Is buying a home "short term" (2-3 yrs) still a good thing to do?

Asked by Craig Emblem, 05487 Thu Oct 14, 2010

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10
Kevin Olson,…, Agent, Colorado Springs, CO
Thu Oct 14, 2010
Hello Craig,

There is no real way for anyone to be certain of what the market will be like in 2-3 years. Until we see change from what has been happening, planning on buying short term could be a dangerous thing (if you are planning on selling at the end of that time period you may not be able to).
2 votes
Joe Houghton, Agent, Plymouth, MN
Thu Oct 14, 2010
I think that if you buy a property with resale value as your number one priority and you purchase it as an investment without letting your emotions cloud your judgment then there is a very serious upside. If you purchase something without assuring it is an amazing value and the market goes backwards even further than it is, you may be in a precarious situation in a couple of years. The best safety net is to find a property well under today's market value and one that will cash flow if (worst case scenario, you can't sell for a profit). What ever you do make sure you have a Realtor on your side that know both how to identify these types of values, knows how to negotiate with sellers, asset managers, and other agents. The agent you choose should be someone that has the time, patience, experience, integrity, references and a proven track record. They should be someone who will work hard for you and not try and "sell" you on the idea of home ownership. I would be cautious if the agent tries to make you sign a contract and be sure to ask up front if they charge a Real Estate Administrative fee and if so how much. Please feel free to call if I can help you in any way.
2 votes
Susan Hoffla…, Agent, Shoreview, MN
Tue Oct 19, 2010
Hi, Craig!
I think I agree with Linda. I don't know why Joe would advise you to have an agent and then NOT sign a contract that would help solidify the agent's commitment to work on your behalf. That's what the contracts are for! Joe, please enlighten us as to why you think the contracts are a bad idea. Without one, you do not represent that person as your client, they are no more than a customer. For example, Craig, if you go in to buy a boat or a car you are a CUSTOMER. You know going in that the sales person represents the dealership and is there to get the best price and terms they can for their BOSS, the dealership. If you sign a contract with an agent, that changes you from a CUSTOMER to a CLIENT. That means YOU become the boss and the agent is bound to negotiate the best price and terms for you!

As for the short term purchase.........if you want to make a profit, I would not advise it at this point in the market. Real estate industry prognosticators are pinning their hopes on 2014 as the turning the corner year. Is that what you have in mind?
Web Reference:  http://www.homestosellmn.com
1 vote
Bill Eckler, Agent, Venice, FL
Fri Oct 15, 2010
This depends on the buyers needs, the location's desirability, the price the property can be purchased for, and the stability of the local RE market.

In our opinion, short term ownership, would best be viewed not as a "money maker" but one in which you can break even and not lose money.

Of the criteria mentioned above, personal needs may be the most important consideration.

Good luck,

Bill
1 vote
Aaron Dickin…, Agent, Champlin, MN
Thu Oct 14, 2010
We will likely be just getting out of all this housing mess in 2-3 years. Prices may be flat, may be down a little more or may be up. Interest rates are likely to be up but even that isn't guaranteed.

I guesstimate that by the time you account for all expenses buying and selling a home, it costs approximately 10% of the value to get in to and then out of a house. That's a lot of dough!

In a 2-3 year timespan it could be a good investment... or it could be a wash or even a negative investment for you. The longer you are there the more likely it is to pay off for you.
Web Reference:  http://www.MNseller.com
1 vote
Joel Friday, Agent, Coon Rapids, MN
Fri Oct 15, 2010
If you do this and are handy at all, I would recommend picking a foreclosed home in need of some TLC. That is the most likely source of any upside potential for properties. We are seeing some great values in this area, including a 17 acre home for under $125000. Blaine definitely is holding its value with the NSC and TPC golf course. Work with an experienced agent in the area that you are looking and know what your limitations are for doing the work needed.
Web Reference:  http://HomeByFriday.com
0 votes
Linda S. Cef…, Agent, Franklin, WI
Thu Oct 14, 2010
I think Aaron summed it up perfectly!

I would like to know why Joe would advise you against signing a contract with an agent. I'm not sure how it works in your state, but in the State of Wisconsin, if you do not have a signed contract with YOUR agent, then that agent automatically represents the seller. Furthermore, if you want an agent that is going to take you seriously and commit to you, they will expect no less from you. If you are a serious buyer, you will want to interview several agents and ask friends, neighbors, family, co-workers about their experience and find a good fit for you. Once you've done that, pick one agent to work with and you will have the best results!
Web Reference:  http://www.lindacefalu.com
0 votes
Linda S. Cef…, Agent, Franklin, WI
Thu Oct 14, 2010
Unfortunately, I have to disagree with the previous answer. It does not matter if the "area/zip code" is rising at the moment. And here is the reason why. You could purchase in an area that is rising today, but that could change in a short period of time. If the area you purchase in begins to have distressed property sales, the appraiser is going to use these for comps. This could bring down the value of your property regardless of what kind of improvements you do. There is so much more involved in giving you a good answer and without more information from you, it is difficult to advise you.
Web Reference:  http://www.lindacefalu.com
0 votes
Lisa Thorik…, , San Diego, CA
Thu Oct 14, 2010
Depends upon the financial objective. The area/zip code should be rising in sold prices. Are you planning to renovate and flip at the end of the three years? Is it a primary residence? There are important considerations before deciding whether the capital investment has a projected decent rate of return vs. other financial instruments. What are the risks.
There are certainly areas which will rise in value over the next 3 years. If you can buy something distressed, be sure it's fixed to code, with permits, I believe you could make a decent profit in 3 years. Work closely with your Realtor to make improvements most likely to improve the value of the house.
Consult with a tax account/investment planner to look over the whole big picture of your financial goals, comfort zone for risk, how many steps to get from where you are to what you want.
Web Reference:  http://www.lchometeamsd.com
0 votes
Linda S. Cef…, Agent, Franklin, WI
Thu Oct 14, 2010
Dear Craig,

I am a firm believer in home ownership. I would be the first one to say this is a good idea. However, the economy is unstable and until it is stablized, I would say a short term on home ownership is probably not your best choice. Much depends on your circumstance including but not limited to how much money are you planning on putting down.

Can I ask why you are saying "2-3 years"? The answer to that would help me to help you.

Linda
Web Reference:  http://www.lindacefalu.com
0 votes
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