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Old 03-14-2020, 01:01 PM
 
62 posts, read 49,966 times
Reputation: 31

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Hi guys, some background info:

Under contract for a foreclosure for 780k, needs roughly 100k worth of renovations. Locked in 3.375% conventional renovation loan for 90 days. Closing scheduled for mid April. I was told the house had 15 offers.

Previous owner bought in 2004 for 860k (guessing before housing crash)

Now the house is having some issues regarding a clear title which may delay the closing up to 6 months. Meaning we have the right to cancel the deal.

The house is in a very affluent area of Long Island, NY (Manhasset Hills) with very few listings and multiple offers/bidding wars before the covid19 pandemic occurred. The average sales price in the area is usually 850k-1m+ (~2000 sqft split levels/high ranches going in this range, our house is a 2600 sqft colonial)

We are now confused if we should wait for the house to clear title or back out due to the potential wreckage covid19 may cause in the housing market. The neighborhood is composed majority of health and tech professionals so I don’t think the current state of the economy would force lay offs in these two sectors, although obviously I could be wrong. Neighborhood is also in the vicinity of corporate offices and hospitals of Long Island’s largest health care employer, Northwell Health.

This would be a house we would be planning to live in for a very long time if we go through with the purchase and renovate it.

Any advice is appreciated. Thanks!
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Old 03-14-2020, 03:09 PM
 
14,394 posts, read 11,263,188 times
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It’s unlikely mortgage rates will be going up soon which is a typical reason to back out if there’s a major delay.

Unless there are other problems I don’t see a reason for you backing out if you love it.
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Old 03-14-2020, 03:12 PM
 
2,759 posts, read 2,052,503 times
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Having had experience in a law office that did foreclosures, IMHO the virus isn't likely to affect the actual housing market as much as it will affect the time it takes to get paperwork and research done. All types of offices are likely to be short-staffed in the near future unless there is provision for them to work from home. And if in-person document searches need to be done (out in Riverhead, for example), if the County offices end up restricting hours and personnel, it will make things take longer there also. So instead of things moving at the normal snail's pace, it could be more sloth-like. And then when things do start to "normalize" again, there will be an even bigger and longer backlog than usual.

Depending on the exact nature of the title problem, IMHO the timeframe you were originally given is probably realistic for pre-Covid days.

One thing I do see happening in the market is that realtors will probably cut back on or eliminate open houses. Maybe Tom and Elke would like to chime in with their thoughts on that?

If you are asking whether more houses in Manhasset Hills may come on the market as the result of changes to the workplace due to the virus, honestly I don't think so. Most people who live there aren't living month to month. The lower-level Northwell employees such as maintenance staff aren't living in Manhasset Hills, and the higher-ups and medical professionals who do live there are probably in better shape financially to weather the current situation than most.

I would think that the trades you will eventually want to employ for renovations are more likely to be impacted by the economic effects of Covid, than anyone who lives in that area. Home improvement contractors are likely to see fewer jobs overall because middle and upper middle income people will be less likely to spend money while this is going on. No doubt some of the smaller contractors may have trouble weathering this, or at the very least may need to let some of their crew go because of either illness or lack of work/income; the question then becomes whether they can get those same people back when things turn around. So you might not be able to do some renovations as quickly as you might like, if/when the time comes.


ETA: Out of curiosity I just checked the Suffolk County clerk's web site and they are already restricting access to County buildings. Nassau County already closed the Clerk's office once already (yesterday) and it's likely there will be other restrictions in place as time goes on. So things are already slowing down in regards to anything that needs to be done in person or by bureaucratic staff.

Last edited by BBCjunkie; 03-14-2020 at 03:22 PM..
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Old 03-14-2020, 04:17 PM
 
855 posts, read 452,283 times
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The virus likely quiet down heading into the warm/hot summer months and the market will move as usual.

When the virus returns for wave #2 in Nov during the flu season and hits hard next winter, the market is dead anyway.
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Old 03-14-2020, 04:38 PM
 
38 posts, read 30,454 times
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Long Island has the lowest supply of homes on the market over the last 20 years. Rates, though they went back up this week, are still extremely low. I wouldn't back out of a home purchase b/c of COVID-19 unless it materially alters your cost of purchase. You've presented no facts that would.
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Old 03-14-2020, 05:46 PM
 
155 posts, read 101,200 times
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Option 1)Renegotiate
If you are buying more risk then you should get more value.
Option 2)Back out of the deal


Be a sophisticated buyer.
Rates are irrelevant (prices of real estate are convex to credit availability and rates, low rates indicate the price is too high)
Nebulous Buyers in the background irrelevant (real estate sales mind trick)
Market conditions and economic conditions are in a state of change.
You are buying a huge "shadow mortgage" - see other post
There is no urgency to purchase something
You don't know if people in the near future will have the same purchasing power they do now
There is a whole industry of people that profit should you go through with the deal, they all want the deal to happen at your expense
You have a golden opportunity to renegotiate.
The safe thing to do is to walk away.

Last edited by Oldandtireddad; 03-14-2020 at 06:05 PM..
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Old 03-19-2020, 12:22 PM
 
783 posts, read 1,424,897 times
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If you can get into a house for $880K all in after renovation and that has a potential worth of $1.1mil+. I think that is a no- brainer.
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Old 03-19-2020, 06:12 PM
 
62 posts, read 49,966 times
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Quote:
Originally Posted by TMing View Post
If you can get into a house for $880K all in after renovation and that has a potential worth of $1.1mil+. I think that is a no- brainer.
There’s just uncertainty that the house I buy for 880k all in I could’ve bought a better house in about 3-6 months due to this virus crisis. Taking a gamble
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Old 03-19-2020, 07:06 PM
 
Location: Former LI'er Now Rehoboth Beach, DE
13,057 posts, read 18,133,701 times
Reputation: 14019
Quote:
Originally Posted by awaken470 View Post
There’s just uncertainty that the house I buy for 880k all in I could’ve bought a better house in about 3-6 months due to this virus crisis. Taking a gamble
You just need to have faith in your choices. There is no crystal ball and we are in truly uncharted territory. We have to see how long this goes on, what the markets do in response and what the government does to help out. You are taking your chances to walk, but there may not be another viable buyer in the near term. You may get a better deal on a mortgage down the road. That said $$ may be tighter then too. Good luck either way.
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Old 03-20-2020, 01:33 AM
 
11,025 posts, read 7,848,892 times
Reputation: 23702
If you want the house, buy it. If you're not sure you want the house, don't.
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