buying house - most expensive in the neighborhood...?

Question

My husband and I are about to place an offer on a beautifully renovated home just outside of Charlotte, NC. It is an old Mill neighborhood and quite a few have been renovated. The one we are looking at is 179K and the average prices are around 115K This house has had a second floor addition (you cannot see from the front) and the price per square foot is actually $79 in comparison to the average homes in the community at $115. I have 2 questions. First- is this a stupid purchase?? I've heard not to buy the most expensive house in the neighborhood. Second, are we going to have a problem with the appraisal- I've heard it is more difficult with an FHA loan. Any help would be great!!

Answer 1

The average house in the neighborhood is 1000 sf and this one is about 2266 sf. It's not only the most expensive house, it's BY FAR too big for the neighborhood.

The only reasons to go ahead and buy it would be because you have a big family and need the space and because you plan on staying in the house for a very long time.

Whether or not it appraises, it's a hard property to market, and you'll have a hard time selling when the time comes.

Answer 2

The Charlotte market is where I am located, and you need a Realtor to pull some comps for you to find out what is going on.

It's not necessarily, in Charlotte, bad to buy the most expensive house in the neighborhood...what concerns me is the $79 per sq foot vs the $115 for the other homes..that leads me to believe that there is something wrong with the house that hasn't been disclosed yet.

An appraisal for an FHA loan is no different for a conventional loan..if someone is telling you that, it's hogwash.

The FHA appraisals used to have something called a VC sheet that pretty much forced the appraiser to do an inspection...this is no longer required, so it makes it easier to get an FHA loan approved.

However, if it's a fixer upper, with rotted wood, high moisture content under the house...it may not fly FHA.

Get your Realtor to do the comps FIRST before you make an offer, and make sure that he/she is really qualified to understand exactly why the house is priced the way it is.

Then you MUST get an inspection contingency on your contract, and I would probably use a figure of $1,000 as the maximum amount of repairs that you are willing to accept...if you put $0.00 your offer will be rejected...that isn't competitive in this market, and even $1,000 is pushing it.

Answer 3

Mary's information regarding FHA appraisals is only partially correct. The VC sheet is indeed gone, as is the need for items on it to be repaired before closing. However, FHA still requires appraisers to evaluate the operation of all of the home's systems, including plumbing, HVAC, and electrical, and does require all of them to be functioning. In addition, all of the items formerly reported on the VC sheet have to be noted under 'condition of the property' and taken into account in assessing the overall condition of the property.

In other words, an FHA appraisal is different, just not as different as it once was.

Source: HUD 4150.2 appendix D

Answer 4

Philly has become a complete sess pool under John Street. Buying in all but the most exclusive areas is not a good investment. Many people have LOST value in their homes as the crime and quality of life has gotten worse. For 150K you aren't going to be able to get into a decent neighborhood in the city! You will most likely have to settle for a row home in a questionable at best area. I suggest you look at Delaware, Bucks, and Chester Counties. All are easily accessable to the city via train and you will get a decent house with good schools in most of these communities, especially Bucks and Chester counties.