Home Buying in Livonia>Question Details

Uniconz0, Other/Just Looking in Detroit, MI

Buying a home in Livonia MI with Fannie Mae, FHA, and Freddie Mac loans?

Asked by Uniconz0, Detroit, MI Thu Mar 1, 2012

How can I make sure I'm not paying too much, or profitng a real estate speculator/house flipper? Seems they are doing the same things that caused this hosuing crisis initially.

Please give me suggestions in addtion to those listed below:

Asking how long the seller has owned the home, and if it's been less than 2 years, having the Buyer's Realtor check to see when the home last sold, and for how much, seems to be a way to avoid being caught up in the real estate bubble created and perpetuated by real estate investors and speculators. Many Buyers are paying far too much for their home. There is still a real estate bubble. Home prices are being kept artificially high by the very low 3% down payment loans & Buyers not being informed consumers.

It also seems to be a good practice for anyone contemplating a home purchase, finding out when it last sold, and for how much, regardless of how long the Seller has owned it.

Help the community by answering this question:

Answers

2
Well, some of your statements are interesting.
For one -- the price of a home is simply a reflection of what someone is willing to pay for it.
Just because you don't think that a home is worth something doesn't mean someone else doesn't think it is worth that.

Example:
My investor clients picked up a ranch in Livonia for $53k in November 2011. We closed on it last Friday for $129k. When we listed the home, the first offer we got was for $100k, saying the market was overvalued and this is what the home should be worth. We rejected their offer and the following day, had 5 offers and took the highest offer of $129k. The people who bought the home loved it, said it was perfect for them and met all of their needs.

So, what we're experiencing now is this:
Supply and demand problem. Our 12 month inventory is down 18.6% from March 2012 to 2011.
In that same period, the average price went up 18.7%.
9 consecutive months of sales increases.

Say what you want about the market, but if you want to play, you'll have to play -- or don't buy. Any skilled agent will work diligently to help you ascertain these figures to allow you to come to your own conclusion, but in all reality, who owned the home, how long they owned it for, what it last sold for and such have relatively low impact on the pricing in most cases.

In addition, Fannie Mae only has 3% down loans on homes owned by Fannie Mae, which is because they know the appraised value of their assets. Freddie Mac does not offer a mortgage program -- they only back loans.

FHA has a precaution in place on the "flip" market as you mentioned in requiring two appraisals on a property if the resale value is over 100% of the prior sales price. So, your points are valid but the system is set up to accommodate and validate these items.
0 votes Thank Flag Link Sun Apr 22, 2012
A home/real estate will usually sell for what the current market value is. Of course there are a few factors that go into this but don't think a flipper has anything to do with it overall. A flipper, investor, builder, bank owned home, etc only can sell for what the market will bear. It is good practice to know the real numbers for a neighborhood and what the homes are selling for. This is a great starting point for you to make your decisions.
0 votes Thank Flag Link Sun Apr 22, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer