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Issue for First Time Home Buyers - Long Beach Real Estate

Long Beach FHA First Time Buyer Tips

With so many Long Beach homes and condos on the market at affordable prices one would think it should be really easy to find a home and get a great deal.  So why are so many first time buyers having trouble finding a home that suits their needs at a price they can afford? 

Until recently it was almost impossible to find decent homes in Long Beach for under $500,000.  Prices have been dropping so rapidly over the last 2 or 3 years that some homes have finally become affordable to first time home buyers.  Recognizing this, many are out shopping, trying to make the dream of home ownership a reality. 

Most first time home buyers are utilizing FHA financing programs with 3 1/2% down and need to have closing costs covered in their offers in order to purchase.  Homes currently on the market that are affordable to first time home buyers, are predominantly short sales and foreclosures or bank owned properties and are not necessarily in the best condition.  Even with a deep price reduction many of these homes are still beyond the reach of first time buyers because the buyer will have to lay out considerable cash after purchase to bring the house into livable condition.  First time home-buyers just dont have this kind of cash to invest in the home for repairs and upgrades after the purchase.  In some cases FHA will not finance if serious repairs are required or kitchens and/or baths are missing. 

Some of the problems buyers have discovered in many of the available homes for sale on the market are:

• Damaged foundations
• Damaged chimneys
• Excessive layers of roofing
• Bent ridge-boards (part of roofs framing)
• Leaking, damaged and old roofs in need of replacement
• Potential mold issues resulting from leaking and damaged roofing
• Kitchens in need of replacement
• Baths in need of replacement
• Incomplete renovations leaving partially completed kitchens and baths
• Badly damaged flooring
• Leaking plumbing and/or replacement
  
• Electrical problems and upgrades
• Unpermitted additions not up to code
  

Many bank owned homes have several of these issues placing the seemingly affordable home into the unaffordable range for the FHA buyer. For instance a buyer may be able to afford a new roof, but not be able to afford to reframe the roof if that too is necessary, this can become a large expense. 

When a Long Beach home becomes available in really good condition, priced to sell it will likely receive multiple offers very quickly.  FHA offers are often being put to the side while banks and sellers entertain offers with 20% or better down payments and all cash offers, often from investors.  It is critical for an FHA buyer to write the strongest NET offer possible.  Even with a strong offer it is very difficult for an FHA buyer to compete against the stronger offers.  

FHA buyers who successfully purchase are finding that their best option is often looking at homes and condos that have been on the market for a while.  These homes and condos don't present the multiple offer problem and often result in a sale.  While homes and condos that sit for a while sometimes do have issues beyond the buyers ability to deal with, if you pick through them you can often find an overlooked gem. 

Many FHA buyers are very disappointed when they realize what their money will buy in today's market.  They are further distressed at how difficult it is to get an FHA offer accepted in todays market. Make sure that your expectations are realistic.  Look around at what is available below your price range.  This will make it possible for you to bid up closer to market value and perhaps get your offer accepted if the seller is considering FHA offers. 

Many sellers are utilizing pricing strategies, listing low to generate multiple offers quickly.  The sellers want to sell, they do not want to sit on the market for a long time.  If you are shopping at the maximum that you can afford you will not be able to compete when you write an offer, you will not be able to bid up near or at market value for that property and will lose it to those who can.  FHA buyers need to shop smart. 

While it may take some time, it is still possible for an FHA buyer to purchase if they are dedicated to the purchase.

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Laurie Manny Long Beach Realtor® (562) 212-5420 244 Redondo Avenue Belmont Heights Long Beach, California 90803 Buyers/Sellers/Investors Homes Condos Income Properties 1031 Exchanges