Va­cant homes can be a deal for buy­ers

Baltimore Sun Sunday - - FRONT PAGE -

For sev­eral years, home­buy­ers in pop­u­lar neigh­bor­hoods have been plagued with the prob­lem of tight in­ven­to­ries. Es­pe­cially in starter-home com­mu­ni­ties, there have been more buy­ers than sell­ers. The re­sult: mul­ti­ple-bid drama.

Fi­nally, that sit­u­a­tion is grad­u­ally eas­ing, says Daryl Fair­weather, chief econ­o­mist of Redfin, a na­tional real es­tate bro­ker­age.

At long last, the in­ven­tory crunch is start­ing to sub­side. In cov­eted ar­eas, prices are still as­cend­ing, but at a slower rate.

These mar­ket changes are be­gin­ning to give buy­ers a breather, help­ing off­set the rise in mort­gage rates and mak­ing the home search process feel less fran­tic.

Ex­pe­ri­enced real es­tate pros say sell­ers are slower than buy­ers to catch on to mar­ket changes. Given hu­man na­ture, some own­ers are still try­ing to “test the mar­ket” with high list prices, which can cause a house to get stig­ma­tized and then to lan­guish un­sold for an ex­tended pe­riod.

This can cre­ate buy­ing op­por­tu­ni­ties for at­ten­tive pur­chasers, says Dor­cas Helfant, co-owner of sev­eral re­alty firms. These op­por­tu­ni­ties oc­cur when the own­ers of an over­priced home are com­pelled to move away with the place still un­sold, leav­ing it va­cant.

Helfant, a past pres­i­dent of the Na­tional As­so­ci­a­tion of Real­tors, says that after a prop­erty has gone va­cant, the own­ers typ­i­cally be­come much more mo­ti­vated to ne­go­ti­ate be­cause they face sub­stan­tial car­ry­ing costs.

With cur­rent mar­ket con­di­tions grad­u­ally eas­ing for buy­ers, Helfant says it’s pos­si­ble to get a good deal on a va­cant prop­erty. But, as al­ways, she urges buy­ers to ex­er­cise cau­tion, es­pe­cially if the prop­erty be­ing con­sid­ered is va­cant due to fore­clo­sure.

Here are a few point­ers for buy­ers: moved away. It’s still harder if the empty prop­erty has gone back to the bank through fore­clo­sure.

“The bank won’t tell you any­thing. And, frankly, the folks at the bank — or the real es­tate agent they’ve hired — prob­a­bly won’t know much about the peo­ple who lived there,” says Mer­rill Ot­twein, a for­mer pres­i­dent of the Na­tional As­so­ci­a­tion of Ex­clu­sive Buyer Agents

To get the scoop on a va­cant prop­erty that in­ter­ests you, your best sources are of­ten neigh­bors.

“Those liv­ing nearby prob­a­bly know some­thing about the skele­tons in the closet,” Ot­twein says.

Per­haps the va­cant prop­erty you like has gone un­sold for so long that you’re ner­vous about hid­den de­fects. In fact, you don’t even want to make an of­fer un­til you know more. In such cases, — Mer­rill Ot­twein, ex-pres­i­dent of the Na­tional As­so­ci­a­tion of Ex­clu­sive Buyer Agents Ot­twein ad­vises hir­ing a home in­spec­tor to take a pre­lim­i­nary look.

“If you de­cide to go through with the pur­chase, a pre-in­spec­tion will let you set your bid based on find­ings from the in­spec­tion. Then, if you de­cide to back out of the deal, you can walk away with­out com­pli­ca­tions,” Ot­twein says.

Cost-con­scious banks that own fore­closed prop­erty some­times shut off util­ity ser­vice to the va­cant homes they own.

But a lack of util­ity ser­vice poses a chal­lenge to home in­spec­tors.

“In fact, it’s use­less to do an in­spec­tion when the util­i­ties are off. You can’t tell if the cool­ing, heat­ing and plumb­ing are func­tion­ing cor­rectly,” Helfant says.

She strongly rec­om­mends you al­ways have a home in­spec­tion on a va­cant prop­erty — if not be­fore a bid is sub­mit­ted, then after. And even if you have to pay to get util­ity ser­vice re­stored, she says it’s worth the ex­pense.

“It shouldn’t be too costly to get the util­i­ties re­stored for just a five-day pe­riod or so,” she says.

“Be­fore you write your of­fer, you and your agent should take a care­ful look at the re­cent sales his­tory in your neigh­bor­hood. As al­ways, you have to be care­ful to avoid over­pay­ing,” Ot­twein says.

Ide­ally, you’ll want to ex­am­ine at least three sim­i­lar prop­er­ties that have sold in the im­me­di­ate area in the past three to six months, ad­just­ing for dif­fer­ences such as a larger garage or a sec­ond fire­place.

Al­though you’ll want to take a home’s con­di­tion into ac­count when judg­ing its mar­ket value, Ot­twein ad­vises against seek­ing out-of-pro­por­tion dis­counts to com­pen­sate for su­per­fi­cial short­com­ings.

Also, don’t get greedy and de­mand too many small con­ces­sions.

“The mar­ket might be slightly bet­ter for buy­ers now. But that doesn’t mean you can take the own­ers to the clean­ers. For­get about small is­sues like the neon yel­low kitchen walls you want re­painted or re­plac­ing that cheap light fix­ture in the dining room. Fo­cus on the big pic­ture,” he says.

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