Most people are thrilled with the prospect of buying their home, they’re less excited about the prospect of taking out a mortgage loan and paying hundreds of thousands of dollars. Who wouldn’t be? It’s no surprise that houses listed for just a dollar are catching the eyes of prospective buyers.
However, like all things that seem too good to be true, there are many pitfalls to buying a home for a dollar. To avoid them, work with an experienced real estate agent. They’ll be able to spot a scam a mile away and help you to get an accurate estimate on the work and financing a home will need prior to purchasing it.
One Dollar Home Listings
Don’t think that every listing on a real estate marketplace like Zillow or Trulia boasting a dollar listing price is legitimate. Often, these listings are just marketing ploys that serve to increase the interest of prospective buyers. Real estate agents aren’t barred from listing a home for a dollar, even if the listing price is significantly higher, so watch out.
In some cases, the home’s initial listing price may genuinely be a dollar, but this price will increase as the number of offers increase on it, and suddenly you’ll find yourself in a bidding war on a home that’s thousands of dollars more than you thought it would be.
Dollar Home Buying Programs
There are legitimate dollar home buying programs offered at local levels. The Department of Housing and Urban Development (HUD) works with local governments to generate home buying options for low-income individuals and families. The aim is to get abandoned or foreclosed homes sold to new owners who will rehabilitate the home and help to revitalize the neighborhood.
These programs have attracted real estate investors who are experienced in fixing homes up and turning a profit. However, there have been stories of ordinary home buyers purchasing a home for a dollar under these programs. Homes that qualify for this program can be found on HUD’s website.
The Benefits of the Dollar Home Buying Program
There’s no denying that you can save money when buying a home for just a dollar. Even though you will have to cover closing costs, the initial purchase price will likely put you in the black.
If the home is the ugly duckling in a good neighborhood, the resale value of your home can greatly increase after rehabilitation. Buying a home for a dollar can generate income in the long run.
Drawbacks of Buying a Home for a Dollar
One of the major drawbacks of buying a home for a dollar is uncertainty. Typically, these homes are listed for a dollar because they have sat on the market for over six months. The idea is not to get prospective buyers interested in the home but to get buyers to commit to fixing up the home.
There is no certainty that these homes will appreciate in value even after the buyer spends their time and money to repair it. The market that these homes sit in is usually not very good. Low home values and even lower land values with no promise of rising isn’t the best investment opportunity.
Home buyers will likely have to spend thousands of dollars renovating and repairing these homes which stand in a state of disrepair. While the initial draw of purchasing a home for a dollar is in the chance to save money, buyers will soon find that even after they purchase the home they will need to fund the necessary work on the home to bring it back to life.
If you can’t commit to staying in a home for at least three years or completing a home’s rehabilitation within 18 months, then a dollar home may not be for you. Those are some of the requirements of Buffalo, New York’s Urban Homesteading Program, for instance. If you can’t make the commitment you’ll be subject to penalty.
How Clever Can Help
You don’t need to buy a run-down or abandoned home go get the best bang for your buck. A Clever Partner Agent can help you find a great home within your budget. With on-demand home showings and exert knowledge of the area, Clever Partner Agents are home buyers’ greatest asset.
Clever Partner Agents don’t just work to get you into your dream home, they work to save you money. Buyers in eligible states can look forward to a Home Buyer Rebate of $1,000 if you purchase your home for $150,000 or 1% if you buy it for $500,000 or more.
Want to work with a Partner Agent? Contact Clever and we’ll match you with a local agent.