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Oct 15, 2008 -- The dangers of buying real estate online
Clark was recently asked by someone if he thought it was a good idea to buy real estate online -- without having seen the property. The Los Angeles Times recently reported that more and more governments are doing Internet foreclosure auctions of this type.
Here's the problem: The Internet gives the false impression that you have access to every bit of info and every tool you need to determine real estate value. But as a real estate investor of 30 years, Clark says that you should never "buy by remote control." You've got to know the community, the neighborhood and the even the street where you plan to buy.
The penny-pincher has heard secondhand that one of his friends is thinking about buying real estate site unseen on eBay. He can't wait to see him and say, "Don't do it!"
You've got to know your market.
Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.
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What others are saying
I have some beach front property inland.
Yikes.
buying real estate from tv network
Hi, please can you advise me of the pro's and con's of buying real estate from a tv network. Is it a BAD idea? Thankyou, Liz.
Buying Online
Great answer Clark. I personally would not even buy at an auction. For me I need to know that the property I am buying is free of major defect and that the owners will not reclaim it 30 days after I purchase it. With all the foreclosures and banks selling REO at .60 to .70 cents on the dollar I just don't see taking a chance on an auction.
Online Real Estate Buying
As an agent for over 30 years, A home or even an investment property is not like buying a flat screen by model # you may have seen at a store. Then you shop the internet for the best buy. You need to know the area, schools ( even if not for resale later), and the condition of the property. Many unattractive items can be cropped or not revealed by a well stagged photo. I have seen photos that still show snow on the ground in July and August, how long has the home really been for sale?
Buying real estate online
As a Realtor for over 22 years, I am amazed that anyone would even consider buyinga house online. These photos don't show you the next door neighbors 3 barkinf dogs, the swamp just beyond the back fence, or the dairy just a half mile away ,where the smells and flies gravitate towards your home. Even the best photos don't and wont show you all this. It is one thing to look and research, but I strongly advise taking a trip to the area before putting in one red cent of your hard earned money. Real Estate is NOT a liquid asset.
Online Auction
What about online auctions where you can preview the house in person, know the neighborhood well, and can even do an inspection prior to the bid?
Auctioning Real Estate on EBay?
Even I, as a neophyte, can say that this one is a very bad idea. Even during the "hot" market when I was looking around, I had come across two different properties that were going for an unusually low price for their neighborhoods. The photos looked great and I was wondering if it was one of those situations where a senior citizen just wants to leave or something.
When my husband and I actually saw the properties, it was another story. The photos were very deceitful and misleading, to put it mildly. One house had a cracked foundation! When you walked inside, you could visually see the slope downhill in the living room. I'm anosmic, but judging from my husband's reaction, it also had a horrible stench because the previous owner was a chain smoker who smoked some cheap, very stinky brand of cigarettes. Furthermore, the backyard was practically destroyed by extreme overgrowth.
The second cheapie house we saw turned out to be a "handyman special." The place was uninhabitable, to say the least, but you could not have judged from the photographs. Most of the place was still gutted and the back porch was packed with all kinds of garbaage. A sneaky photographer made good use of light and shadow when making the shoots, because you could not see any of the piles of garbage on that porch from the photo online. Nor could you see that the screen was ripped wide open.
Unless you have just won the lottery and thus have money to burn, don't do it. Look at the property or else you will be stuck with a money pit. This is especially true now with the high risk of "foreclosure rage."
If Clark Howard already mentioned some of this, apologies ahead of time. I did not hear this part of the show and just saw this when I came to the site.
single family residence) statistics
Here are a few SFR (single family residence) statistics from a mortgage banker friend of mine. This information is focused on California, but you can probably get the general US message.
Foreclosures made up 47% of all CA SFR sales in August 08, up from 9% in August 07 Median CA SFR price was $350,000 in 8/08 down 40% from $590,000 in 8/07 2008 SFR unit sales are on pace for 490,000 units, up from 313,000 in 2007 Current unsold inventory sits at 6.7 months VS 10.6 months in 8/07 New SFR permits are down 53% so far this year Single family construction loans are now 12.5% delinquent, and condos 16.5% Respectfully yours,
