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• Buying a foreclosure sale before the sale
• Types of foreclosure opportunities
• How and why to buy property at a foreclosure sale

• Buying a foreclosure sale before the sale
• Types of foreclosure opportunities
• How and why to buy property at a foreclosure sale

Some would say that as a Realtor, I am a salesman.  In fact, when I am representing a Seller, I am working diligently to sell their house.  But when I am representing a buyer, I view my role a bit differently....

Salesman vs. Consultant
When I am working with buyer clients, looking at homes, I am never trying to convince them to buy a particular home.  I am not trying to sell them on the merits of a particular house.  What I am doing is trying to understand their housing needs and desires and to help them evaluate each home to determine whether it will meet their needs, and fulfill their desires.  I am a real estate consultant, helping them to examine each critical aspect of a home to make a wise buying decision.

And yet sometimes (in retrospect) it would have helped my buyer clients if I were a bit more coercive!
I have now had two clients in the past two weeks who knew what house they were going to buy, but held off (for valid reasons) on making an offer.  Then, in the time that they waited, interest rates went up, the associated monthly payment increased, and they were not comfortable buying anymore.  If they had made an offer sooner, they would have finalized their financing, locked in their rate, and they would have been able to buy the house they had hoped to live in.

Rates aren't likely to go up drastically in the next few days, weeks, or months, but they are increasing --- and an increased rate changes your monthly housing costs. 

Given this interest rate context --- I advise you to act speedily once you know which house you would like to purchase!

Read a bit more about pre-qualification here.

It would seem that many buyers in the market today are hesitating before making an offer because they are unsure of the current and future value of the home they think they want to purchase. 

While it's impossible to predict the future 100% accurately, I can definitely help you to better evaluate your buying decision.  Here are a few ways we could quantitatively analyze a property:

Price-per-square-foot trends

If you are buying a home in a subdivision where other homes have recently sold, we can certainly look at average price-per-square-foot trends to estimate the value of the home, and to see how those values have changed over recent months and years.  This graph shows price-per-square-foot trends for all of Harrisonburg and Rockingham County.  We would be doing the same sort of analysis, but with a smaller data set.

Comparative Market Analysis (CMA)

In my opinion, a CMA isn't just for a seller before they list their home for sale.  Comparing a property for sale to other similar properties that have recently sold can shed significant light on the potential value of the property.  The "comparable" sold properties would be as similar as possible based on features such as: age, bedrooms, bathrooms, location, condition, square footage, amenities, etc.

There are other ways we can approach this issue as well, but the main thing to remember is that it is important (in any market, but especially now) to understand the value of the home that you might purchase.  The listing price alone won't provide a full picture of the value of the home.

• When a homeowner works with a Realtor to market and sell their home, the homeowner and Realtor negotiate and agree upon a "brokerage fee" -- the amount of money that the homeowner will pay the Realtor upon the successful sale of the property.  This is often a percentage of the sales price. 
  
  
• Almost always, the homeowner and Realtor agree that if a different Realtor finds and represents the buyer for the home, that the brokerage fee will be split between the Realtor representing the seller, and the Realtor representing the purchaser.
  
  
• As a result, systems exist (MLS, lockboxes) to allow Realtors representing home buyers to be aware of and have access to all homes on the market.
  
  
• So -- while many contextual clues (for sale sign, brochures, other advertising) might suggest that you MUST call the Realtor, representing the homeowner, in fact, that is not true at all.  You can call any Realtor.
  
  
• To bring it all together --- I can show you any house that you see that is for sale.
  
  
• And, of course, any other Realtor can show you those houses, including my listings.

• Home values are declining in Harrisonburg and Rockingham County, or
  
  
• Less expensive homes are selling more often these days than more expensive homes.
  

• There aren't as many investors buying anymore. There were significantly more investor buyers in our market in 2005 as compared to this year. Low sales prices, low interest rates, high appreciation, and high loan-to-value opportunities, and high return on investments all contributed to many, many investor buyers closing on properties during our most active years (2004-2006).
  
  
• Increases in home values have priced many buyers out of the market. Back in 2005, when home values were significantly lower than they are today, many more buyers were qualified to purchase (as opposed to renting). Income levels have risen at a slower pace than housing costs over the past three years.
  
  
• Buyers have to plan to keep their home longer now. Admittedly, this is just a return to the conventional wisdom of the past --- don't buy unless you plan to stay in your home for 3+ (or 5+) years. However, during 2004, 2005, and 2006 it worked out fine for many buyers who bought, and needed to sell only a year later --- they walked away with impressive gains! That phenomenon, created by high appreciation rates, brought many people into the market to buy when otherwise they would have rented. Today, if someone isn't sure whether they'll be in the Harrisonburg area for more than a year or two, they often choose to rent, as they won't necessarily be able to buy, sell, and make money in a 1-2 year time frame.
  
  
• Loans aren't as easy to obtain any more. For several years, if you had a pulse, you could obtain a mortgage. Lenders didn't care whether you could verify your income or your assets --- a buyers word was good enough, and loans were being written for just about anyone who wanted to buy a home. Loan requirements have now become much more strict, which reduces the number of buyers in the market.

• Ryan Ankrom (email)
  www.IRCFireSprinkler.org
  Report that Ryan provided
  
  
• Ryan Smith (email)
  www.residentialfiresprinklers.com
  Report available on web site
  

• Fire sprinklers go to work immediately to reduce danger, as opposed to a smoke detector which relies upon human factors.
  
  
• Many people assume a sprinkler system would douse an entire home with water, when in fact only the sprinkler(s) in areas affected by fire would be activated in the event of a fire.
  
  
• Most structure fires in the U.S. take place in residential properties, yet residential properties don't require sprinkler systems.
  

• Is it true that installing a residential fire sprinkler would require different water (more expensive) water lines and water meters?
  
  
• Is it true that it is difficult (or impossible) to use a water softener in tandem with a residential fire sprinkler system without having to add a second incoming water line and water meter?
  

• Cost aside, would you want them in your home?
  
  
• If they were optional in a new home, would you be willing to pay to have them included?
  

1. Water Supply
   The typical domestic water supply does not provide adequate water flow rate for a residential fire sprinkler system. A larger incoming water line will have to be installed, and the water meter and pressure regulator will likely need to be modified as well.
   
   
2. Water Softeners
   Typical residential water softeners are designed for low flow rates, and the drop in water pressure as it passes through the water softener would cause most fire sprinkler systems not to function.
   
   
3. Malfunctioning Systems
   The fire sprinkler piping is always full of water in a "wet" system, which if the pipes freeze can cause significant damage. The alternatives to wet systems (multi-function, dry) have limitations relative to cost, approval by the IRC, and dependency on electricity.
   
   
4. Increased Cost To Home Buyers
   In 2007, a survey was conducted of residential builders to gauge the cost of adding a residential sprinkler system. The media cost of a fire sprinkler system with a public water source was between $3500 and $5000. On a private water source, the media cost was between $8000 and $9000.

• According to a national poll conducted by sprinkler advocates, 63 percent of those surveyed indicated that they were aware that residential sprinkler systems are available, but the number of homes built annually that are equipped with sprinklers continue to be less than 2 percent, many of which are required by local ordinance and not as an option elected by the home buyer.
  
  
• When asked in a 2007 survey of 800 likely voters by Public Opinion Strategies if fire sprinklers should be required in new homes, an overwhelming 89 percent of consumers said that smoke detectors already do an adequate job of protecting them in their homes and 28 percent would not want sprinklers at all, even if they were provided free of charge. Survey results show that only 15 percent of consumers in the sample were willing to pay $4,800 or more for a residential fire sprinkler system.