You cannot turn the radio on without an investor telling you they have a free seminar coming up in Houston. They will tell you how to make a fortune flipping houses with no money down. Flipping homes is on everyone’s mind. After all, where else can you double you money in a few months?
The Houston MLS shows that there are 483 single family home foreclosures listed for sale today. The total amount of single family homes listed for sale in the Houston MLS is 17,864 on March 28, 2015. That means of all the single family homes for sale only 2.7% are foreclosures. Of these homes listed for foreclosure 128 have been on the market for more than 60 days. With Houston’s hot real estate market this means one of two things. They are either falling down or located in an area of Houston Al Capone would be afraid to go in. So the true rate of buyable foreclosures in Houston is 1.98%.
The next sad truth is the sellers know the facts. Asset Managers have up to two appraisals done on the homes BEFORE they list them. They know what these homes are worth. If the home has small amount of damage, they may make the repairs themselves and sell the home. Foreclosures in good condition are selling for near the same price as resale homes in Houston. SORRY!
The reason why foreclosures are selling for high prices in Houston:
- Houston will add 43,000 new jobs this year
- Population growth of 2,000 people a week
- There is a labor shortage of skilled construction workers
- A building permit in Houston takes twice as long as neighboring cities
- Home builders are still building less than ½ the new homes they did in 2006.
- Foreign and out of state Investors are buying single family homes for rental property
- The Houston Economy
Buyers need to realize that there is a shortage of foreclosed houses here due to the strong economy. Also the fact that builders have not been able to keep up with the increasing housing shortage has left a low inventory. Inner loop Realtor Bill Edge says “I tell someone everyday that Houston is a hard town to make money by flipping foreclosures.” Most buyers and investors do not want to hear this. At Man-Edge Properties we do our best to educate the buyers about the market conditions in Houston.
It is important for buyers to know the market so they can understand the pricing strategy. The average foreclosure may have 17 contract offers according to Fannie Mae. The list price may be below the home’s final selling price. If you want to buy the home be aggressive in your buying strategy. If you have a low initial offer, that maybe your only offer. Asset Managers don’t bother giving the bottom feeders (low offers) a chance to raise their offer. The low initial offer strategy backfires way more than it works.
With investors cash was king in the foreclosure market. Today many investors are making full cash offers to buy a foreclosure.
The government has a first time homebuyer program for their foreclosures. The properties are available to first time buyers before investors allowed to submit offers. Many of these first time buyers will be using financing from either Fannie Mae or the FHA. It is even still possible to buy a foreclosure using a Mortgage Assistance Program.
Be realistic about your offer and don’t expect to steal the property. Listen to your Realtor and not the guy on the radio show.