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Ronda Allen's Blog

By Ronda Allen | Agent in Amarillo, TX

Buyers can't see a great value when it's staring them in the face

I had another meeting yesterday afternoon with a lender.  I have three that I use as sounding boards and advisors so I attempt to stay on top of the changes in the lending industry.  This one asked me what the biggest challenge I was facing right now was as a selling agent.  I responded, "buyer's can't see a great value when it's staring them in the face". 

5 1/4 -5 1/2 percent interest rates as the going rate for a good portion of my buyers with good credit.  And, yet, I hear that buyer's aren't certain we've hit the bottom yet.  Re-finances are happening like crazy, but buyer's are waiting for more?  Come on...can you say 'free money?'.  Investors are snagging up the best deals while buyers sit on their laurels. 

Homes listed under sale comps that should be listed over average comps due to the upgrades.  And, yet, the buyer wants to haggle over the price even further.  Real estate contracts achieve a win:win or they are just offers that go null&void within a few days.  Some buyers seriously need to pull their head out of a proverbial dark place and understand the comps for a neighborhood before they make an offer.  Agents not taking comps into account and letting their clients dictate what they offer on a home should be considering new careers.  Those agents enjoy filling out paperwork.  I enjoy selling homes.  There is a difference.  I've received 30 low-ball, hit & run offers this year that buyer's could not accept - with buyers who didn't stay around long enough for a counter-offer.  Forgive me if I don't get excited by the prospect of an offer until I see it committed to paper any longer.  We, too, are products of our environment. 

3% down-payment is unfair.  No - zero percent down-payment was stupid.  People buying at the top end of their loan approval limits and rolling in closing costs put them upside-down from closing day.  The rules are no different today than they were in 1993.  Veterans still qualify for zero-down payment.  You want zero-down, go serve your country and earn it. 

FHA and VA loans were always a big part of my business.  That was because I work in an area where new construction exists, and FHA came with the ability to re-fi at any time if the market values turn significantly.  We protected our clients.  Some loan officers put a push on ARM's and interest-only notes because they were paid more if they sold those products.  Buyers need to open their eyes and realize that loan officers are salespeople, too.  A good agent and a good loan officer are like gold to you.  Bad ones exist in every field. 

Property taxes are too high.  Don't tell your Realtor.  Tell your State Representative.  We Realtors are the ones who got on buses two years ago and went to the steps of the Capitol in support of lowering property taxes in Texas.  It's your turn to step up.  Adjust the price of the home you will buy lower in a high tax area, and be sure to get quotes on your hazard insurance.  That's how we conduct the searches in high tax areas. 

Buying points is to be expected.  According to who?  I don't have anybody buying down their loan right now.  But, there are lenders out there telling people that they can get a great interest rate, but not explaining that a point is a 1% fee on the loan amount paid at closing.  If you are qualifying for under 6% right now, there really isn't a need to buy down the rate.  If you aren't planning to stay in that home at least 7-10 years, think hard about whether this move benefits you or your lender.  Personally, I would take that cash and go buy stocks (after you close, of course).

My credit score is high enough.  Really?  Today's loans take credit scores into account more than ever.  Did you know that if you are under 720, you get hit with different fees and rates, and they get higher as your score gets lower?  Be careful.  Credit score is everything right now.  We have hundreds of people working with our lenders right now to bring up scores so they can get into the loan they want.  We may have to put you on a 3-to-24 month plan to purchase, but if you will follow the advice, you will be in the best possible position for a loan with fair fees. 

My debt level isn't that high.  Again, really?  If it's over 38% of your net income, it's high.  It's time to tighten the budget and get lean.  It isn't fun being house-poor.  And, it really isn't fun to be in a position where you have to sell your home just to pay off debt.  We see floods of people going into rental homes right now.  They are using equity to pay off debt, and they are starting over at square one. 

Buying in today's economy can be a slippery slope or a happy trail.  Dorothy didn't go visit the Wizard all by herself.  She had the scarecrow, lion, and tin man along for support, and everyone had something to gain in the end.  You need a good Realtor, Loan Officer, and Insurance Agent hooked arm-in-arm with you through the buying process.   





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