For the last 7 or 8 months, I have been talking about how the banks will eventually turn their foreclosure properties into rentals. Well yesterday, Fannie Mae and Freddie Mac announced that it will start taking applications from investors to get pre-qualified for the upcoming Foreclosure-to-Rental program. This new program will create an investment vehicle that will allow investors to purchasxe a controlling equity interest in bulk packages of properties owned by Fannie and Freddie. If you still have doubts about this, go direct to Fannie Mae's website: Homepath.com and read it for yourself. You can also go tohttp://www.WestCountyBlog.comÂ
So what does this mean for home sellers, home buyers and professionals in the real estate industry?
Home Sellers -- With many foreclosures turning into rentals, the current lack of inventory on the market will continue. It will be a seller's market with multiple offers on almost every property. So 2012 will be the year to sell. For those sellers facing foreclosure, doing a short sale is the best option. In California, the 1st and 2nd lien holder (normally the bank holding your mortgage) cannot come after you for loses after approving a short sale.. last year a new California law banned it. But if the bank forecloses, then the 2nd lien holder can come after you for a judgment. So completing a short sale in today's seller's market is the way to go.
Home Buyers -- Unfortunately due to the lack of inventory, you will be competing with other home buyers on the few available properties. The reality is that you will have to overbid on most properties. But the good news is that you will not have to overbid by much because home values will not increase by much.. maybe a few percentage points but nothing drastic. They will continue to stay very affordable. In most areas of West Contra Costa County, SF Bay Area, CA, buying is cheaper than renting. I'll be making another video this coming weekend explaining why prices wont go much higher and what you as a buyer can do to increase your chances of getting your offer accepted.Â
Real Estate Profesionals -- It is going to get very tough out there. The National Association of Realtors came out with a statistic that in the next 18 months, 70-80% of ALL brokerages currently in business will go out of business. I'm already seeing it here in my area with several mid-size brokerages falling apart. The reason is due to lower volume of sales, running a mid-size brokerage is too expensive. The ones that will last are small mom and pop shops and large brokerages such as Security Pacific Real Estate (visithttp://www.spre.com). So what should be your 2012 business plan? Get realigned with a strong brokerage that will last through the housing market. And don't forget to network, network, network.