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Last month, we asked readers to share their real-estate horror stories: What had they seen at a listing that had made them run — not walk — out the front door?
In this installment of Buying Advice, we'll dish all the gruesome details about these houses and the problems that are just too scary for most buyers to take on.
We'll also check in with the latest sale and price statistics and examine the widening gap between buying and renting in most cities. (Bing: Checklist for first-time homebuyers)
Quite a fright
File this list under "five things you don't expect to see" at an open house or home tour:
1. A home with a criminal past? "Drug graffiti in the kids bedrooms" and "an automatic rifle in the corner of the master bedroom" certainly don't give most buyers a warm, fuzzy feeling. "No, thank you," said Irene Kreutzer, a Yelm, Wash., reader, after touring this scary house.
2. A death in the family. Note to sellers: Don't start a home tour with a look at the basement and the filthy mattress plopped down in the middle of the room under a bare light bulb. It's also creepy when you tell prospective buyers that your grandfather just died on the mattress, and that a mama cat had a litter of kittens on it. But what really killed the deal for reader Karen Vinson was the padlocked bedroom upstairs that no one was allowed to look into. "Talk about creepy," Vinson says. "I'll always wonder what was behind the door."
3. Call the exterminator. One cockroach might not be so bad, but a hundred? "Basschick," who replied to our online query, said she went out to see a condo that had been in disrepair, but was recently remodeled. It looked nice at first glance, she said, but while she and her husband were standing in the kitchen, a live roach landed on her husband's foot and scurried off. More inspection found dead roaches in the bathrooms, closets, living room carpet, kitchen cabinets and stove, as well as more than a dozen roaches in the dishwasher. "Our agent nicknamed it the roach motel," she says. "Basschick" checked in and checked out as fast as she could.
4. Misleading photos. "Kathryn" emailed Buying Advice with her memory of a listing that she couldn't wait to see: a neat home with a sparkling pool and beautiful landscaping — or at least that's what she saw in the listing photos. When she got there, it was a dead zone, complete with brown shrubs, a pool with just 2 feet of black water, a filthy interior and different flooring than in the photos. "It should be a crime to misrepresent something like that, or at least they should be required to note that the pics aren't current," she said. "What a waste of time!"
5. Unexpected guests. A homeless man had built a large fort along the back fence of a home that agent Mike Litzner of Century 21 American Homes showed to one of his clients in Long Island, N.Y. "Right next to him was his stash of alcohol," Litzner says. "My client asked, 'Does he come with the house?'"
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On a more serious note: Don't overlook these problems
However, what scares Litzner even more than impromptu homeless shelters are squatters inside the home, and bad tenants. These, he says, are thorny and often expensive problems to fix, so he advises his clients to stay away.
For Hickory, Ill., home inspector Jack McGraw, foundation issues are the real fright. "If your home inspector is recommending an inspection by a structural engineer," you might want to walk while you still can.
Walls that are bulging or that appear to be "pushing in" are another sign of major structural problems, as well as the vertical and horizontal cracks that accompany them.
Ditto for black, moldy walls and condensation that would require removal of a lot of drywall.
Slide show: 7 places you should be checking around a house
"That is a sign of a building having serious issues," McGraw says.
Damp insulation and rotting wood under the roofline are other signs of expensive roof damage that will turn your hair gray when you get the repair bill. Better to leave that home alone, he says.
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(House hunters: Are you putting your house hunt on hold for the holidays? If so, why? Or, conversely, do you think the end of the year is a great time to buy? Give us your opinion, either on Facebook or via email at msnrealestate@microsoft.com and we may include it in next month's column.)
Housing-market update: The recovery begins in earnest
Existing-home sales jumped 9.3%, to 4.82 million in August from 4.41 million a year earlier, and 7.8% from July, according to the National Association of Realtors.
Tight supply in many markets, including Florida and the West, and a declining number of foreclosure sales helped to push prices up. August's median home price of $187,400 was 9.5% higher than a year ago. The increase was the largest since January 2006 and marked the sixth straight month of year-over-year price increases, the last time that has happened since before the bubble burst.
- On our blog, 'Listed': Will the rise in home prices continue?
For-sale inventory continued to dwindle, reaching 2.47 million — or a 6.1-month supply — down 18.2% from last year, when there was an 8.2-month supply of homes available for purchase.
"The housing market is steadily recovering, with consistent increases in both home sales and median prices," says Lawrence Yun, the NAR's chief economist. "More buyers are taking advantage of excellent housing-affordability conditions."
According to the National Association of Home Builders, housing markets in most parts of the country are improving. The number of improving markets — as measured by upticks in housing permits, employment and house prices for at least six consecutive months — swelled to 99 in September from 80 in August. You can see how your metro fared here.
Where is buying better than renting?
With mortgage rates hovering around record lows, owning a home is now cheaper in all of the 100 largest U.S. markets, according to a report released recently by Trulia.
Looking at the average cost of homes for sale and for rent between June and the end of August — and assuming a 20% down payment, a mortgage rate of 3.5% and itemized tax deductions for mortgage interest, etc. — owning really trumped renting in some areas, such as Gary, Ind.; Oklahoma City; Lakeland-Winter Haven, Fla.; and Toledo, Ohio.
In each of these areas, the monthly cost of homeownership — including closing costs, maintenance, insurance and property tax — was more than 60% less than the monthly bill for rent, security deposit and renters insurance. In foreclosure-riddled Detroit, owning was 70% cheaper.
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Even in expensive markets such as Los Angeles, New York and San Jose, Calif., owning was 32%, 31% and 28% cheaper, respectively.
"Despite the recent price rebound, rents continue to rise faster than prices, and mortgage rates are near record lows," says Jed Kolko, Trulia's chief economist.
Of course, that spread thins if you look at buyers getting a 4.5% mortgage, who fail to itemize tax deductions and plan to stay in a home only five years. In Los Angeles, for instance, the cost of owning is only 1% cheaper. In New York, it's 3% cheaper to buy, given those factors.
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Of course, not everybody can afford to take advantage of these for-sale bargains. There's still the down payment to come up with, and buyers must have a good credit score — think 700 or more – to get access to these great mortgage rates.
Buyers can look at a full list of rent-versus-buy comparisons here.
We want to hear from you: As always, we welcome your questions. Submit them either in the commentssection below or on Facebook, or email msnrealestate@microsoft.com. Brief questions have the best chance of being answered.
