The new real estate 'consciousness'

Flickr image by Ralph Buckley.

A couple of weeks ago, I wrote about how often I'm asked by people who understand the evils of misused subprime loans to do loans that were made possible only by the loose lending guidelines of the subprime era! The irony of it is a little crazy-making, so I took the opportunity to vent. (Thanks, readers!)

In all fairness, though, what I'm actually seeing more often among homebuyers and sellers these days is the opposite -- people who have learned from their mistakes (and others' mistakes) and are trying hard to apply the wisdom from them in the course of their post-bubble-burst real estate decision-making.

Sometimes they take it too far, but many of the buyers and sellers who are active in today's market are working hard not to repeat the errors of the immediate past era.

Today's buyers are most often acting out of an effort to avoid the pain and turmoil they've seen their friends and relatives experience when they lost a home through foreclosure or ended up totally upside down. Sellers are taking care to prevent the fiascoes they've witnessed whereby their colleague or neighbor allowed an overpriced listing to devolve into a traumatic short sale or worse.

Before the bubble, the attitude of many of us real estate consumers was very similar to that reflected in the recent hip-hop hit, "Just Throw It in the Bag."

The song, by rapper Fabolous, is a love song of sorts, whereby the young man lures in the ladies by extolling his financial wherewithal, which is so vast that she needn't investigate how much her desired trinkets cost. Rather, she should, as the title says, "just throw it in the bag."

It was sort of a "don't ask, don't tell" policy: We won't ask questions, just get us "X" house by any means necessary, and don't ever tell us the whole picture of what we're getting ourselves into. Actually, in my experience, even when we did tell, many buyers kind of stuck their fingers into their ears and sang the loud "la la la" of a child trying to drown out unwelcome information.

Sellers wouldn't ask how on earth their homes could be worth 30 or 40 percent more than they'd paid five minutes ago, or how it was possible or sensible for a lender to finance that despite the lack of any increased actual value in the property. Why should they?

In contrast, if I had to clump the smart reactions of homebuyers and sellers to the recent housing crisis under a single descriptor, it would probably be "conscious." It's as though the critical masses of real estate consumers have simultaneously, as the scripture says, put away such childish things as the "just throw it in the bag" mentality.

Sellers want to be confident that even the highest of multiple offers is reality-based so that it will actually close. Buyers want to know the details of their total homeownership costs projected far out into the future, so that they can take steps to ensure their mortgage obligations are realistic and sustainable -- before they sign their loan documents. ...CONTINUED

All rights reserved. This article may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this article without permission is a violation of federal copyright law.