With prices for real estate in Potomac, Bethesda, and Rockville going down, most smart buyers and investors are bargain hunting—albeit cautiously. Buyers are finding great real estate values in the entire Washington DC region, including urban homes in Rockville, estate properties in Maryland, and beautiful Northern Virginia homes.
Why is this year even better than last year? Sellers are tired of waiting out the market. They are slashing prices aggressively. More people are in financial trouble because of risky mortgages coming due. Also, more properties in the process of foreclosure are ripe with the foreclosure moratoria set by banks and state governments having expired. Another factor is that banks are finally deciding to allow larger numbers of properties to go to auction.
As unemployment rates increase, we can expect more of the above to create even more inventory.
According to Standard & Poor’s October 2008 Case-Shiller home price index, home prices fell by a record 18 percent between 2007 and 2008 in 20 US cities. We know that interest rates have also gone down. So why, when we see great deals, do we need to be cautious?
Some of the least-expensive homes are on sale by banks that foreclosed on the properties. Banks now want to sell what they refer to as “shadow inventory.” However, they sell these properties “as is.” In the news, we have heard that some homes have retaliatory owners who have trashed their homes as they moved out. Other properties have been vacant for extended periods of time.
Another common trap is the overpriced property purposefully offered at a discount. The price per square foot can be deceptive. So, how can buyers find out the real value of properties? A real estate agent can offer valuable assistance, providing information such as the depreciation of the property.
In this market, buyers need to know what they are getting into when buying foreclosed properties. Unless a buyer has experience with contracting, remodeling, and homer repairs, they’d best shy away from run-down foreclosed homes. The best way to get involved with these types of “bargains” is under the guidance of a reputable real estate agent.
Sometimes it costs less in the long run to buy a home from an investor who purchased the “as is” property from an auction. The investor may have fixed up the property and raised the price a bit. The property may still be a better deal and will definitely be quicker than purchasing directly from a bank or from an auction.
Feel free to contact Eric Stewart of Llewellyn Realtors at (301) 424-0900 for more information about real estate in the metropolitan areas.
