Expert: Lori Frankfort - 8/6/2010

Question
Hello Lori,

I am a first time home buyer. I plan to move out to the Bakersfield area in the next 6-9 months to attend the university there. They obviously have many newly-constructed homes for sale in that area, as well as foreclosures and the like. My question for you is two-fold.

The first part of my question is whether or not I should buy a home in the Bakersfield area if I currently plan to live in it for 3-4 years, then move? Or should I just rent instead? The second part of my question is if purchasing a home is the better decision, is it advisable to purchase a brand-new home as they are very affordable there or am I better off purchasing a bank-owned property that may be 5-20 years older?

As a background for me, I would be using FHA financing with 3.5% down, I have good credit and my annual salary is $60,000 per year, so I have the funds to afford the house payment. Any advice you can provide me would be greatly appreciated. Thank-you!

Answer
Hi Michael,

I don't work in the Bakersfield market, so as a disclaimer I think you should contact a local agent and discuss your situation with her / him.

My personal opinion would be to rent if you aren't going to be staying more than 3-4 years.  It's going to take much longer than that for the Bakersfield market to recover, and you'll likely lose money selling in that time frame.

If you're still going to buy, I would buy new.  The bank owned homes don't come with the history you'd want to know about a home's maintenance.  In fact, it's as-is.  The banks are also trying to recoup their lost funds from you, so it's a difficult, drawn-out process that usually doesn't result in much of a savings to you.  On the other hand, a new home comes with inspections and disclosures.  Also, the builder likely isn't losing the money the banks are.  The builder will probably be willing to offer incentives to buyers in the form of rebates, upgrades, better financing, etc.  No matter what you decide, please use a reputable Realtor to complete your transaction.  Don't use the builder's in-house agents, you want someone that will represent your interests fairly.

Best of luck,
Lori