Before buying a home, don't forget to check the pipes! There may be more to a home than meets the eye.

Home buyers must remember that this purchase is a huge decision. Avoid getting a lemon by being cautious and deliberate in your search, inspection and selection of every property investment.

In this and future articles, we’ll help guide you through the nooks and crannies of being a savvy home buyer, so you can avoid a few major headaches and save money.

The biggest home buyer hazards lie just below the surface. Sellers might avoid making major home repairs by masking them from potential buyers with cosmetic or temporary fixes.  Major systems are big budget busters for amateur property flippers. A roof, AC  and pool repair can cost more than the entire rehab budget for shark investors. Whether you are looking for a move-in ready home or are looking to renovate, nightmare home money pits can ruin more than your day.  Inspect properties carefully while viewing homes, and always hire a professional inspector before closing to avoid these:

• Lemon #1 Check the Air Conditioning. Systems can be charged constantly rather than replaced. Cores from stolen system can also be installed. The brand and installation dates should match both on the inside and outside units. When in doubt, pay an independent air conditioning professional to take a look or ask for a home warranty from the seller.
• Lemon #2 Up on the Roof. It is possible to make a 10-year old roof look almost brand new with some mold cleaner and a power washer. Some investors are only concerned about selling the home, and couldn’t care less about how long their “renovation” lasts.
• Lemon #3 Pool Decks and Surfaces. Pools can be great Florida fun or an expensive nightmare. The Carney Properties and Investment Group often hears of major leaks being patched over rather than having the whole pool reshot. Hidden leaks can be masked by simply refilling the pool before people see it. Also, beware of old river rock, and look for any cracking around the slab on the outside of the pool. A crack on the pool deck can easily progress and become a crack in the pool. Erosion around the slab is another potential issue that should be resolved.
• Lemon #4 Undisclosed Chinese Drywall remediation. It’s very expensive to remediate Chinese drywall. Carney doesn’t invest in it at all because the EPA doesn’t have final determinations on what a full “rehab” entails unless everything is replaced. Chinese Drywall damages almost everything. Every material that it doesn’t destroy becomes a sponge to emit the toxic fumes into other systems. The EPA calls for complete electrical and plumbing replacement as well as all major systems containing copper. Be warned, there are investors out there that replace the defective drywall, and instead of rewiring the home entirely, they cut and replace only the first six inches of wire on each outlet. The same pitfalls apply to the plumbing as well. One of our recent buyers shared his experience with undisclosed Chinese drywall remediation in a home he had inspected prior to coming to us. His home inspector pulled a wire all the way out to check it and discovered the previous damage.

Have you had a bad experience? What happened and how did you handle it? You’re welcome to share your thoughts in the comments below.

One of the best things about owning your own home rather than renting, is that you earn equity with every payment. Renting means someone else gets all your money.

When unemployment is high and neighbors are falling prey to foreclosure, buying a home may be the last thing on a renter’s mind. However, the best reason to buy a home doesn’t depend on the economy, or even the market where you want to live.

Calculate your renting risk

Some may go as far as saying renting seems better than buying when unemployment is still up and the value of the dollar is down. Renting can look good when the housing market is so unpredictable. However, there is no security in renting. Consider that a landlord may find themselves in foreclosure, putting a renter in a precarious position. When you don’t own the home yourself, you may have no knowledge that the landlord has stopped paying their mortgage – even if you are reliably paying your rent each month. If a renter is lucky, their landlord may disclose that they’ve stopped paying their mortgage, but most don’t.

Typically, when a landlord goes into foreclosure, their renters will find themselves packing and moving sooner rather than later. Once the bank sells it, the new owner may or may not have any interest in continuing to rent the property.

If an owner has an adjustable rate mortgage, the renter will not be able to predict or control what happens to their landlord’s situation. Their payments could increase substantially and unexpectedly. Even if  the rent is low now, it is not guaranteed to stay that way.  Higher rent prices might also come as a result of increased foreclosures on the market. As more owners become renters, there will be far less inventory left to rent, pushing rent prices higher.

Determining home value and other economic factors

While fear is a major reason many people are delaying their decision to buy a home. Those who are in the position to buy a home, either with cash or excellent credit, will find a wide variety of choices in this buyers’ market.  News, Realtors and investors are talking about why now is the time to buy. Supply is high due to unprecedented foreclosures, particularly in the Southwest Florida market. Demand may seem low because of the high supply in relation to number of buyers, but actually the number of sales is also at the a very high level. Buyers are taking advantage of the low prices, well below replacement costs.  Many home buyers and investors have the cash in hand to take advantage of these prices.

A home is valued at what a buyer is willing to pay and what the seller is willing to sell for. If you finance the bank has
their say on the value when they determine from a mortgage standpoint, how much they are willing to lend. If a renter/potential buyer is personally solid in this economy with a steady income, then now is an excellent time to buy.  Not so much because the market value of homes is so much more affordable, but rather because the value of a home owned versus the uncertainty of a rented one is greater. With today’s interest rates, paying a mortgage is a much more controlled and predictable way to go than to take chances with possible rent changes in the near future.

The Florida market outlook

It’s no secret that during times like these, with home prices and interest rates so low, many people agree now is the time to buy. People who are purchasing today will be making a good investment by buying at prices that are well below how much they would be worth in a few short years. Qualified buyers can also get unprecedented low interest rates on a mortgage. This will continue until all the foreclosures are filtered through the system of the courts, auctions and REO sales. As this inventory dries up, and assuming that people will continue dreaming of  owning a Florida home, prices will start to rise. We don’t expect the same growth rate as the crazy period from 2002-2006, but it will stabilize and then creep up over time.  Reports have long shown that baby boomers are moving to Florida (shopping for homes long before they retire), and there’s no indication of that changing in the next 10-15 years. That will drive a lot of growth, prices and home sales. While renting at this time may be a necessary evil  for the timid or unqualified, renting when you could buy is like throwing away over $10,000 a year without building any equity.

The bottom line

Trying to time the market perfectly or predict what will happen next is next to impossible. For that reason and more, buying a home should traditionally not be looked at as a short term investment. Understandably, home-buyers are waiting for the “right” time. But just because the market price is half what it was last year, does not mean it is the right time. Consider personal factors (such as how long you will be in and area and financial security) and options, and remember that whether deciding to buy or rent a home, there’s always a risk that something won’t go according to plan.

Carney Properties and Investment Group buys select short sale properties from families in the Southwest Florida area. If you are a real estate agent trying to help a client through this time, give us a call, and we may be able to help out!

John Carney multitasks, looking for homes to buy.

One might think seeking business opportunities in such dire times, particularly in such hard-hit areas like the Florida housing market, would seem wrong somehow. Consider this, though. Lives and economies do not turn around by themselves. It is through the adaptability, foresight and sometimes sheer determination that we manage to pull ourselves back up when we’ve hit rock bottom. Opportunities exist because leaders among us are looking for ways to plow through, and they make sound decisions that help rebuild families and businesses. Carney’s business is driven to improve the community around him, and he’s using his expertise to to this in the best way he knows how.

A CarneyHome site often starts as a lump of coal and becomes a diamond as John's team works its magic..

Carney Properties buys, renovates and sells homes, predominately in the southwest Florida market, that have been abandoned, foreclosed or otherwise victimized by the economic circumstances. People have lost their homes and neighborhoods are suffering as well. Carney buys them with cash and puts his heart and soul into making them livable and finance-worthy again. As one commenter, who calls him or herself “happybutterfly1,” points out, “These are homes that would likely sit empty and continue to lower the value of the homes around them. Most of these foreclosed homes cannot be purchased by the average Joe since there isn’t a bank in the world that would provide financing in the condition that the former owners have left them in. He is simply purchasing the homes, fixing them up and selling them at an affordable price to families that will be able to receive financing.”

You can read the entire story by clicking on this link: bit.ly/bTrc1m

Also, if you liked this post, please consider subscribing to our blog through the orange button above and commenting below.

Foreclosure strippers gutted all kitchen appliances before leaving the home.

This picture reflects the stress, frustration and desperation that the process of losing a home can cause people. It can go on for months and months, and in the past years, people in such circumstances might feel immense helplessness, shame and anger over the impending loss of their home – especially when they’ve spent time and money making it uniquely theirs. When financial troubles start, the inner turmoil people face can become larger than the growing debt itself. However, it doesn’t necessarily have to come to this. Homeowners facing foreclosure may have other options, including short sale, when they face such a situation. They just need to gain a clear understanding of what is out there and work with a professional with the sensitivity, understanding and experience to help them through.

Carney Properties and Investment Group purchases properties through Short Sales, Auctions, Banks and private owners. REALTOR® Marzia Rivera, with Carney Realty & Associates, in association with Carney Properties, advises that the moment a person sees trouble ahead for their mortgage, they should contact a REALTOR® who specializes in Short Sale and other foreclosure alternatives. ”Every person’s circumstance has unique factors that need to be considered,” Rivera said. “It may be in the better interest for owners as well as mortgage lenders to consider loan modifications, short sales or even deed in lieu agreements.”

Coming soon, a quick video where she explains and shares a couple brief tips for people considering a short sale to avoid foreclosure.

When people are struggling to keep up with their mortgage payments, it can be one of the most stressful times of their lives. This is the time to come together to discuss your options to make the right decision for your family. There are many, many articles online that write all about the options, but this is one example of a time when it really makes a difference to talk with a real person as opposed to relying on online resources. Have someone at your side who is abundantly knowledgeable about both your individual circumstance and alternative real estate transactions. No one should go through it unrepresented or let themselves get so overwhelmed that they shut down and walk away. Too many people are unaware that a short sale could be a viable option for them, and they misunderstand the tremendous negative impact that foreclosure has on a credit score. Don’t move out until you have all the facts to make the right decisions.

You can learn more about short sale options at www.swFloridaShortSale.com.

We don’t trade in Chinese Drywall homes, but that’s not the case for most of the industry. No one in our market is replacing all of the effected systems in their remediation. Now more than ever, it’s important to know who you are buying your home from and what kind of character they employ in their business. Saving a few thousand dollars on a purchase is not worth the long term risks of buying discount renovations.

The full guidelines can be found here.

Check out the charts below to see the progress and the the outcome.

Inspections

Inspections are as good as the inspector. Research is important to vet out a reputable company, buyers should look for an inspector who has been in the business for a number of years. Inspections are not about cosmetic issues; ensuring the property is structurally sound is most important. Buyers should consider when the home was built and recent renovations when considering the value of the home.  If an inspection reveals foundation issues, Chinese drywall or mold, repairs will be desirable or even necessary, but there will be an additional cost involved. Buyers need not be completely turned off by a home in need of repairs, but being aware of them in advance can help them negotiate more informed purchase prices. The price of a property should be commensurate with its condition, and buyers bidding on a home in need of repair will need to consider both their financial and time budgets for renovating the property. Most sellers in today’s market are selling their properties “as is” which means that they are not willing to do any repairs, however, this is still negotiable.

Chinese Drywall

Chinese drywall is a large concern to buyers, even if they don’t know much about it. Businesses offering potential solutions are adding to the noise. Chinese imported drywall materials have been blamed for emitting corrosive gas that turns copper black and can damage wiring and appliances. Some people have reported health problems as well. Web sites, wiki pages, and news stories cropped up continuously throughout 2009 about the issue. Homes built between approximately 2001 and 2007 are considered most likely at risk.  Though corroded copper does not automatically indicate Chinese drywall, it is considered a symptom of the faulty material’s presence.  To safeguard themselves, buyers should get an inspection before purchasing any home where they are concerned Chinese drywall exists. The U.S. Consumer Product Safety Commission (CPSC) has advised people living in homes with Chinese drywall that there may be health risks, linking Chinese drywall to higher-than-normal levels of hydrogen sulfide gas present in the homes. Consumers have complained of symptoms including irritated eyes, skin and respiratory systems; asthma attacks; and headaches. Although the full ramifications of Chinese Drywall have not been determined, for most people, it is not worth the chance to buy a house with it.

At Carney Properties, it is a strict policy to not purchase any homes with Chinese drywall. Since we don’t trust anyone to remediate this to the point that we would move our families into a home previously contaminated with this product we will not sell it to our customers. It is our goal to prevent our customers from having to deal with this issue by knowing exactly who is selling to them. Remember, just because some of the panels in a home do not have Chinese drywall does not mean the home is 100 percent free of this issue. The second-hand home buyer market is full of unscrupulous investors that value a quick dollar above the safety and quality of a home. Many may even remodel and flip a home without disclosing its previous condition. Bank-owned properties, or REOs, have disclosures that indemnify everyone from everything as do, and “as is” contracts are the norm for the southwest Florida market. Ultimately, this is a buyer-beware issue, where the more a buyer knows, the better.  Knowing the seller and throughly inspecting any property before purchase is a great place to start.

Check back often or follow our RSS feed to get the latest from the team at Carney Realty as well as direct market commentary from John Carney himself.