Listing Courtesy of LONG AND FOSTER-BETHANY
If you are an Bethany Beach homeowner (or about to become one), you’ll be interested in the progression of your Sussex County home’s value over time. The market may fluctuate, but what doesn’t is your goal of seeing your property value go up — in other words, calculating its Return on Investment. In economic terms, evaluating the projected ROI tells you how much profit there would be if the home is sold at a later time.
There are two major methods of calculating real estate ROI. Both take cost and appreciation into account — but they come up with quite different answers!
The Cost Method gives a smaller ROI. Consider buying an Bethany Beach house for $100,000. Ubiquitous Zillow (the Internet giant) pegs the current annual appreciation rate for real estate in the U.S. at 6%. If our Bethany Beach market proves true to that projection, the example Sussex County home value would register $106,000 after the first year. If $2,000 were spent on repairs, that means a $4,000 profit would result, and the ROI for that one year would be $4,000 divided by $102,000: 3.9%. At that ROI, it would take roughly 26 (100 divided by 3.9) years to equal the cost of the home.
Sometimes called the "Out of Pocket" method, this calculation yields a higher ROI. Here, ROI is calculated based on the size of the down payment (assuming a mortgage is involved). Take the same example: the Sussex County home valued at $100,000. You won’t actually pay that whole amount — just the down payment (say, $20,000). To evaluate the ROI, the down payment is added to the repair costs ($20,000+$2,000) and that number is subtracted from the appreciated home value ($106,000-$22,000). The "equity" in this case is $84,000, so the ROI in that single year is $84,000/$106,000 = 79.2%. Although this sounds terrific, it isn’t too realistic…after all, the mortgage left is still owed: it may not be "out of pocket" because it hasn’t been actually paid yet, but the remaining liability is real.
If you have Bethany Beach home value questions, I’m here to answer those and any other real estate-related needs. Call me anytime to discuss home values, ROI, or other property questions!
You may have seen the reports — and they are correct — that the number of new foreclosures has dropped almost everywhere throughout the country. Although the Mortgage Bankers Association’s report about the drop in non-seasonally adjusted foreclosure starts might indicate otherwise, sharp-eyed buyers can still find any number of foreclosed homes in Delaware.
For those whose goal is to find an appreciably nicer home at a lower-than-average price, a few basics shed light on the process.
Short sales differ from foreclosures. Although the sale price may be a good deal less than what is still owed on a loan, it may be more or less than the actual value of the home. A foreclosed home in Delaware is one that is actually owned by the bank holding the underlying loan — with the previous homeowners already having moved on.
Success in the foreclosure realm means saving money by buying local foreclosed homes — and it means being aware of the motives of the lender. First, any bank will typically offer foreclosed homes on an as-is basis. To keep losses in check, no repairs will have been made on the property. Some homes may be in fine condition, but others will not. That’s why it’s so essential to be willing to pay for an inspection on the property: it’s the only way to know exactly what you are getting into before you sign on the dotted line.
Unless you have prior success in buying Delaware foreclosed homes, it is universally recommended that you enlist a buyers agent to help throughout this process. An agent can advise you whether or not the property value is in line with the market for comparable properties in comparable condition. While you can work with the bank on your own, it is advantageous to have an experience professional to assist at the bargaining table.
If you are interested in buying foreclosed homes in Delaware this fall, why not contact me today to discuss your search parameters? The values really are out there to reward the patient — and anyone willing to put in a dollop of elbow grease! Call/text 302-228-7871 or email me, Russell Stucki, REALTOR ® of Beach Real Estate Market to provide detailed information on Delaware homes for sale, investment and commercial properties, luxury and waterfront homes, condos/townhomes, new construction, lots and land, farms and equestrian properties located in but not limited to Bethany, Bethel, Bridgeville, Dagsboro, Delmar, Ellendale, Fenwick Island, Frankford, Georgetown, Greenwood, Harbeson, Laurel, Lewes, Lincoln, Milford, Millsboro, Millville, Milton, Ocean View, Rehoboth Beach, Seaford, Selbyville, Delaware.