Today's buyers need thick skin
Mood of the Market
By Tara-Nicholle Nelson, Monday, June 1, 2009.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. Another good 20 or 30 percent of them have some minor or perceived issue that doesn't actually render the property ineligible, but the listing agent or the asset manager believes it does, so they refuse to accept an FHA-financed offer.
And now we're learning that a bunch of the REOs aren't even being listed for sale, but are being held off the market by the banks until some unbeknownst to anyone moment in time, with the intention to prevent a glut of REOs. I can't tell you how many times in the last couple of months a buyer has asked me how they can buy a particular property that we know, through title or the signage on the property itself, to be bank-owned, but is not available for sale, according to the property and asset managers.
Then, when you finally find a good place in a decent neighborhood, there are inevitably multiple offers. Now, my clients are well-trained to understand that the list price is simply a figment of the listing agent's and seller's imagination, so it might be right on fair market value, but it could be overinflated (to match the seller's ego) or depressed (to generate multiple offers). So we go over asking in multiple-offer situations on the places we think are worth it. But lately, even our $30,000-plus over-asking offers are getting little or no seller love! I mean, we're still dealing with nine weeks of response time from the bank, or someone else with a 20 percent financed offer $10,000 higher than ours. In a normal market, it'd be no sweat -- we'd just go higher the next time. But after two years of having heard how buyers hold all the bargaining power, how houses are just sitting there, it's really tough for buyers to wrap their heads around offering $40,000 or $50,000 dollars over asking. And with the new changes that minimize or eliminate communication between Realtor/mortgage broker and appraiser, I wonder whether these deals are even feasible, with sale prices so high over asking and with few or no comparables to justify them.
So, what does a buyer need to have to buy, besides mortgage money, cash and decent credit? Pads. As in football pads -- but of the emotional sort. Buyers need to be hearty and hale. Be prepared to be battered. Be prepared for a long escrow if you make an offer on a short sale. Be prepared for some tumult and drama if you make an offer on an REO, and then be pleasantly surprised if you experience none. Be willing to check MLS, Craigslist and each of the 7,249 other listing Web sites about 17 times per day (the precise number a client of mine said she checks them). Never get your heart set on ANY short sale or REO until you have a contract signed by the bank's representative. And if you know anyone with a mid-century modern in my town with no pit bulls next door and minimal freeway/airport noise -- please call me. I have qualified buyers!
Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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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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Miami-Dade County, Florida.