It’s no surprise that the title of this article caught your attention; after all, “$6000” houses aren’t very common. Odds are, you paid far more than that for your car. Any tradesman has more than that invested in his tools. So, what’s the story?
I can’t claim any special expertise; this is the very first house I’ve bought. Rather, it’s a sign of these extraordinary times – and shows the sunny side of the ‘market collapse.’ One man’s disaster is an opportunity for another.
The first step in buying anything is to determine what you want. The second is to have a realistic picture of your strengths and your weaknesses. My strengths included:
– Some construction experience;
– I was in no hurry;
– A better than average understanding of how homes were built, and what was involved in remodeling them;
– It’s just me and a cat! That is, I don’t need a mansion, and I could care less about the schools or the neighborhood;
– I had the money in the bank; and,
– My steady job provides steady income.
On the ‘downside,’ my weaknesses are:
– I don’t have much extra cash (so I’ll need a loan);
– I don’t plan on living in the place for decades;
– I lack most household things like furniture and lawn equipment; and,
– My steady job defines my free time, so there’s no one there to meet contractors or receive shipments during the day.
There are a variety of web sites that can point you toward cheap homes. www.zillow.com and www.ezmls.com are two. Probably the best is www.hudhomestore.com. All are FREE sites (though Zillow will often refer you to a ‘pay’ site), Find a house that looks interesting, give it a quick walk-around, then call any realtor. HUD seems to be where the homes that defaulted on their FHA-guaranteed mortgages go.
Indeed, you probably want to call a different realtor for each house. Not necessarily the ‘listing agent;’ it’s just that each house lets you get a feel for each one. Some will be more useful than others. Don’t rely upon the realtor for anything- though you can rely upon them cashing the commission check!
Have your money ready. If the place lists for thess than (perhaps) $25,000, any financing will come from a regular bank, and not a ‘mortgage’ operation.
The realtor will undoubtably want to show you other properties as well- and they’re sure to have higher prices. It costs nothing to look. Personally, I was amazed at some of the stuff on the m arket – and the prices they were asking! I looked at homes listing for three times as much -up to $20,000- that were in far worse shape than the one I bought. Several had serious structural issues.
Keep in mind YOUR requirements. I saw several homes that were too large for me, or required more work than I was able to handle. Others were farther from work than I liked.
Apart from the construction details, pay attention to the ‘paperwork.’ At least two I looked at had serious title issues, and a third had access / easement concerns. One had the electrical panel on the outside -which is fine- but it was accessible only through a neighbors’ fenced yard.
At some point you’ll want to inspect the property in some detail. With a HUD home, you already have a ‘property condition report’ that gives you a pretty good idea of what you have. At least draw a floor plan, accurate to a foot in each room, and test for lead paint. If you’re planning on a HUD loan to remodel the place, removing the lead paint is their top priority- and it appears that work is something you need to hire out to meet their requirements.
See a house you like? Make an offer. Do NOT expect any guidance from the realtor. The realtor will say any number you toss out is a ‘reasonable’ offer. Finally, be patient. My house had to reduce its’ listing price twice before the owner was willing to sell. (To be fair, three houses went to others who were either quicker or richer.)
The final act in the drama was the ‘closing.’ The absence of a lender at the proceedings was a bit confusing to the others. There were a few details to address before I handed over the check. Remember: that check is your only leverage! Once you hand it over, folks vanish like wisps of smoke. The listing realtor even raced over to the house to remove his padlocks and doorknobs; he refused to simply hand me the keys.
Naturally, I spoiled his fun – he intended to leave me with a house that could not be secured – by pulling MY locks out of the car, and putting them on as fast as he took his off. I was now a homeowner.
My next installment will discuss taking posession of the property, and preparations for the remodelling.
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Have you got any pictures, John? We'd love to see them.