First-time buyers aren't first in line
Letter to the Editor
By Inman News, Friday, September 4, 2009.Re: 'Multiple offers: the new norm' (Aug. 17)
Dear Editor:
First-time homebuyers are in a bidding contest, but if they win they are limited to "cash on hand." This simple matter is what places first-time buyers in second or third place in the bidding process. If the appraiser does not come up with the figures offered in the contract ... there goes any chances to negotiate for the first-time buyer because they are competing with cash and 20% or more down-payment buyers.
Gloria Argueta
Casa Latino AT Real Estate
Concord, Calif.
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Submitted by Gloria Soria,"Su realtor de confianza" on September 4, 2009 - 7:01pm.
I am agree with this . Here in New York, we are competing with the Real estate investor and construction and remodelation companies who are able to buy on cash , as you stated in your article. The REO and short sales properties are most solicited for the investor. The first time buyer need not only the loan to buy but the one to remodel and they are not familiar with this processes and most of them still thinks to get very good deal, taking long time to decide
Submitted by Sue Eller on September 4, 2009 - 7:20pm.
I am in absolute agreement with the author of this post. It is so frustrating to be in the "real world" of multiple offers in this situation, while the media continues to ignore this "new reality." I have written numerous offers in this situation, only to be out bid with what I presume to be "all cash" investor types who just blow the regular first time buyer right outta the water.
By the time you factor in the cost of refurbishing many of these REO's, there is no way a first time buyer can swing it. After working since February with one such buyer, I am hoping that the latest offer will fly. I found a home listed by an out of area agent that is a bit over-priced and not an REO or short sale. We shall see.
I am a Realtor in the greater Los Angeles area. The tax credit really needs to be extended so that these true first time buyers who were the target of the credit can actually buy a home!
Submitted by Christine Donovan - Costa Mesa Real Estate on September 8, 2009 - 7:49pm.
There is so much competition right now in the lower price ranges it can place a first time buyer with less down payment at a disadvantage.
I believe the best thing for the first time buyer in this market is patience and persistence.
www.donovanblatt.com
www.livingcostamesa.com
Submitted by Margie OCampo de Castillo on September 14, 2009 - 1:24am.
In a perfect world, industry solutions would be created, or at least vetted, by industry experts and practitioners. I believe we can all safely assume that anything to the contrary is a complete waste of resources!
I still have not gotten my arms around the one where we so generously gave tax money to failed banks with no strings attached and a mere suggestion they help homeowners in hardship with temporary modifications. Come again? Oh, they’re going to cure this financial crisis from the top on down. This one is giving lots of folks, including me, a major case of heartburn.
What about the monies given to states and cities?
The whole purpose of this money, or so we were told, was to help first time buyers purchase a home and reduce the inventory of foreclosed homes. Well, the way one program in our state works; the buyer is given 22% of the price of the home as a silent second. After owning the property for a predetermined time, the 22% does not have to be repaid. OK, that sounds good so far. But here is where I have trouble understanding the rationale behind the guidelines.
First, the Buyer must find a Seller willing to sell the home for 5% below the appraised value vs. accepting a higher than list price cash offer from an investor who can close in weeks vs. in 60 +/- days. (this is a perfect segue for another pet peeve of mine….why aren’t banks required to give first time buyers first shot at foreclosed homes? After 90 days on the market, First Time Buyer Exclusivity would be removed…. But that’s a 10 page grievance, so we’ll leave it alone for now….but I’m sure you get the gist of it.)
Let’s say the home is around $125K. The Buyer has to put 3.5% of his own money down ($4,375). If the Seller isn’t jumping for joy at the idea of giving the buyer more money to help pay closing costs and prepaids, the buyer has to have at least another 3.5% to cover those costs, ($4,375) along with 2 months of reserves, ($450).
Now I don’t know about you, but not even before the economy fell off a cliff did I come across many first time buyers with $10,000 saved up to buy a house. So I’m going to go out on a limb and say that the successful first time buyer programs I know of offer loan worthy buyers a 30 year fixed rate at or mostly below market. They typically include down payment assistance with a required financial literacy class. But I guess that model was just way too uncomplicated and mundane.
So the question begging to be asked….what percentage of first time buyers are we targeting to help here? Are we throwing money at people who DON’T need the help….? You be the judge.