This is text from an email sent to client looking to buy a house in NY.

This is buyer’s market though market is heating up from my observation in past month.  When there are more than one serious buyer making offers on a house, the successful buyer pays more for the house.  The more serious buyers there are, the higher the price paid.  Its possible that recent uptick in buying activity is due to seasonal considerations.  People like buying houses in time to close in August so kids go to new schools by September.  I suspect that this is more the case rather than a bottom on housing prices on Long Island.   I note, however, that California has had 3 months of declining inventories and ‘as California goes, so does the nation.’  Declining inventories is better for the market (not to state the obvious) so possibly LI can see bottom into 2010 (let us all hope) which could mean that fall/winter 09 could still be the best time to buy something.  However, we don’t have solid forecast on interest rates and they’ve moved up very fast in past month.  Figure a point in last month and on a $300K mortgage, that’s $3K a year/ $250/month.  Increasing interest rates will hurt residential real estate which is foundation of consumer spending which represents 70% US economy.  The govt.’s goal is to keep rates down to prevent this but protecting the dollar / avoiding inflation by necessity could undermine these efforts.  Bad news for everyone to extent this becomes real.

Market timing is one consideration for purchasing residential retail.   Another way that someone can secure a good deal in any market is buying a house that is distressed.   While there are a large amounts of foreclosures on the market, it isn’t necessary to ‘search the foreclosures’ to take advantage of this or to ‘buy on court house steps.’  That can work but most people don’t have the time and interest to go this direction.  Please bear in mind that bank owned properties tend to enter the market through real estate agents anyway as banks naturally want as high a price possible.  One way to spot distressed property is to pay attention to vacant houses.    Buyers have a very tough time visualizing a ‘home’ when looking at an empty house.  This by itself means ‘fewer offers’ which means better price for successful buyer.   Houses with ‘curb appeal’ get more offers. When someone pulls up to house, they feel ‘I could live there’ and are open to ‘making it work’ as they look at the house.  If there is a nice lay out and if someone has an apple pie in the oven and ensuing great smells, that house is going to get more offers.   On the other hand, if that house as an unkempt lawn and a nasty yard and otherwise lacks ‘curb appeal’, its not getting a lot of offers.  If it needs paint and other updating, there is real potential to get a good deal.  You could wind up being only serious offer in a year with a very motivated seller.

What you want to avoid with a house that ‘needs work’ is the proverbial ‘money pit.’   Cosmetic repair is always fine  - you are looking for solid structure and to get a realistic budget of what it will cost to get up to speed.  I only look at this from a dollar and cents perspective and look to get a 3-5 fold return or more.  For instance, if client can pick up house for 300K and put in 20K in repair, I am looking for house to be worth $360-400K at end of spending the 20K.  That requires a little bit of speaking with contractors and getting a ‘feel’ for it and possibly living in a house that feels like a construction project for a few months but many people are willing to make sacrifice now to enjoy more financial security later.

Please call/email any time.

Best, Chris

Christopher J. Litrel

Attorney at Law

827 Wantagh Avenue, Wantagh, NY 11793

(516) 342-5880 Wantagh Office
(631) 368-4747 Home Office  (516) 429-5937 mobile

(877) 429-5749 toll free          (877) 429-8509 facsimile

www.WealthCareAttorneys.com

Real Estate, Business, Estate Planning & Asset Protection

Client Articles @   http://blog.wealthhealthlaw.com