Buyer beware in Tampa's low-priced housing market

Home prices are lower than they have been in years, and there are plenty of properties to choose from. No doubt, it's a buyer's market.

But it's also a market to beware.

As buyers rush to find homes before the federal tax credit expires next month, experts say they should be cautious. About 60 percent of the homes on the market in Tampa Bay are distressed sales. In some cases, these properties can allow buyers to stretch their budgets even more, but there are potential pitfalls.

"People get dazzled by the price," said Maggie Beard, a real estate agent with Coldwell Banker. "Sometimes, they overlook things."

We asked experts for some advice for homebuyers to consider before closing the deal.

Make sure the home doesn't have contaminated drywall.

As many as 100,000 homes nationwide, built from 2004 to 2007, have tainted drywall. Much of it was imported from China, but there have been cases of the bad drywall made in the U.S.

Homeowners contend the drywall emits sulfuric gases that cause a rotten-egg stench, possible health problems and corrosion of appliances and electrical wiring.

There are ongoing lawsuits, and the situation is under investigation by the federal government. One thing is for sure: it's a costly problem that brings down a home's value. Replacing the drywall can cost $100,000 or more.

Some of the homes selling cheaply may have the bad drywall, Beard says, or they may be in a housing development plagued by the problem.

How can buyers protect themselves?

Signs to look for include the rotten-egg smell and corrosion on the air conditioning coils. With the seller's permission, Beard said, buyers can look behind electrical sockets to check for corrosion of wiring. If you notice a black film, it may be worth it to hire a professional inspector to conduct a drywall test, something that ranges from hundreds to thousands of dollars, depending on the inspector and problem.

If you buy a distressed property beware that it comes "as is."

If buyers get a mortgage, they will likely be required to get a home inspection. But in this economy, some are using the lower prices to launch into the investment game. Investors often pay cash for homes and don't always conduct inspections, said Vernon Taylor, president to the Greater Tampa Association of Realtors.

In some foreclosure cases, the former homeowner has deliberately damaged the home. Some of the evidence is easily spotted: holes in walls, damaged carpet. Others aren't as easily detected. For example, in some cases distressed owners have left water running to purposely cause damage. That could lead to mold.

"If you get an inspection, at least you know what you're facing and can decide whether it's worth it," Taylor said.

Sellers typically fill out a seller's disclosure that details the home's history and problems. But when the seller is the lender, they may not always have that information, Beard said.

"When you look at a used car, it may look good on the lot, but then you drive it 100 miles and run into big trouble," she said.

Check records to make sure there are no liens or past due bills on the property.

Just as a distressed sale comes "as is," it also comes with some of the past homeowner's financial woes. For example, if the strapped owner didn't pay homeowner's association dues or community development district payments, the new owner is on the hook.

Buyers can also check with the county tax collector's office to verify that all property taxes are up to date.

"You have to cross every T," Taylor said. "Check with the homeowner's association before buying, and remember you're assuming the liability of the house."

Don't buy a home for the short term.

Even in this turbulent real estate market, some investors are still flipping homes and making a profit. But if you're buying a home to live in, chances are you'll need to stay at least three years before selling.

Tampa Bay home prices have fallen more than 40 percent since they peaked in 2006. Many experts believe the Tampa Bay area has hit or is near the bottom of falling prices. But even if prices fall a little more, Taylor said, today's buyers should be fine, as long they don't plan on selling the home soon.

With so many foreclosures on the market, some worry it could take years to sell them all, and that could keep prices from rising.

"People have to look at it as a home," Beard said. "Not a short-term investment."