The home buying market during the time of recession is a minefield that must be navigated with due care and patience. First time home buyers will hear that they will find great values and, while that is the case, those values are fraught with peril. Homes that have been gutted that have unexpected liens against their titles will have great cosmetic appeal when buyers set foot into the front door. However, peeling back the layers will reveal that every great value during a recession has components that require the expertise and knowledge that only experienced real estate professionals can successfully navigate.
In this two-part series of articles, we will explore the unique challenges and opportunities presented by the home buying market during a recession—challenges and opportunities that are different for property investors vs. traditional buyers who intend to reside on the property. In part one, we will begin on a positive note by discussing the potential benefits of buying a home during a recession.
Opportunities for Investors
As stated above, seemingly great deals that appear on the market during a recession can reveal themselves to be treacherous traps for first-time home buyers to fall into. Therefore, it is best for investors to make their purchases at the time of recession. Investors are used to purchasing properties at below market value since that is the only way to maximize their profit. Investors have cash reserves and are able to close without financing. Furthermore, they are willing to take on the burdens that liens upon the title of the property carry with them. If a home has been gutted of its essentials, investors have no problem replacing those items cheaply since it is their intention to either rent the unit or to flip the home to another buyer.
Going one step further, a home that is gutted actually may be something the investor is looking for anyway since it is more likely than not their plan to gut the property themselves.
Opportunities for Traditional Buyers
There are also advantages for traditional home buyers, of course. Home buyers who intend to reside on the property are more likely than not to pay close to Market price. They also will be less likely to pull any tricks on the sellers since they are focused on the home as their primary residence. They will come pre-approved from lenders that are credible. Sellers may see this as more desirable, since buyers who can come to a showing with a pre-approval from a reputable lender should be valued over investors who make multiple offers constantly hoping “that one will stick”.
Overall, buying a home during a recession can result in a great investment whether you are a first time home buyer, experienced purchaser, or an investor who is looking for a great deal. The key is to do your research and know what you’re getting into. By aligning yourself with a veteran realtor and knowledgeable attorney, you will add assets to your team that will give you the full picture. First time home buyers should never try to buy a home on their own especially during a recession. There are too many factors at play and too many possibilities for them to make a mistake since “they don’t know what they don’t know.”
If you’re considering dipping your toes in the home buying market while prices are low, check back with our next blog post where we will cover the unique challenges presented by a recession.
