I was just talking to a friend of mine who is a real estate agent in Indiana and was reminded of something that I tell my buyers looking for good deals on homes. For the most part, the United States real estate market is hot and Indianapolis is no different. If homes are priced correctly, they should be selling rather quickly.
Smart sellers will sometimes even price their house just under market value and watch the offers roll in. Many buyers are getting caught up in multiple offer situations and are forced to compete with other buyers for the same house. With limited housing inventory, in our area, it is not uncommon to receive up to 10 offers or more on one house if the house is priced right. So, what should you do if you have either lost a few homes (you were beat out by a higher offer) or you just don’t want to be caught up in a bidding war?
You start looking for ugly houses. That’s right, the uglier the better. Why? Because there is magic and money in buying an ugly house. Most buyers want the homes they are looking at to tell a story. The story includes one that requires very little work. True, the home that is bright, shiny and has little work needed will get the seller more money. And buyers pay more to someone who has already created that vision.
Convenience costs money, doesn’t it? You really don’t have to go far to find that rule to be true. For instance, go to the deli counter and take a look at prepared salads, premade foods, or just dine at a restaurant. Items prepared for you cost you more money than you preparing it yourself. The same holds true for home buying. There is a hassle factor to most prices.
If you don’t mind applying a little vision to the home that you are looking at then buying an ugly house may be exactly what you need to do. There are different levels of ugly that you may want to consider when buying a house. Cosmetic ugly is usually the least expensive to overcome and requires less time. For example, a home with flowered wallpaper and green shag carpet is fairly easy to fix. Heck, even a pink bathtub and pink tiles can be professionally painted and make a bathroom come back to life. The benefit to cosmetic ugly is you get to put your personal stamp on your new home with little money invested. Plus, you more than likely increased the value of your home in the process. And, don’t forget you probably didn’t have to outbid other buyers as well.
Other levels of ugly homes involve more structural issues, like kitchens, bathrooms or even a roof. If you are a brand new buyer, I recommended sticking to cosmetic ugly. However, if you have owned at least one or two homes, then take a look at even uglier houses for sale. A home that needs a new roof is less likely to qualify for a traditional mortgage. So, it limits the buyer pool and hopefully saves you money on the purchase.
But, did you know mortgage companies will loan you money for your ugly house? Yes, there are mortgage products out there that allow the ugly factor to be considered into the amount a lender provides. It doesn’t matter if the house is just ugly for cosmetic reasons or needs major work. There are loan programs for both. You just have to ask your lender about buying ugly. What is great about that is the fact you can buy ugly and not have to use your cash to pretty it up.
So, if you are thinking about buying a house in the near future, remember, there is money in ugly!!
Photos courtesy of Sandy Williams