David Carey Custom Builder News and Notes

Being in the real estate business for over 25 years I wouldn’t dream buying a bank owned or foreclosed properties. Sure you hear about all your “friends” that saved thousands or hundreds of thousands of dollars buying these properties. Aren’t these the same friends that boast how much they won at the race track; however, they don’t ever talk about their days they went out and lost their shirt. The same applies to purchasing these type of “risky investments”.

Remember, you are buying the bank owned property “as is” with no guarantees, warranties or disclosures. In most cases the bank hasn’t seen the property nor do the care to. Their main interest is selling the home as quickly as possible with the least amount of liability. Most likely the utililities have been turned off (the bank will not pay for these services) and the condition of the utilities are unknown. Understand that buying theses properties is a legal gamble. You may present the bank with an offer with all kinds of standard and additional clauses for your protection but the reality once the price and terms have been agreed to the bank will come back with a Bank Addendum which may not be modified that will remove and replace those clauses in favor of the bank. This is how the game is played and the price you pay for this risky investment. You can hire an attorney to modify the Bank Addendum however, the bank will reject these modifications and move on to the next offer and you have spent your money and nothing to show for it.

Ultimately, like all investments it comes down to risk vs reward. Buying these properties is extremely risky and you are accepting this risk by the reflected purchase price. Common sense tells you that if the previous owner couldn’t make the timely mortgage payments how would they have the ability to pay for the maintenance that is required of owning a home.

Recently, friends of mine purchased one of these homes over a year ago and are beginning to deal with with issues that they didn’t discover until now. Most were minor issues that just cost additional monies that they didn’t count on. Now, they are dealing with a serious mold problem that is going to cost them thousands of dollars to repair; the damage most likely wiping out the savings they thought they would realize. They are extremely frustrated and wish they would have walked away from this nightmare.

Remember the axiom “Buyer Beware”. The field is rife with risk and you can lose your whole investment if you make a single bad investment.

I  recently exchanged several concepts with Steve Mouzon discussing design and sustainability incorporating green building and what the future holds including several interesting predictions. He is the founder of the Original Green and is a wealth of knowledge concerning design, sustainability and green building.

Read his article The Green Top 10 to gain a better insight of what the future may hold. Planning and designing is so important when you are starting to think about building a new home.

Remember - Building your home is a realively short process for a lifetime of enjoyment; spend the time and effort to make it a successful experience - David Carey.

Recently, our clients have changed what really matters to them in their home designs.  A few years ago they demanded the great room and the hearth room etc.; these newer designs are created for a more comfortable casual living. Just because the square footage is less doesn’t mean we can’t create your dream home with all the amenities.

Since 2004 we refocused many of our designs to accommodate these requests. Our clients really love these unique designs and throughout this economic downturn these plans are becoming more desirable.  People are amazed when we sit down with them on the first draft and are able to create an authentic design that combines function with creativity. With the newer energy standards and green building opportunities it really makes sense to start planning your new home.

Building your home is a realively short process for a lifetime of enjoyment; spend the time and effort to make it a successful experience - David Carey

   Louisville is fairing fairly well through this economic downturn. All of our sales agents reported good traffic for the weekend with a few returned visitors; it seems Buyer’s are taking advantage of our special financing that we have secured for our existing homes. Visit us www.davidcarey.com for details.

   Fortunately, Louisville hasn’t experienced the large price increases over the past decade so we aren’t experiencing the hugh price reductions other areas of the country are faced. The new construction sector is starting to stabilize where we are starting to schedule design consultation meetings which is the start of the construction cycle. Our Buyer’s are seeing the value of buying or building today vs waiting. It can take 6 months to a year to design and build a new home; by the end of this process prices for materials and labor could start to increase and negate the good value that exist today.

   We have several new plans that have been developed through this downturn. After meeting with several new Buyers’ this year I’ve concluded we are on the right track.  Several of our new cottage style plans offers smaller SF but includes energy efficiency features and very livable floor plans.

   We are still hearing “I have a home to sell”. We have worked with our sales agents to help in this process. Between the special financing and a negotiated commission on both properties the sales agent has been able to help move their home when they contract to purchase ours. It’s a win win for all parties involved.

   Spring is near which brings out more SOLD signs.

   While we are experiencing at least two years of a housing recession, this administration has done very little to address the crisis we are facing. The bill that was passed failed to give the housing industry the jolt that is needed to bring this recession to an end. There are millions of jobs that have been directly lost due to the downturn in housing however, this administration would rather keep pouring billions of dollars in banks that frankly need to restructure or bankrupt.

   When you analyze the spending that is included in this bill it is shamefull that these elected officials are that far out of touch with the American people - they need to be voted out of office. Hopefully, there will be a grass roots organization that will trace down every pork spending that is included in this bill; who was responsible for introducing it and publish their names and exactly how much money they cost the American taxpayers.

   We are in an environment where the banks, mortgage companies and regulators basically forgot what’s their job description. The banks and mortgage companies lent money to individuals that had no business borrowing that kind of money creating a financial crisis that was bound to surface. Greed took over and nothing mattered but the bottom line; all while the bank regulators looked the other way. 

   Unfortunately, the small business owners that have bought equipment, expanded their business and labor force, borrowed thousands and millions of dollars and pay taxes to their local economies are facing mountains of debt that they may never payoff. Meanwhile, most the individuals and companies that caused this wreck will or have already left the industry and looking for the next get rich scheme.

   There is little doubt that many people gambled on the housing bubble and didn’t understand how brutal this business can be. My family has been in the business since the 1950’s and we have witnessed both the good and bad.

   There are many industries that are in trouble, I’m not sure if any has been hit as hard and long as the housing sector. We are not asking for a bailout; we want favorable interest rates, temporary tax cuts and incentives that will provoke those that are able to continue purchasing homes and increase their net worth. Once the incentives have jolted the industry they will be removed costing the taxpayer nothing.

   My only message to the existing administration; I hope you don’t get too comfortable in your offices. The American people put you there and we can certainly remove you.

   With housing in somewhat of a slump nationally, there are areas in the United States that are actually doing pretty well. In Louisville, KY. we have a few months longer supply than normal, however, we don’t have the multiple years supply that many areas are experiencing. This is attributed to Louisville not seeing the double digit increases in housing for the past several years. When housing increases 15-30% annually, just like the stock market, the bubble will burst at some point.

   We are now seeing lower interest rates available, and with mortgage companies getting back into the business of lending money, we should see the housing market turn around in a very short time. For buyers that have been waiting for home prices to hit rock bottom, you should begin to seriously start the purchasing process. If history repeats itself (as it has in the past housing slumps) there will be a large increase in purchases which leads to less inventory and that results in rapidly increased housing values. In areas where housing values have dropped 5-10%, these same homes could easily increase 10-20% in the next several years. Don’t put off purchasing - buy now!