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Property values are dropping. Mortgage rates are at an all-time low.
For homebuyers in Delta County, there may never be a better time to purchase a house. For folks searching for better returns on their investment than the banks or stock market are offering, real estate can be a great option.
There's just one catch — you've got to have really good credit to buy even a fixer-upper. If your credit isn't top notch, you're not going to get approved.
"One of the big myths out there is that there's no money and lenders are not lending," said Janice Jones, broker/owner of RE/MAX Mountain West in Cedaredge. "That's not true. It's harder to get a loan, but there are lenders out there making loans all the time."
There's also an amazing selection of property — even houses priced below $100,000.
A view of the Multiple Listing Service for Delta County shows 87 homes listed for $100,000 or less. Jones breaks the listings down — 50 stick built, 35 manufactured homes, and two modular homes.
For the most part, these are smaller, older homes, and many will need work. But Jones points to an older home she has listed in Cedaredge. The solidly built, three-bedroom house is priced at $95,000. Just a few years ago, the same house would have brought $120,000 to $130,000. But since prices peaked in 2007, home values have been dropping throughout the county.
"There are bargains out there for people," she said, and not all are bank-owned. The house in Cedaredge, for example, is "pretty dated" but has 1,373 square feet and a detached garage. With some upgrades it would be a great investment.
"We have so much inventory that sellers have got to be really competitive," Jones said. "Even though the market has picked up considerably in the last year, if folks are thinking they're going to sell their houses quickly, they'd better have the nicest house in their price range or be priced below comparable houses."
Lenders like Wells Fargo have come up with financing options that are particularly attractive for fixer-uppers like the small home in Cedaredge, or bank-owned properties that need a lot of work. Renovation financing will cover the purchase of the property, plus the cost of repairs or upgrades, with one loan. The only catch is that improvements must be made by approved contractors, not do-it-yourselfers.
These options are available for owner-occupied homes or investments. Jones said rent will generally cover the cost of the loan payment, because while home prices have dropped, rent has not — probably because people who have lost their homes have no choice but to rent.
Before searching for bargains owned by the bank, Jones said it's important for investors to first be pre-qualified. Many — but not all — repossessed homes will require work, because even if the owners were conscientious,critical maintenance (such as winterizing) may have not been performed during the foreclosure process.
After checking the local real estate market, banks will generally price foreclosed homes at the going rate. If they don't have an offer in a month or six weeks, Jones said they'll drop the price and keep dropping the price until the home sells or ends up on the auction block. Online auctions can be a bit deceiving, Jones cautions, because the website may state that the minimum bid is $10,000, but lenders are not going to accept a bid of $10,000 even if it's the only one they've received. They may be willing to take a loss, but they're not willing to drop the price that low.
Still, you hear about selling prices that are 50, 60 or even 70 percent lower than the listing price. Jones says deep discounts like that generally indicate the property was priced way too high to begin with.
For those who are holding onto their money, thinking prices have yet to bottom out, Jones offers these words of experience: "By the time prices have bottomed out, interest rates will probably have gone up."
In today's market, borrowers can find home loans for under 4 percent. And through Rural Development, 100 percent loans are available for some owner-occupied properties, particularly those that don't need any work.
Real estate in Delta County has always been a great value, and homebuyers still recognize that building equity in their own property is a solid investment choice. To avoid getting "upside down" on a mortgage, a pitfall for homebuyers in the last three to five years, Jones recommends that buyers save up enough money to make a down payment and pay the closing costs on their new home. "And buy a house you can actually afford," she said. "Young couples may not be able to buy their dream house first off."
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