What is Shadow Inventory and How Does it Effect the Real Estate Market

The term "Shadow Inventory" may be new to you, but you will hear it more and more over the next several months and years.  This term refers to the homes that are not on the market yet, but are destined to be for sale next year or the year after.  These are homes that banks will be foreclosing and placing for sale in the future. 

This "Shadow Inventory" is also a prime reason that many buyers are holding off, not buying at this time. Since homes that are yet to be placed for sale are a major factor affecting our real estate woes, it seems prospective home buyers should be aware of all the facts... Lawrence Yun, chief economist at the National Association of Realtors says "To be sure, the housing market is faring better in several metro areas, particularly those with decent job growth such as parts of Illinois and Washington, D.C., though it could be "choppy at times."

You probably already know where I am going with this... By parts of Illinois, he means "THE CHICAGO AND SCHAUMBURG REAL ESTATE MARKET"!

For the last 24 months I have been hearing so much about the next wave of foreclosures coming on the market and there have been quite a few that have come up. Yes foreclosure homes are a great value but are the always worth the headache? There are many things you should know before purchasing a foreclosed home.

1.)   You are purchasing the home as is where is. Which means all liens and problems with the home can become your responsibility.

2.)   They may need some work. Very few foreclosed homes are in great shape. Typically you will need about 10% of the purchase price to do repairs on the home.

3.)    The home may not be in as a great shape when you close as when you first saw it. The home will remain vacant and who knows what can happen to a vacant home in 90 days.

4.)    You are dealing with a corporation not a regular seller. Everything about the deal is about money there is no emotion and the bank will walk if the deal is not perfect.

5.)    Financing may be an issue. Fha loans require a certain in-habitability standard. If they home is not inhabitable for example: mold or no furnace, odds are you cannot get financing.

So before you purchase a foreclosed Schaumburg home, make sure you know exactly what you are getting into. Feel free to search all foreclosed homes on my website at http://www.aaronwittenstein.com/mx/Foreclosure/index.cfm?

Rent Vs Buy

The age old questions should I rent or purchase a home. It really comes down to home comfortable you feel in to make this huge step in your life. Remember you don’t spend 100, 200, or 500 thousand dollars every day and you want to make sure that it feels right. 

All logic says that in this real estate market, especially with Schaumburg homes being at record lows, interest rates lower than ever, and massive amounts of inventory every it’s an easy yes. But, what you really need to do is sit back and evaluate your personal situation. Just because it is the right time to purchase a home does not mean it is the right time for you to purchase a home.

Start first by calculating how much rent is vs. how much your mortgage would be. It is amazing with homes prices and mortgage rates being so low and rental rates being so high it would shock you to see that some Schaumburg homes for sale may actually be cheaper to purchase than rent.  The rental market is almost 15 percent higher that it was the same time two years ago.  Also you need to look at the tax deductions you will get when you purchase a Schaumburg home. Did you know that you can write off all the interest on your loan? Talk to your account to see how much that can save you in taxes per year.  The main concern is do you want to make the commitment? Purchasing a home weather it’s a regular sale, short sale, or foreclosure is an investment that you need to be ready for. I strongly adivse against purchasing a Schaumburg home if you do not want to commit to staying put in an area, or if you are unsure about your own personal situation. 

As you see there a quite a few factors that come into play when making this type of decision. First you should consult a mortgage professional to get an idea of what your numbers will look like. Many people think they can’t get a loan. When in fact people can get loans that should be getting loans! If you  make a solid income, don’t have a ton of debt, can put down at least 3.5 percent, and have a credit score above 620 you may be better off than you think. If you have any questions about purchasing a Schaumburg home feel free to call me at 847-477-9474 or go to my website www.AaronWittenstein.com

What a Foreclosure Can Do For You

Ok so lets face it, if you are looking to purchase a home buying a foreclosure can help you save money.  Purchasing a foreclosed home can get you more home for each dollar that you spend.  When the market fluctuates as much as it has in the past 5 years no one wants to pay for an over priced house.  In the past people have destroyed their home before the bank took it over devaluing the property.  This is no longer a common occurrence as it once was because banks are paying people to leave the property as is.  This leaves an opportunity for home buyers.

Foreclosed homes are coming to the market in better than ever condition.  You may even be able to find an updated home that is in good condition under market value.  It is always advised to search the MLS for foreclosures before looking at the regular listings.  Foreclosed homes sell faster because they are under market value.  It is becoming harder and harder to flip property to make money, so investors are flocking to the foreclosure listings.  Act fast when purchasing a foreclosure because offers roll in. 

Get the foreclosure home inspected.  It is always advised to get a home inspected before purchasing it and this is especially true when putting in an offer on a foreclosed listing.  You want to make sure that any problem is disclosed before making your purchase.  Banks rarely inspect the home thoroughly because they have a large amount of foreclosures and do not want to spend any more money than they have already lost. 

SEARCH FORECLOSURE LISTINGS NOW

Always remember that the word "foreclosure" always perks buyers up because they think that they are getting a deal.  If you choose to purchase a foreclosed home just to fix it up and resell it be sure that you have enough cash to allow it to sit on the market for a few months when re-listing it.  The home will no longer be classified as a foreclosure home for sale and will be listed as a regular listing.  If priced right it will sell fast however there are more homes for sale currently than buyers.  Make sure that your home is priced a little less than others so that it sells faster.