that low mortgage interest rates will not last. Eventually the Federal Reserve's highly inflationary policy of printing more and more money will cause interest rates to increase," she says.
"America's overall high unemployment rate has prompted the Federal Reserve to keep rates low which has spurred banks to borrow cheap and lend high."
Foreclosures can be as cheap as 30% or 40% below market. While the buy-cheap, lend-high policy has helped banks regain their financial health, it has done little for consumers and taxpayers who are footing the bill. Ms. Haney worries that consumers will pay an even bigger price for mortgage money if inflation takes off in 2010.
"Avoid buying a lemon by hiring independent licensed appraisers and home inspectors before offering to purchase a home," she advises.
"Buyers of foreclosed properties should insist on inspecting the property with all utilities turned on before offering to purchase.
This simple step allows potential buyers to test the plumbing, electrical and heating systems."
Ms. Haney said she employs the analogy that consumers would never buy a car without turning on the engine, therefore, why buy a house without turning on the electrical, plumbing and heating systems.