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Vken, Home Buyer in Sacramento, CA

is it a good time to buy now? is courthouse auction the way to go. or other option better

Asked by Vken, Sacramento, CA Sun Mar 2, 2008

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9
Good Sunday Vken!
I just wanted to give you a bit of feedback about courthouse auctions. When you go to buy a home at auction at the courthouse you have to pay cash! Yep, that's right... cash!
I got started in real estate with foreclosures and that's what my investors and I used to do. The other problem with trying to buy a home before the foreclosure is that many of the homes are under water and many have large second mortgages on them. If you wait until after the auction and let the bank take the home back...aka "REO", "Real Estate Owned" or "Bank Owned" you will probably get a better deal.
As for the question, "Is it a good time to buy?"
If you look at mortgage rates over the last 25 years, we are at some of the lowest rates in history. That combined with the huge home prices makes for a great combination. Personally, I remind my clients that buying a home is a long term investment. Statistically, once a person buys their first home, they will be homeowners for the rest of their lives. That considered, if you are in a financially secure place to buy, then the time is not only right in the market... the time is right for you!
Good luck! I hope I was able to help a bit.
Sincerely,
Alex Amaro
Web Reference: http://www.alexamaro.com
1 vote Thank Flag Link Sun Mar 2, 2008
Why not? Buy it with big down as now required in this market! And rent it out. Get close to positive cah flow - I hope. If not tell your friends "I like the property none the less! Yeah Right!

Then get tenants that roll in cash operating a crack shack. But they dont pay rent and you file a UD . Attorney charges you a fortune and after 6 months they smoke up the place and trash it. So you sock whats left into the home and then lose your job. Can't borrow against it so you can always think about dumping the shack a year or two later !

Conserve cash ! Wake the Hall up! Take me ...take me now!

The King
0 votes Thank Flag Link Tue May 5, 2009
To buy or not to buy! That is the question on everybody’s mind, weather you are a first time buyer or a seasoned investor.

First time home buyers and investors have started to take advantage of this great time in Real Estate. There will probably never be a better time to buy Real Estate in our lifetime.

It is unlikely that interest rates will continue to decrease.
• We are seeing results with the current rates. There may be no incentive to lower them more.
• It is possible that we may see an inflationary period due to the money being printed.
• Inflation will cause an increase in interest rates as well as Real Estate prices. Real Estate is one of the best hedges against inflation.

It is unlikely that prices will continue to decrease and may have hit bottom.
• Replacement cost is higher. Builders will not build until prices go up enough for them to make a profit.
• Sellers will not sell until they have equity.
(Both factors will keep inventory low until prices go up)
• Inventory is decreasing and there is currently a shortage of available homes.
• We are mostly reliant on Bank Owned properties to fulfill the supply.
• We are experiencing multiple offers on reasonably priced properties.

For First Time home buyers (Have not owned a principal residence in three years) there is a tax credit that will expire December 1 2009.
• Buyers must close escrow by December 1, 2009.
• There could be a frenzy starting late summer.
• There could be a pre-frenzy frenzy starting the beginning of summer.


Sold prices are no longer spiraling downward. This is the time that people will be talking about as the time that they either bought a house or they wish they would have bought a house when it was cheep and interest rates were low.

Be the one who says “I’m glad I did” instead of the one who says “I wish I had”
0 votes Thank Flag Link Tue May 5, 2009
In LA, I believe the reason homes do not sell "on the steps" is because whatever your bid amount, you need the ENTIRE AMOUNT in cash or a cashier's check. This is unlike some other counties where you can put 10% of your bid down and get the rest through financing. There are fantastic deals available but if you don't have $250k in cash, you won't get the property.
0 votes Thank Flag Link Tue Mar 4, 2008
Be extremely careful when considering buying a home on the courthouse steps. Do your research ahead of time on comps. Get a preliminary report. You don't want to get stuck with somebody else's back taxes and liens! A better way to go is to purchase a bank owned property. There are some incredible bargains now.
0 votes Thank Flag Link Mon Mar 3, 2008
Sorry, small correction.
I just noticed that I wrote, "That combined with the huge home prices makes for a great combination."
What I meant to say was, "huge DROP in home prices."
Have a great day!
0 votes Thank Flag Link Sun Mar 2, 2008
All the answers so far have been very good. I just want to reiterate that unless you know what you are doing the courthouse auctions are probably not for you.

Most of the homes being offered on the court house steps are valued way under what is owed on them. Thats what they mean by being "upside down". Almost none of the homes that are auctioned on the court house steps sell there. So if the serious , experienced investors are not buying them that should tell you a whole lot.

In this market you are almost always better off waiting untill the bank forecloses and then lists them with a real estate agent as bank owned (REO). At that point the price will be competitive with other homes for sale in the area or even less.

As far as this being a good time to buy , I think it is. Prices are about half what they were in 2004 or 2005 and interest rates are great. Will prices continue to fall, probably. If you are buying a home to live in for 4 or 5 or more years it shouldnt make a difference.

As a last comment, the only way you will know that the Real Esate Market has hit bottom is when prices start going up again and then that bargain you had your eye on will be gone.
0 votes Thank Flag Link Sun Mar 2, 2008
The courthouse auction is great for the experienced investor with wheelbarrows heaping with mounds of available cash.

You are not that experienced. You probably need a loan to buy. Then the courthouse is probably not for you.

Any Realtor who can fog a mirror can find an investment house in Sacramento today for you that is half the price it was worth during the bubble. There are hundreds of "half - price" houses to choose from.
Thousands more that are 30% to 50% below their 2005 values.

You have to have the income and credit to qualify for the loan, you have to have money for a down payment. You need to have enough money to make any repairs needed. You have to be able to make the payments with your money until you find a tenant who can pay the rent to cover most or all of the mortgage payment, unless you are buying to live there yourself

Consider that you build real estate wealth by buying during the really bad market ( now ) and keeping the house for several years at least, until the house is worth much more during the next "hot market"

You will lose money if you buy now to sell it a month or two later.
0 votes Thank Flag Link Sun Mar 2, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
I am less attracted to courthouse auction simply because you get what you get - you most times cannot see the inside of the property before you must bid on the property and the property is not sold with a guaranteed clean title or vacant. If the bank owns it, they generally clear all title liens and make the property available to show. I would go for the bank owned property. Banks will, ultimately sell - sometimes they are hard headed on price in the beginning of the transaction, but they soften with a qualified and determined buyer. All the Best. Liz
0 votes Thank Flag Link Sun Mar 2, 2008
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