Wednesday, June 24, 2009

Today's foreclosures, not for all first time buyers.

We are, no question, in a real estate market that unless you are over 80 years old, you have never experienced. Sixteen percent of our local listings make up eighty percent of our units sold. That 16% represent bank involved properties, that being foreclosures and short sales. When we look at real estate, we need to look with a completely different lens. If you are a buyer, you are in the zone. Particularly if you have the time and know how to rescue or fix up what can be a terrific purchase. Some homes are selling at 70-80% discount of their purchase price just 4 years ago! Often these homes are not the condition that they were 4 years ago, but with some know how, gumption, and ambition, these can be great buys. The problem I see with many buyers is a mentality of a $20,000 home that needs no work. Forget it. It's not there. Or a $50,000 home that has acreage, remodeled kitchen with stainless appliances and new baths and pole barn. Forget about it. When I show young men foreclosure homes that have terrific potential and incredible value, I am surprised that so few of them actually know very basic home repair. Even painting, which is the lowest level of home repair projects, is foreign to them.
It has occurred to me that we have been raising our young men with a mentality of hiring it done. Our young men have been brought up soft. Even when we have a flat tire, we have a service we call to have it changed. As young boys, they see their dad calling roadside service to change a flat tire and they figure "so that's how it's done." We get our oil changed at Jiffy Lube, not in the garage in the evening. When an organization of young boys has a sub sale, the boys don't actually make the subs, they just order them from someplace and resell them. In fact, they don't even sell them. Their parents bring in the sub sale sign up sheets and post them in their workplace breakrooms. This is how we begin to train our young boys and girls, and it is making a impression. My point is that calling roadside service is not a bad thing, or going to Jiffy Lube is a not bad thing. It's just that many boys have never been exposed to actually doing these things. The option of doing it themselves doesn't even occur to them. The lack of any substantive home repair/remodel knowledge hits hard when these young boys become young adults and enter the home buying market. The "hire it out" mentality might work OK in good economic times, but in these challenging times, more and more inept young men find themselves completely clueless when the necessity of circumstances eliminate the "hire it out" option. What often floors me is the lack of gumption to even try. Obviously there are other social conditions that put some young boys at a disadvantage to learn. Absentee dads, single parent households, divorce, have left these young boys without a example. Now, as young adults wanting to capitalize on a incredible real estate purchase value, it's not for them. Not that a solid real estate deal is not within there grasp. A 20% discount is still a 20% discount, it just that it's not 70%. Foreclosures can be a terrific deal- but not for everybody.