Today's buyers need thick skin
Mood of the Market
By Tara-Nicholle Nelson, Monday, June 1, 2009.Before I came into this business, my mental reference images for the home-buying process lived at two equally ridiculous extremes of a fully unrealistic spectrum. On one end were my selective memories of house hunting as a child, in which my brother and I got to run into a single, perfect house and choose our rooms (I'm pretty sure my parents had already closed escrow on the place before we got there). On the other end were scenes from that last of Richard Pryor's PG-rated films, "Moving," where his family showed up after closing to realize that the doorknobs, sinks and even the in-ground swimming pool had been jacked up and hauled off by the sellers.
Then, I started selling real estate in a booming seller's market. My buyer clients' experiences were neither idyllic nor traumatic, but were fast-paced and hectic, with the process of making an offer comprised of me making educated guesses at what price would make my client win out over the other 80 offers (no joke -- I once worked on a home that had a total of 81 offers) and still appraise at the purchase price. Buyers came into the office well prepared by their friends' and families' anecdotes of multiple offers and over-asking sales prices, and so were ready to lose a few and go way over the list price.
Fast forward to now. In the past two years, I've been asked to write articles and provide quotes probably a dozen times speaking specifically to what a buyer should have or do to be prepared to buy in today's market. I usually give some sort of answer that mentions loan guidelines, down-payment money, clarity on their life plans and vision, and so on and so forth. But over the last few months, I've become convinced that there's an extra element buyers need to have: very thick skin.
Buyers today need to be durable. It is just a tough market. Today's buyers are just getting up the nerve to through their hat into a market that has been unprecedented in volatility. After two years of hearing what a buyer's market it is but being afraid to buy with prices still falling, buyers are getting up the gumption to jump into the market with both feet (OK, nudged slightly by the $8,000 Obama tax credit) and, well, being put through the ringer.
First off, 40 percent of them aren't even qualifying for a mortgage. And that's 40 percent of the people who thought they were qualified enough to spend their time filling out a loan application, not just 40 percent of John Q. Publics out there. Sometimes it's a credit issue, but other times, the source of the failure to qualify is a (justifiably) concerned-for-her-job underwriter who simply can't go out on a limb to approve any sort of employment or income or asset documentation that doesn't live squarely within the box.
But once they do get a loan, finding a house -- one that has no fire damage, flea infestations, crime scene tape, meets basic health and safety standards, is in a good neighborhood, and is maybe even (could it be?!) attractive and functional -- is just not as easy as it used to be, especially at the oft-touted entry-level price ranges. ...CONTINUED
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Submitted by Robert A. Hulme on June 7, 2009 - 5:01am.
This definitely is a Buyer's Market, there are a few obstacles but not anything that is close to the doom and gloom portrayed. The Bank Owned properties that my clients have purchased have all been in OK condition.
This is the perfect time for qualified buyers to enter the market, they won't be allowed to fail.
Robert A. Hulme
Realtor, GRI, e-PRO
Utah Select Realty
Loan Officer
Mortgage Xpress
www.CedarHillsUtHomes.com
www.EagleMountainUtHomes.com
Submitted by Betty Saenz REALTOR EcoBroker SRES GRI on June 7, 2009 - 5:28am.
I miss Richard Pryor and have not seen that film- I'll order it on NetFlicks! 81 offers! That's amazing!! In parts of Central Austin, it was commonplace to have multiple offers the first day a property was on the market. You had to make an offer Day 1 AND make it for MORE than asking price & clean as a whistle. Now, we are slightly down, and I mean slightly, it's not quite that way anymore. I am thankful to be in Austin! Texas and many cities in Texas are doing well compared to so many around our nation. I think if a person feels secure in their job or income- NOW IS the best time in many years to buy a home!!
Betty Saenz REALTOR® EcoBroker GRI SRES®
http://www.bettysellsaustin.com/
http://www.texasorganichome.com/
http://skyrealtyaustin.com/blog/author/betty-saenz
Submitted by Joe Loomer on June 7, 2009 - 6:13am.
This is nothing like the market out here in the Augusta area. VA and FHA combined make up a good percentage of all buyers here, thanks to the presence of Fort Gordon. Inventory is high but seems to be stable, and homes have not lost value - although appreciation is flat. We never experienced the boom market of other areas, so multiple offer scenarios where never the norm. I guess it just proves the point "All Real Estate is Local."
Augusta GA Homes
Navy Chief, Navy Pride
Joe Loomer (USN Ret.)
Associate Leadership Council, Growth Chair
Keller Williams Realty Augusta Partners
Submitted by Ruthmarie Hicks on June 7, 2009 - 6:42am.
Pretty good description of the buying experience in New York - For the most part its the banks that are beating people to a pulp....Trying to get a loan is taking is like willing putting yourself through the Spanish Inquisition.
Submitted by Doug Francis on June 7, 2009 - 6:58am.
Your readers sure are up early! Oh, your clock is pacific time...
The harsh reality is that I am sitting in my office at 10:36 on Sunday morning, have been to church and just finished up with a client to "improve" the offer that we submitted yesterday. This property is in almost perfect condition and stands out from the rest so it attracted another offer... because the inventory of nice properties (where an overhaul isn't required) is slim.
I like to tell my clients in an attempt to lighten the tension that this isn't a job, it's an adventure in real estate.
Doug Francis
RE/MAX Presidential in Fairfax, Virginia
http://dougfrancishomes.com/category/blog/
Submitted by Wenceslao Fernandez Jr, BS, Realtor, CDPE on June 8, 2009 - 12:07pm.
As you said: "Half of the bank-owned properties -- most of what's out there at this price point -- are falling apart, filthy, or have some flavor of funkiness that renders the property ineligible for FHA financing".
Keep in mind that, though this program may not be ideal in multiple offer situations (because it typically takes longer to close - up to 60 days or so), FHA has a program ideal for this type of property. It's the Streamlined Limited FHA-203k program, which lends buyers up to $35,000 to make repairs ($5k minimum).
The program requires buyers to submit estimates from licensed and insured contractors (may even be from Home Depot or Lowes), and FHA would pay them directly. Of course, restrictions apply and not all mortgage brokers/lender may be as familiar with the program. However, more can be learned straight from the FHA website (www.FHA.gov). Just enter 203k in the search field.
According to the FHA website:
"Streamlined 203(k) Limited Repair Program
Like the regular Section 203(k) program, Streamlined (k) is available to:
Augment an FHA Energy Efficient Mortgage (EEM).
Insure the mortgage on a single-family housing unit sold from HUD's REO inventory.
Insure a mortgage that covers both repairs costs and the refinance of an existing mortgage."
Remember Luck is when Preparation Meets Opportunity. Make it happen!
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