First time home buyers vs. investor builders

As spring unfolds in Richardson, Texas, the real estate investors have fanned out across our many neighborhoods. While walking through the Reservation neighborhood this weekend, I saw no less than five builder/investor signs in front of houses on just one street! Most folks I talk to about this happening are polarized either for it, or against it.

If you are for it, you likely already live in a fully renovated home, or a newly built home. If you are against it, you likely live in a partially renovated, or not at all renovated home, and are seeing your neighborhood go from quaint and affordable to overly modern and expensive.

While there are still plenty of neighborhoods that have not been touched by this explosion of tear-downs, the community as a whole is definitely feeling the change.

First time home buyers and their families are the hardest hit.

The available starter houses are becoming scarce and the ones that are available the buyers are competing with the investors who often come to the table with cash causing the lender reliant buyers to be left behind.

What can a first time home buyer do to improve their chances of purchasing a fixer upper?

First, have a standing relationship with a bank so you can easily obtain a "pre-approval" letter for the house you are interested in. Next, have your financing complete before you go looking. While the actual location of the house is needed to finalize your financing, there is plenty of paperwork that can be completed beforehand. While these things may not always help you out against the investment folks, as noted above, not everyone is in a panic to sell and may see value in their home being sold to a young family that will improve the home instead of it being torn down.

Real estate inspection services.

One final thing to consider on this topic; real estate inspection services. Just as it is commonplace in the house buying process to utilize a real estate agent, it is also common place to hire a company to inspect the house for issues prior to finalizing a purchase contract. These service companies will go through the home and note any visually accessible defects along with limited mechanical issues like HVAC temp output, plugs and switches that are not working, insufficient insulation and plumbing fixture function to name some of the bigger items. They will deliver a full report of what they find. Sometimes the items on the list are mostly cosmetic in nature and the buyer will feel confident in moving forward to contract.

What do you do when the list has more serious items, that as the buyer, you have no idea the cost to repair?

If you're like most buyers, you walk away from the contract and start looking for another house. However, if you have a standing relationship with a builder, you may not have to walk away! All FTC clients know they can call us to view potential purchase houses for a much deeper financial commitment review of the house. We work with multiple real estate agents in the same way. Turn over the inspection report to your builder and allow them to walk the house and you may find it is the perfect house for you to purchase.