A vacation property is a dream that many Americans can realize in today's real estate market. Buyers are seeing both low prices and low interest rates for mortgages. With many cottages and vacation location homes in foreclosure status, purchasing a second home is potentially more feasible than it has been in the past several decades.
Developing a Criteria List for a Vacation Home
The buyer needs to consider what he will do with the property, how far he is willing to travel, what amenities are most desirable and what area is the target for his search. The more flexible the buyer can be about these details, the more likely he is to find something worthy of his pursuit.
Contact a mortgage broker and determine what amount you can afford to borrow, if you are not planning to pay cash for the property. Be sure to allow the broker to obtain credit information, since several of the lending rules changed beginning in 2010. Criteria has been tightened and different restrictions apply than in the past. Make sure to pre-qualify by ascertaining a maximum house price before looking at anything.
Come up with a list including minimum number of bathrooms, bedrooms, location parameters and any additional "must have" features. Start searching by visiting the MLS listings for the area online. This is the fastest and most efficient way to identify a possible property that meets identified needs. Once three or four properties are available in a twenty mile geographical area, contact a local realtor to plan a visit to the area.
Make several trips to the area of interest. Stay overnight at a local hotel and spend time in the stores, restaurants and recreation areas. Talk to the locals about the area and their likes and dislikes. Check out the library and post office. Get to know the town.
Bank-Owned Properties as Vacation Homes
Many foreclosure properties have become available due to the economy. Purchasing a bank-owned home may take longer and be riddled with complexity. Some asset managers at the banks are easy to deal with and reasonable, while others are the opposite.
Be prepared for signing a bank-generated sales document, which protects them if anything goes awry. Be sure to review this with an attorney. Changes in legislation are ongoing regarding bank sales to individual buyers, with changes for the better in mind. Many people have complained about kinks in this type of sale and though it is slow, change is in the works to make this process more buyer friendly.
When a Potential Home is Located
Visit the home more than once before making an offer. Research sales in the area to discover what other similar homes have recently sold and evaluate the prices. The realtor should be able to assist with this information. Also, check the Zillow website for other sales data and interesting facts about the home and area.
When an offer is accepted, plan to conduct an inspection with a qualified inspector. This should include a septic assessment as well as a structural overview. Many mortgage lenders will need all systems to be up and running when they do the appraisal. If there is a problem with the water or heat, they may require repairs before finalizing the mortgage. If not, they could increase the interest rate on the loan because of condition issues at the property.
Note that most standard sales agreements will allow the buyer to exit the sale unharmed if problems come up during the inspection and the seller is unwilling to fix them. Discuss this matter with an attorney before it becomes an issue. If a multitude of issues are identified, it is best to get out of the sale.
Don't rush the process. Look at different areas and take the time to find the right fit. Purchasing a foreclosure property is not for everyone and can be very stressful. Find a local attorney and trustworthy real estate broker to assist in the search. Talk to people about the area and visit often before making an offer on a house.
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Therese Haberman - With a MS degree and 25 years in HR mgmt, in 2005, Ms.Therese began a writing career specializing in children and HR.
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