How likely are you, as a consumer, going to spend more money for a product than it's worth on the open market? Unless it's the last one of it's kind to be found, not much in life is going to be sold for more than it's truly worth at the time. And in real estate, value is based on an appraisal, which is an historical prospective of similar home sales over a prescribed time frame. The appraisal doesn't depend upon what the seller originally paid for the property, how much money the seller has spent upgrading or maintaining the property, nor how much that seller needs or wants to net upon sale.
What makes some sellers think a buyer will pay more than the appraised price for a home? But they do. No matter how intelligent and informed they are, some sellers still think their home is so special that it just has to be valued at much more than others in the neighborhood.
The price of homes has dropped significantly over the last couple of years and appears to have leveled off now. Prices leveled. They didn't rise. They won't rise significantly for months and years to come.
Expectations of both buyers and sellers are just wildly different from the reality of this economy. Sellers who have been waiting out the housing market crash now seem to have amnesia when it comes to the realities of this housing market and their chance of selling at a higher price than in months or years past. And buyers are still bargain hunting and often terribly unrealistic because they think they can further discount list prices by 25% or more.
The market is a mess, with foreclosures and short sales in the mix and being used as the majority of the comparables for appraisals. It can't be helped because the short sales and foreclosures make up the majority of the homes being sold now. They are sold at what amounts to current fair market value for each one. Some look like better deals than others on paper and on the crazy websites that claim to give you an appraised price of all properties in the area. How in heck can they purport to know the real value of homes without knowing nuances of the neighborhoods or the property conditions?
They just serve to further confuse both buyers and sellers. And us, real estate professionals. What are we to do? Listing a property at well over the true value isn't legitimate. That inflates expectations and is just a downright lie told to the sellers to get the listing. Being too emotionally attached to a property and unprepared to take a beating on price now really means that the property shouldn't be on listed for sale in the first place. But there will always be an agent willing to list a home, land or condo at a significantly inflated price because they need to get their name on a sign and on the internet.
Don't mistake the person with the highest number of listings or the highest listing prices to be the highest quality agent. Agents inflating prices get a reputation among their peers and their tactics backfire. When I show one of their listings I'm more cautious than usual and make certain to tell the buyer prospects about the exagerated list price as a buffer to protect them and myself. While the listing agent is lying to the seller, the selling or buying agent would be lying to the buyer by not providing very accurate information of sales in that specific neighborhood.
No one wins here, except perhaps the listing agent who captures an audience through ads and gains clients for other properties, just not for that specific overpriced one.
Wednesday, June 2, 2010
Saturday, May 1, 2010
Getting the Price Right
This past couple of months we've seen an increase in sales and a leveling of prices, indicating to me that we've hit bottom and are now hoping to see property values on the rise. The inventory of homes for sale has dropped and buyers looking for specific types of properties are anxious to see what will be listed for sale next.
That's good news for buyers because prices aren't going to sky rocket anytime in the near future, allowing them to still get good deals at reasonable rates And it's good news for sellers, although they won't see the dramatic rise they were hoping for. Both the $6500 and $8000 tax rebates on a home purchase have expired, interest rates are slightly up, and we're back to basics.
Property listings are the life blood of all agents and we vie for each and every one. We hone our marketing skills and work to get the properties sold as quickly as possible and at the best possible price. Attempting to assign a current fair market value is where the science comes in. It may not be an exact science, like math or chemistry, where A+B always = C, but it's a 'science based on past sales and current trends, analyzed together, to come up with the best possible listing price for that property at that time. And we try to explain to sellers that equates to a reasonable place to start, may not hold up over the life of the listing. Price adjustments are almost always inevitable. As the market ebbs and flows, so do listing and sales prices.
But listing homes for sale is still difficult because most sellers don't want to believe the one universal truth...if it's priced right for the market, it will sell. If it isn't, it won't. Similar in some ways to the 'if you build it, they will come' theory for new construction, everything will sell over time if the asking price and the buying price make good economic sense. Recently, and probably for a long time to come, the lower prices made good economic sense to buyers...and threw sellers for a loop. No one wants to hear the reality that their home is worth less than they would like it to be.
None of us has a crystal ball. We can only follow trends and history. My approach to listing and selling property is based on data taken from the sales statistics and knowledge of the local neighborhoods. I look at what seems to be happening in each area of the county and specific neighborhoods and give the best information I can find to help with the pricing decisions.
Last week I saw that owners I'd been talking to for over 6 months listed with another agent for $100,000 over the sale price of anything else in their neighborhood. Apparently my counseling on fair market value and appraisal issues didn't make any difference once they found someone who would tell them what they wanted to hear. Sure their home is lovely and has lots of bells and whistles. But it won't appraise at anywhere near that asking price. I guess it's listed 'just in case' that one-in-a-million cash buyer, who's been out of touch with economic realities, happens to stop by. And the listing agent gets to have a good looking property on multiple public real estate websites and can divert calls that come in on this listing to other properties that make more economic sense.
And just yesterday an owner in my very own neighborhood listed with another agent at much lower than the price I recommended 12 months ago, and lower than what is currently fair market value, for sure. Last year they were angry with my assessment of value, thinking it too low. Now they have a listing agent who isn't familiar with the neighborhood, didn't take it's recent sales and location into account, and who has UNDER priced the home by close to 20%!
I'm obligated to supply buyers with information on recent comparable home sales when they are out looking to buy a home. And I'm also obligated to give the same type of data to sellers when they are ready to list their property. Why does one group value that information and the other find it appalling?
That's good news for buyers because prices aren't going to sky rocket anytime in the near future, allowing them to still get good deals at reasonable rates And it's good news for sellers, although they won't see the dramatic rise they were hoping for. Both the $6500 and $8000 tax rebates on a home purchase have expired, interest rates are slightly up, and we're back to basics.
Property listings are the life blood of all agents and we vie for each and every one. We hone our marketing skills and work to get the properties sold as quickly as possible and at the best possible price. Attempting to assign a current fair market value is where the science comes in. It may not be an exact science, like math or chemistry, where A+B always = C, but it's a 'science based on past sales and current trends, analyzed together, to come up with the best possible listing price for that property at that time. And we try to explain to sellers that equates to a reasonable place to start, may not hold up over the life of the listing. Price adjustments are almost always inevitable. As the market ebbs and flows, so do listing and sales prices.
But listing homes for sale is still difficult because most sellers don't want to believe the one universal truth...if it's priced right for the market, it will sell. If it isn't, it won't. Similar in some ways to the 'if you build it, they will come' theory for new construction, everything will sell over time if the asking price and the buying price make good economic sense. Recently, and probably for a long time to come, the lower prices made good economic sense to buyers...and threw sellers for a loop. No one wants to hear the reality that their home is worth less than they would like it to be.
None of us has a crystal ball. We can only follow trends and history. My approach to listing and selling property is based on data taken from the sales statistics and knowledge of the local neighborhoods. I look at what seems to be happening in each area of the county and specific neighborhoods and give the best information I can find to help with the pricing decisions.
Last week I saw that owners I'd been talking to for over 6 months listed with another agent for $100,000 over the sale price of anything else in their neighborhood. Apparently my counseling on fair market value and appraisal issues didn't make any difference once they found someone who would tell them what they wanted to hear. Sure their home is lovely and has lots of bells and whistles. But it won't appraise at anywhere near that asking price. I guess it's listed 'just in case' that one-in-a-million cash buyer, who's been out of touch with economic realities, happens to stop by. And the listing agent gets to have a good looking property on multiple public real estate websites and can divert calls that come in on this listing to other properties that make more economic sense.
And just yesterday an owner in my very own neighborhood listed with another agent at much lower than the price I recommended 12 months ago, and lower than what is currently fair market value, for sure. Last year they were angry with my assessment of value, thinking it too low. Now they have a listing agent who isn't familiar with the neighborhood, didn't take it's recent sales and location into account, and who has UNDER priced the home by close to 20%!
I'm obligated to supply buyers with information on recent comparable home sales when they are out looking to buy a home. And I'm also obligated to give the same type of data to sellers when they are ready to list their property. Why does one group value that information and the other find it appalling?
Statistics Do Tell The Story
Reprinted in part from my newsletter...
2008 VS 2009 sales in Indian River County...and the first 45 days of 2010
Here are some statistics as taken from the MLS of the Realtor Association of Indian River County comparing the sales in 2008 to those in 2009.
Single family home sales on the mainland in Vero Beach were up nearly 40% in 2009 as compared to 2008, while the average and median price of homes dropped significantly.
In 2008 there were 708 homes sold on Vero’s mainland with an average sale price of $215,395 and median sale price of $175,000, as compared to 989 in 2009 at an average sale price of $151,674 and a median sale price of $133,000.
Single family home sale on Vero’s island rose 16% from 216 in 2008 to 251 in 2009 while a drop in the average and median price. In 2008 the islands average sale price was $933,770 with a median of $577,500, while in 2009 it fell to an average of $831,542 and median sale price of $460,000.
Single family home sale in Sebastian and the north Indian River County rose 23% in 2009 to 486 from 395 in 2008 but median and average prices fell. Here the 2008 sale price average was $154,025, median $142,000, while in 2009 they dropped to an average of $130,000 and median of $115,000.
Condominium sales on the mainland of Vero Beach rose just under 14%, from 233 total sales in 2008 to 265 in 2009. And as has been the trend, the median and average sale prices dropped in 2009 to $90,887 average and median $70,000 from 2008 average of $122,700 and median of $90,000.
The number of island condo sales stayed level with 146 in 2008 and 151 in 2009 but, as expected, average price went from $495,384 in ’08 to $373,556 in ’09 and median dropped from $355,000 to $266,000.
Condo sales in Sebastian and the north county more than doubled in 2009 at 48 total, up from 20 in 2008. Average condo sale price went down from $167,325 in 2008 to $127,539 in 2009, and the median price fell from $148,750 to $122,250.
And for the month of January in 2010 the statistics show 12 single family home (average sale price of $686,250, median of $407,500) and 13 condominium sales ($396,615 average sale price and $378,000 median) on Vero’s island; Vero Beach mainland sales of 59 single family homes (average sale price $140,576, median price of $126,000) and 12 condo sales (average $122,125 and median of $85,000); Sebastian and the north county show 31 total single gamily homes sales (Average $133,170, median $127,900) and only 4 condo sales averaging $142,875 (median $142,250).
Statistics for the he first half of February show sales holding steady county wide. The MLS data for the period of February 1-14, 2010 shows 9 single family and 4 condo sales on Vero Beach’s island; 26 single family home and 8 condo sales on Vero’s mainland; and 16 single family homes and 1 condo sale in Sebastian and the north county.
We are selling in all price ranges and styles, all ages and conditions of structure…new, old, and everything in between. And the rentals are going fast, too! This is certainly a great time for buyers to take advantage of low mortgage rates and low house and condo prices that seem to have leveled a bit. Realistic sellers are feeling more confident now and our market picture is looking brighter! Maybe we are at the turning point? Stay tuned….
2008 VS 2009 sales in Indian River County...and the first 45 days of 2010
Here are some statistics as taken from the MLS of the Realtor Association of Indian River County comparing the sales in 2008 to those in 2009.
Single family home sales on the mainland in Vero Beach were up nearly 40% in 2009 as compared to 2008, while the average and median price of homes dropped significantly.
In 2008 there were 708 homes sold on Vero’s mainland with an average sale price of $215,395 and median sale price of $175,000, as compared to 989 in 2009 at an average sale price of $151,674 and a median sale price of $133,000.
Single family home sale on Vero’s island rose 16% from 216 in 2008 to 251 in 2009 while a drop in the average and median price. In 2008 the islands average sale price was $933,770 with a median of $577,500, while in 2009 it fell to an average of $831,542 and median sale price of $460,000.
Single family home sale in Sebastian and the north Indian River County rose 23% in 2009 to 486 from 395 in 2008 but median and average prices fell. Here the 2008 sale price average was $154,025, median $142,000, while in 2009 they dropped to an average of $130,000 and median of $115,000.
Condominium sales on the mainland of Vero Beach rose just under 14%, from 233 total sales in 2008 to 265 in 2009. And as has been the trend, the median and average sale prices dropped in 2009 to $90,887 average and median $70,000 from 2008 average of $122,700 and median of $90,000.
The number of island condo sales stayed level with 146 in 2008 and 151 in 2009 but, as expected, average price went from $495,384 in ’08 to $373,556 in ’09 and median dropped from $355,000 to $266,000.
Condo sales in Sebastian and the north county more than doubled in 2009 at 48 total, up from 20 in 2008. Average condo sale price went down from $167,325 in 2008 to $127,539 in 2009, and the median price fell from $148,750 to $122,250.
And for the month of January in 2010 the statistics show 12 single family home (average sale price of $686,250, median of $407,500) and 13 condominium sales ($396,615 average sale price and $378,000 median) on Vero’s island; Vero Beach mainland sales of 59 single family homes (average sale price $140,576, median price of $126,000) and 12 condo sales (average $122,125 and median of $85,000); Sebastian and the north county show 31 total single gamily homes sales (Average $133,170, median $127,900) and only 4 condo sales averaging $142,875 (median $142,250).
Statistics for the he first half of February show sales holding steady county wide. The MLS data for the period of February 1-14, 2010 shows 9 single family and 4 condo sales on Vero Beach’s island; 26 single family home and 8 condo sales on Vero’s mainland; and 16 single family homes and 1 condo sale in Sebastian and the north county.
We are selling in all price ranges and styles, all ages and conditions of structure…new, old, and everything in between. And the rentals are going fast, too! This is certainly a great time for buyers to take advantage of low mortgage rates and low house and condo prices that seem to have leveled a bit. Realistic sellers are feeling more confident now and our market picture is looking brighter! Maybe we are at the turning point? Stay tuned….
Wednesday, February 3, 2010
I got scammed last week
OK, I should have know better. Live and learn...and pay through the nose!
Last week I signed up with company out of California that was to provide me with names, emails and phone numbers of consumers looking for real estate services in Vero Beach and Sebastian. The company, Reply Real Estate, gets the contact information from on-line forms that are filled in by each of the prospects. They described these people as being 'scrubbed' leads, fully screened and just sitting there waiting for me to call them. The initial set-up fee was only $35 and each name cost $59+change. It's a small price to pay for an introduction to clients eager to buy or sell. Plus, I was told without hesitation that any who were unreachable or not valid would be credited to my account.
Well, guess what? Of the 10 or so I've been sent so far, at least 8 didn't want my services at all. They didn't just change their mind after they filled in the form. They merely went online to look for information about something specific and couldn't get to what they wanted unless they filled in a form. Once they filled in all the 'required' fields and were able to search for their specific information, they signed off and promptly forgot about it.
So there I sat, on the phone, making calls to people who said they didn't have anything to sell or didn't want to buy anything and questioned why in the world I was calling them. One guy did say, yes, he was looking for information on a specific property near Gulf Port, Mississippi and wondered if I could help him.(That's at least 10 to 12 hours away!)
Finally I got smart and asked these unsuspecting 'leads' if they could be willing to provide statements for me detailing that they did not intend to have an agent contact them and were not in the market for real estate services. I explained that I was paying for these so called leads and might eventually need some type of proof for the customer service folks at Reply Real Estate. They each responded in the affirmative.
So imagine my shock when I wrote within the necessary 72 hr. time frame to ask for credits just to have my requests denied. Repeatedly the service department did not feel that the situation required credit...one service rep couldon't even see that a lead to a guy wanting info in Mississippi was invalid. The company simply keeps cranking out bogus leads and charging my American Express card for each one. CAAAA....CHING! CAAAA...CHING!
I have been credited with a few...one duplicate where the guy was neither a buyer nor a seller. And another where the phone number isn't live. But each credit received has been a fight and a challenge to blood pressure control.
So, here I sit, waiting for my contract to expire, continuing to battle for credits, and vowing to tell everyone in earshot about my experience with www.replyrealestate.com.
For the consumers reading this...DO NOT FILL IN FORMS ON WEBSITES UNLESS YOU KNOW THAT THE INFORMATION IS GOING TO SOMEONE SPECIFIC AND YOU WELCOME THEIR CALL.
And for real estate agents thinking that a scrubbed and polished lead service might be a nice addition to your marketing plan, SKIP THIS COMPANY!
Am I afraid of them coming after me for publicly complaining about them? NOT ONE BIT!!! Everyhing I've said here is true. They are the bad guys and they deserve to be exposed for their total lack of quality control and unwillingness to do the right thing.
Remember the name www.replyrealestate.com. Avoid them like the plague.
Last week I signed up with company out of California that was to provide me with names, emails and phone numbers of consumers looking for real estate services in Vero Beach and Sebastian. The company, Reply Real Estate, gets the contact information from on-line forms that are filled in by each of the prospects. They described these people as being 'scrubbed' leads, fully screened and just sitting there waiting for me to call them. The initial set-up fee was only $35 and each name cost $59+change. It's a small price to pay for an introduction to clients eager to buy or sell. Plus, I was told without hesitation that any who were unreachable or not valid would be credited to my account.
Well, guess what? Of the 10 or so I've been sent so far, at least 8 didn't want my services at all. They didn't just change their mind after they filled in the form. They merely went online to look for information about something specific and couldn't get to what they wanted unless they filled in a form. Once they filled in all the 'required' fields and were able to search for their specific information, they signed off and promptly forgot about it.
So there I sat, on the phone, making calls to people who said they didn't have anything to sell or didn't want to buy anything and questioned why in the world I was calling them. One guy did say, yes, he was looking for information on a specific property near Gulf Port, Mississippi and wondered if I could help him.(That's at least 10 to 12 hours away!)
Finally I got smart and asked these unsuspecting 'leads' if they could be willing to provide statements for me detailing that they did not intend to have an agent contact them and were not in the market for real estate services. I explained that I was paying for these so called leads and might eventually need some type of proof for the customer service folks at Reply Real Estate. They each responded in the affirmative.
So imagine my shock when I wrote within the necessary 72 hr. time frame to ask for credits just to have my requests denied. Repeatedly the service department did not feel that the situation required credit...one service rep couldon't even see that a lead to a guy wanting info in Mississippi was invalid. The company simply keeps cranking out bogus leads and charging my American Express card for each one. CAAAA....CHING! CAAAA...CHING!
I have been credited with a few...one duplicate where the guy was neither a buyer nor a seller. And another where the phone number isn't live. But each credit received has been a fight and a challenge to blood pressure control.
So, here I sit, waiting for my contract to expire, continuing to battle for credits, and vowing to tell everyone in earshot about my experience with www.replyrealestate.com.
For the consumers reading this...DO NOT FILL IN FORMS ON WEBSITES UNLESS YOU KNOW THAT THE INFORMATION IS GOING TO SOMEONE SPECIFIC AND YOU WELCOME THEIR CALL.
And for real estate agents thinking that a scrubbed and polished lead service might be a nice addition to your marketing plan, SKIP THIS COMPANY!
Am I afraid of them coming after me for publicly complaining about them? NOT ONE BIT!!! Everyhing I've said here is true. They are the bad guys and they deserve to be exposed for their total lack of quality control and unwillingness to do the right thing.
Remember the name www.replyrealestate.com. Avoid them like the plague.
Saturday, January 2, 2010
The Best and Worst of 2009
(reprinted from my Newsletter of January 2010)
Here's my recap of the best and worst that happened in our real estate market in 2009:
The WORST...
- Short sales
Numero Uno in the list of 'bad' things to happen to real estate. For those who still may not know, a short sale is when the owner owes more than the current market price of the property and tries to convince his lender to take less than the mortgage payoff amount. This type of sale isn't for everyone and it's just problematic from start to finish. It's one step before foreclosure and doesn't always work. In fact, I think the average success with short sale is only about 50%. They are normally a nightmare for all involved with long waits and little information forthcoming and then frantic activity trying to meet the lenders often impossible demands, be it an unrealistic timetable or more money. The government should have instructed the banks that received bail-out funds to renegotiate existing mortgages at fair market value. More people could then have stayed in their homes or sold the properties at a loss and moved on without personal financial collapse. The banks got us into this mess with subprime lending practices and loans for anyone who could fog a mirror. They should have been forced to get us out of it, too.
- FHA approved seller 'contribution'
As if things aren't bad enough, FHA loans have become the norm and with them comes the allowance of a seller contribution to cover buyer's closing costs and pre-paids. The word is 'allowed' but in this market it is often a 'demand'. More buyers without sufficient funds for a down payment and closing costs are shopping for homes and making offers which include that 6% 'give-back' from the seller. Most sellers are already hanging on a financial cliff and can't negotiate more loss into the low market prices. It's just torture for everyone. There are lots of reasons why FHA is so popular, but the bottom line for me is ...if you can't afford it, don't buy it. If you need that extra 6%, save up and buy later. And seller's beware: if you accept an FHA offer, even without any request for concessions, and the property appraiser assigned by the buyer's lender doesn't appraise it high enough to meet that contract sale price, you are stuck with that 'determination of market value' for 6 months! I witnessed firsthand how a poorly constructed appraisal, missing sales that were clearly in the county records but not the MLS, and a demand for a 6% seller contribution, can ruin deals and even lives. That particular deal collapsed and the seller was forced into foreclosure. Sellers should weigh the options when presented with an FHA-based offer.
- Lenders here today, gone tomorrow
With the drop-out rate of banks, it's difficult for all buyers and loan officers to keep the mortgage application process together. Bank A gets swallowed up by Bank B and the process begins again. Maybe not starting from scratch, but still an unwanted snag in the procedural quagmire. And, with banks already known for selling off mortgages in the sub-prime market, it is often nearly impossible for the borrower to learn who is now holding the loan papers. Only the original mortgage is recorded in the county records and subsequent sales of that loan aren't easy to find. It took one of my clients over 6 months to find the right people to talk to regarding his mortgage. And that was only after he wrote to his state legislators.
- Foreclosure lists
Most often those properties aren't even still available. Most agents who work exclusively with foreclosed properties have the homes sold before they ever get advertised. Their are plenty of investors with cash who snap up foreclosures, often in total disrepair, and work them up to be rentals or resales. These lists and websites for foreclosed properties have been a complete waste of time for my interested clients who have tried making multiple offers only to be rebuffed time and again.
- Chinese drywall
As if there wasn't enough to worry about, now home sellers and buyers have to be concerned about the possibility of defective drywall that can cost tens of thousands of dollars to replace. Worse yet, there is no 'protocol' for the repair...no proper procedure to follow to insure the toxic effects are entirely removed even if the drywall is replaced. The government is working on it. (Practice holding your breath). Sellers, be cautious and always get a second detailed opinion. It's important to have information and services provided by those without a self interest.
And the BEST...
- $8000 First time Homebuyer Credit
This stimulated the market at a time when prices are low and brought buyers to real estate while there are a lot of choices.
- Extension of Homebuyer credit expanded to include those who already own a home
The rules are a bit different and the credit is less ($6500) but this change brings even more activity to the real estate market and allows interested homeowners to consider buying something different. Maybe newer, maybe smaller, maybe larger. With the promise of a tax break, many current homeowners will feel 'unstuck'.
- Leveling of homes prices
This isn't to say that prices won't go a tad bit lower, but it really looks as though existing home prices have leveled off. That gives more stability to the market and allows both buyers and sellers to make better decisions. Buyers can 'get off the fence' and sellers will have to get realistinc to make the sale. They both now have a more realistic point ot reference.
- Return of the condo market
Condos are selling again after a few years as the 'hot potatoes' of real estate. Cash buyers looking for deals have been attracted to the lower prices of condos with amenities for their pleasure and that of their snow-bird tenants when the places are rented for 'season'. It's still important to check the financial health of a condo community before making a purchase, but many are all spiffed and polished and good deals now.
Notice I couldn't think of an equal number of bests vs. worsts. I don't know about you, but I bid a not-so-fond farewell to 2009...and welcome the new decade. 2010 just has to be better!
Wishing all the best to you and yours for peace and prosperity in 2010....Bon
Here's my recap of the best and worst that happened in our real estate market in 2009:
The WORST...
- Short sales
Numero Uno in the list of 'bad' things to happen to real estate. For those who still may not know, a short sale is when the owner owes more than the current market price of the property and tries to convince his lender to take less than the mortgage payoff amount. This type of sale isn't for everyone and it's just problematic from start to finish. It's one step before foreclosure and doesn't always work. In fact, I think the average success with short sale is only about 50%. They are normally a nightmare for all involved with long waits and little information forthcoming and then frantic activity trying to meet the lenders often impossible demands, be it an unrealistic timetable or more money. The government should have instructed the banks that received bail-out funds to renegotiate existing mortgages at fair market value. More people could then have stayed in their homes or sold the properties at a loss and moved on without personal financial collapse. The banks got us into this mess with subprime lending practices and loans for anyone who could fog a mirror. They should have been forced to get us out of it, too.
- FHA approved seller 'contribution'
As if things aren't bad enough, FHA loans have become the norm and with them comes the allowance of a seller contribution to cover buyer's closing costs and pre-paids. The word is 'allowed' but in this market it is often a 'demand'. More buyers without sufficient funds for a down payment and closing costs are shopping for homes and making offers which include that 6% 'give-back' from the seller. Most sellers are already hanging on a financial cliff and can't negotiate more loss into the low market prices. It's just torture for everyone. There are lots of reasons why FHA is so popular, but the bottom line for me is ...if you can't afford it, don't buy it. If you need that extra 6%, save up and buy later. And seller's beware: if you accept an FHA offer, even without any request for concessions, and the property appraiser assigned by the buyer's lender doesn't appraise it high enough to meet that contract sale price, you are stuck with that 'determination of market value' for 6 months! I witnessed firsthand how a poorly constructed appraisal, missing sales that were clearly in the county records but not the MLS, and a demand for a 6% seller contribution, can ruin deals and even lives. That particular deal collapsed and the seller was forced into foreclosure. Sellers should weigh the options when presented with an FHA-based offer.
- Lenders here today, gone tomorrow
With the drop-out rate of banks, it's difficult for all buyers and loan officers to keep the mortgage application process together. Bank A gets swallowed up by Bank B and the process begins again. Maybe not starting from scratch, but still an unwanted snag in the procedural quagmire. And, with banks already known for selling off mortgages in the sub-prime market, it is often nearly impossible for the borrower to learn who is now holding the loan papers. Only the original mortgage is recorded in the county records and subsequent sales of that loan aren't easy to find. It took one of my clients over 6 months to find the right people to talk to regarding his mortgage. And that was only after he wrote to his state legislators.
- Foreclosure lists
Most often those properties aren't even still available. Most agents who work exclusively with foreclosed properties have the homes sold before they ever get advertised. Their are plenty of investors with cash who snap up foreclosures, often in total disrepair, and work them up to be rentals or resales. These lists and websites for foreclosed properties have been a complete waste of time for my interested clients who have tried making multiple offers only to be rebuffed time and again.
- Chinese drywall
As if there wasn't enough to worry about, now home sellers and buyers have to be concerned about the possibility of defective drywall that can cost tens of thousands of dollars to replace. Worse yet, there is no 'protocol' for the repair...no proper procedure to follow to insure the toxic effects are entirely removed even if the drywall is replaced. The government is working on it. (Practice holding your breath). Sellers, be cautious and always get a second detailed opinion. It's important to have information and services provided by those without a self interest.
And the BEST...
- $8000 First time Homebuyer Credit
This stimulated the market at a time when prices are low and brought buyers to real estate while there are a lot of choices.
- Extension of Homebuyer credit expanded to include those who already own a home
The rules are a bit different and the credit is less ($6500) but this change brings even more activity to the real estate market and allows interested homeowners to consider buying something different. Maybe newer, maybe smaller, maybe larger. With the promise of a tax break, many current homeowners will feel 'unstuck'.
- Leveling of homes prices
This isn't to say that prices won't go a tad bit lower, but it really looks as though existing home prices have leveled off. That gives more stability to the market and allows both buyers and sellers to make better decisions. Buyers can 'get off the fence' and sellers will have to get realistinc to make the sale. They both now have a more realistic point ot reference.
- Return of the condo market
Condos are selling again after a few years as the 'hot potatoes' of real estate. Cash buyers looking for deals have been attracted to the lower prices of condos with amenities for their pleasure and that of their snow-bird tenants when the places are rented for 'season'. It's still important to check the financial health of a condo community before making a purchase, but many are all spiffed and polished and good deals now.
Notice I couldn't think of an equal number of bests vs. worsts. I don't know about you, but I bid a not-so-fond farewell to 2009...and welcome the new decade. 2010 just has to be better!
Wishing all the best to you and yours for peace and prosperity in 2010....Bon
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