6 reasons Buyers aren't biting (and what Sellers can do to change that)!
Posted under: General Area,
Market Conditions,
Home Buying,
Home Selling
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October 27, 2010 10:36 AM |
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130 comments
Interest rates are at historic lows: less than 4.5% on a 30-year-fixed 
and below 4% on 15-year fixed rate loans. And prices are low, too - at or near bottom in most of the country. Together, these items mean that affordability is near an all-time high.
It's like a massive, pre-holiday sale on real estate!
Nevertheless, home sales are only "gradually" creeping up, according to the most recent data published by the National Association of Realtors. And sellers are clearly still feeling price pressures; on Trulia's October price reduction report, an all-time high 27% of American homes listed for sale had had their price cut at least one time!
So, what's stopping buyers from running out to grab up all these affordable homes at affordable rates? And what can savvy sellers (and listing agents!) do to offset these obstacles?
1. (Perceived) difficulties in qualifying for a mortgage. Mortgage guidelines have tightened up significantly over the last few years, now requiring good (but not perfect) credit, documented
income, a proven stable job history and cash for down payment and closing costs. Some buyers find it difficult to scrape the down payment money up; others find that they can qualify, but not for a large enough mortgage to buy any home worth owning (banks have tightened up debt-to-income ratios, too). Many would-be buyers don't even consider themselves serious prospects, disqualifying themselves in their own heads because they heard somewhere that a 20 percent down payment is necessary - in actuality, many buyers can qualify for a 3.5 percent down, FHA loan. Between actual difficulties qualifying and perceived difficulties that don't actually exist, lots of buyers are not biting because of loan "issues."
Seller Solution: Ask your agent to have a mortgage broker colleague prepare flyers reflecting various loan options, to give open house attendees a reality check about what it would actually take - including down payment, closing costs and monthly payment - to buy your home. Also, consider offering closing cost credits or being willing to chip in for lender-required repairs to empower buyers who are struggling with mortgage qualifying to close the deal.
2. Fear of buying a foreclosure. The ongoing robo-signing/foreclosure fraud scandal and the resulting foreclosure freeze is beginning to play a role. If you haven't heard, two of America's largest mortgage servicers have frozen foreclosures and resales of foreclosed homes in 23 states, and Bank of America, the largest lender in the land, has frozen them in all 50 states, all because sweeping fraud and improprieties have been revealed in the way the banks are processing foreclosure documentation.
More and more, buyers are fearful that if they buy a foreclosed hom
e, that sale could be reversed down the road if it comes out that the banks wrongfully foreclosed on the former owner. And that could be stopping buyers from, well, buying foreclosed homes.
Seller Solution: If your home is not a short sale, all of your home's marketing materials should be trumpeting this fact - especially if most of your home's competition (e.g., similar homes in the area and in the same price range) are bank-owned homes and short sales. Seeing 'Not an REO/Not a Short Sale' on a listing or flyer is quite magnetic to buyers right now.
3. Waiting for the shadow inventory to come out. The phrase 'shadow inventory' refers to the homes that have been (or w
ill soon be) foreclosed on by the banks, which are not yet on the market; some estimate this inventory to be as high as 7 million homes! Many buyers who are actively house hunting -- and who are disappointed with the homes that are available -- are fearful of pulling the trigger because they believe the banks are going to start releasing their 'shadow inventory' soon, and that those homes will be better than what's out there on the market right now.
Seller Solution: Work with your agent to strategically stage your home and even do basic, inexpensive repairs, to make it stand out against the competition as a desirable property. Also, ensure that your pricing is in line - or even slightly below - similar homes on the market right now, to ensure that your home seems like a very strong value for the price.
4. Waiting for the bottom. Given the trajectory of home prices over the past couple of years, there's a large contingent of buyers who are afraid that after they buy, home price will continue to fall and they will lose their hard-earned investment in the home. These are folks who are still waiting for the b
ottom (although by some accounts, including that of the Case-Shiller Price Index, the bottom is here or has already passed, in many cities).
Human nature is always to wait too long for the bottom, miss it, and then end up wishing we had bought sooner. The behavioral economics theory of myopic loss aversion explains this phenomenon as being due to the fact that the pain of losing money generates a greater psychological fear and avoidance than the prospect of gaining the same amount of money. Buyers can set themselves up to gain over time, even if they lose equity in the very near term, by making smart decisions about the home they buy and how much they pay for it, and planning to stay in their home for a longer term than previous generations of buyers did.
Seller Solution: This is a difficult one to counter, because it's really more about the would-be buyer's interpretation of the market than about their reaction to your home. If you live in a market that has had recent increases in home values, include that data in your marketing - make sure buyers are aware that they may already have missed the very bottom, and create a sense of urgency to buy your home before prices go up even more.
5. Unemployment/underemployment. Take California, for instance. The national unemployment rate is 9.6%; California's is a whopping 12.8%. But right around the same number of Californians are underemployed, meaning they work part-time, but want full-time work. That's right, a quarter of Californians are unemployed or underemployed, and -- right again! - none of those people are buying homes. On top of that, many people who do have jobs lack job security, the confidence of believing they'll be able to keep their jobs in the future. Interest rates could be
zero, and people will not buy homes as long as they have no jobs or job security.
Seller Solution: If there are major employers in town that are within an easy commute of your home, both you and your agent should consider marketing it directly to employees there. Share your home's listing with Facebook friends who work there or even send an email out to your own contacts, if you work there yourself! Major companies' Human Resources Departments might help you get the word out to their employees - especially if you offer some incentive to an employee who buys your home, like a year's worth of subway passes. If you have universities nearby, there are likely online bulletin boards that offer housing options directly to relocating professors and employees.
6. Need to keep options open. Because home values are so volatile, currently, there's no guarantee that you can resell today's new home tomorrow without taking a loss. If we've learned anything from this crisis, we all know that it just doesn't pencil, financially, to buy a home on today's market unless you plan to own the home for at least 7 years (give or take a year or so, depending on how your market has fared in the housing recession).
Many Americans don't want to be tied to one location, given the changes in the job market, because they simply don't want to be stuck in one place, geographically speaking. They want to be free to meet someone via online dating and move if the match sticks. They want the freedom to move across the country or even to the next city or state for a job, if that's the direction their career takes them. The more mobile the person, the less likely they are to buy a home.
Seller Solution: Price your home well - if it's been lagging on the market, make sure you get aggressive and cut the price below a common buyer search cut-off price point (see this post for more details: Sellers: 5 Signs It’s Time to Cut the List Price of Your Home). Even buyers who are seriously in the market, get nervous about buying a home when it seems a bit overpriced, because they fear the price will drop some more in the coming months and years, extending the period of time before they can sell it at a break even or (hope beyond hope) a profit! Don't let overpricing cause you to lose buyers who otherwise would have bitten the bullet, pulled the trigger and hopped off the fence in order to buy your home.
and below 4% on 15-year fixed rate loans. And prices are low, too - at or near bottom in most of the country. Together, these items mean that affordability is near an all-time high.It's like a massive, pre-holiday sale on real estate!
Nevertheless, home sales are only "gradually" creeping up, according to the most recent data published by the National Association of Realtors. And sellers are clearly still feeling price pressures; on Trulia's October price reduction report, an all-time high 27% of American homes listed for sale had had their price cut at least one time!
So, what's stopping buyers from running out to grab up all these affordable homes at affordable rates? And what can savvy sellers (and listing agents!) do to offset these obstacles?
1. (Perceived) difficulties in qualifying for a mortgage. Mortgage guidelines have tightened up significantly over the last few years, now requiring good (but not perfect) credit, documented
income, a proven stable job history and cash for down payment and closing costs. Some buyers find it difficult to scrape the down payment money up; others find that they can qualify, but not for a large enough mortgage to buy any home worth owning (banks have tightened up debt-to-income ratios, too). Many would-be buyers don't even consider themselves serious prospects, disqualifying themselves in their own heads because they heard somewhere that a 20 percent down payment is necessary - in actuality, many buyers can qualify for a 3.5 percent down, FHA loan. Between actual difficulties qualifying and perceived difficulties that don't actually exist, lots of buyers are not biting because of loan "issues."Seller Solution: Ask your agent to have a mortgage broker colleague prepare flyers reflecting various loan options, to give open house attendees a reality check about what it would actually take - including down payment, closing costs and monthly payment - to buy your home. Also, consider offering closing cost credits or being willing to chip in for lender-required repairs to empower buyers who are struggling with mortgage qualifying to close the deal.
2. Fear of buying a foreclosure. The ongoing robo-signing/foreclosure fraud scandal and the resulting foreclosure freeze is beginning to play a role. If you haven't heard, two of America's largest mortgage servicers have frozen foreclosures and resales of foreclosed homes in 23 states, and Bank of America, the largest lender in the land, has frozen them in all 50 states, all because sweeping fraud and improprieties have been revealed in the way the banks are processing foreclosure documentation.
More and more, buyers are fearful that if they buy a foreclosed hom
e, that sale could be reversed down the road if it comes out that the banks wrongfully foreclosed on the former owner. And that could be stopping buyers from, well, buying foreclosed homes.Seller Solution: If your home is not a short sale, all of your home's marketing materials should be trumpeting this fact - especially if most of your home's competition (e.g., similar homes in the area and in the same price range) are bank-owned homes and short sales. Seeing 'Not an REO/Not a Short Sale' on a listing or flyer is quite magnetic to buyers right now.
3. Waiting for the shadow inventory to come out. The phrase 'shadow inventory' refers to the homes that have been (or w
ill soon be) foreclosed on by the banks, which are not yet on the market; some estimate this inventory to be as high as 7 million homes! Many buyers who are actively house hunting -- and who are disappointed with the homes that are available -- are fearful of pulling the trigger because they believe the banks are going to start releasing their 'shadow inventory' soon, and that those homes will be better than what's out there on the market right now.Seller Solution: Work with your agent to strategically stage your home and even do basic, inexpensive repairs, to make it stand out against the competition as a desirable property. Also, ensure that your pricing is in line - or even slightly below - similar homes on the market right now, to ensure that your home seems like a very strong value for the price.
4. Waiting for the bottom. Given the trajectory of home prices over the past couple of years, there's a large contingent of buyers who are afraid that after they buy, home price will continue to fall and they will lose their hard-earned investment in the home. These are folks who are still waiting for the b
ottom (although by some accounts, including that of the Case-Shiller Price Index, the bottom is here or has already passed, in many cities).Human nature is always to wait too long for the bottom, miss it, and then end up wishing we had bought sooner. The behavioral economics theory of myopic loss aversion explains this phenomenon as being due to the fact that the pain of losing money generates a greater psychological fear and avoidance than the prospect of gaining the same amount of money. Buyers can set themselves up to gain over time, even if they lose equity in the very near term, by making smart decisions about the home they buy and how much they pay for it, and planning to stay in their home for a longer term than previous generations of buyers did.
Seller Solution: This is a difficult one to counter, because it's really more about the would-be buyer's interpretation of the market than about their reaction to your home. If you live in a market that has had recent increases in home values, include that data in your marketing - make sure buyers are aware that they may already have missed the very bottom, and create a sense of urgency to buy your home before prices go up even more.
5. Unemployment/underemployment. Take California, for instance. The national unemployment rate is 9.6%; California's is a whopping 12.8%. But right around the same number of Californians are underemployed, meaning they work part-time, but want full-time work. That's right, a quarter of Californians are unemployed or underemployed, and -- right again! - none of those people are buying homes. On top of that, many people who do have jobs lack job security, the confidence of believing they'll be able to keep their jobs in the future. Interest rates could be
zero, and people will not buy homes as long as they have no jobs or job security.Seller Solution: If there are major employers in town that are within an easy commute of your home, both you and your agent should consider marketing it directly to employees there. Share your home's listing with Facebook friends who work there or even send an email out to your own contacts, if you work there yourself! Major companies' Human Resources Departments might help you get the word out to their employees - especially if you offer some incentive to an employee who buys your home, like a year's worth of subway passes. If you have universities nearby, there are likely online bulletin boards that offer housing options directly to relocating professors and employees.
6. Need to keep options open. Because home values are so volatile, currently, there's no guarantee that you can resell today's new home tomorrow without taking a loss. If we've learned anything from this crisis, we all know that it just doesn't pencil, financially, to buy a home on today's market unless you plan to own the home for at least 7 years (give or take a year or so, depending on how your market has fared in the housing recession).
Many Americans don't want to be tied to one location, given the changes in the job market, because they simply don't want to be stuck in one place, geographically speaking. They want to be free to meet someone via online dating and move if the match sticks. They want the freedom to move across the country or even to the next city or state for a job, if that's the direction their career takes them. The more mobile the person, the less likely they are to buy a home.
Seller Solution: Price your home well - if it's been lagging on the market, make sure you get aggressive and cut the price below a common buyer search cut-off price point (see this post for more details: Sellers: 5 Signs It’s Time to Cut the List Price of Your Home). Even buyers who are seriously in the market, get nervous about buying a home when it seems a bit overpriced, because they fear the price will drop some more in the coming months and years, extending the period of time before they can sell it at a break even or (hope beyond hope) a profit! Don't let overpricing cause you to lose buyers who otherwise would have bitten the bullet, pulled the trigger and hopped off the fence in order to buy your home.
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Comments
1) supply (a lot of homes, plus foreclosures on the market or about to be),
2) demand (few buyers, unless you include alkl those who have lost or about to loose their home) and
3) affortablitiy (not prices, but ability to pay)
. three bedroom 1 bath and a two stall garage , it a older home but i think for anyone starting out a GOd send , the deals are out there it just what you think you want and what you need at the time ,, thence it the shoe fit buy it,
A lot of the stats used here are the official government stats, I suggest everyone look at John Williams' http://www.shadowstats.com/primers-and-reports to see reasons why the government stats might be underreporting unemployment and inflation. Wayne Allyn Root had a good article on this on October 18th.
On your second point on foreclosures the Big Banks such as BofA have indemnified the title companies against loss so as a buyer you are protected even if title was not conveyed properly in the past in the foreclosure process.
Copy and paste this url: http://lake-eufaula-home-for-sale.webs.com/ Not an REO/no short sale
Thanks for sharing.
Many are also waiting for the election to find out what the federal income tax will be. The government panel to balance the budget is suggesting eliminating the mortgage interest deduction..." That's an important factor too! I tell my Sellers/Buyers, there are closings everyday, but at a slower pace, however, the ones that are selling are priced for the current market AND stagged for maximum curb appeal and show like models inside. As an example, last weekend, I took a Buyer out to see 5 houses which met his search criteria. He hesitated on making an offer on his #1  picks, by Monday 2 of the 5 houses were under contract ($200-225K range). Indeed Short Sales & Foreclosures will appeal most to Buyers & investors who have the cash or credit to snap up the best of them. (Charlotte, NC)
From my side I have found my buyers either need to feel like they are getting a great price or really have to have found that home that they will regret passing on. Where the trouble lies in those homes that are neither special nor priced well. Those homes may be sitting for a while.
I am not a person that is shouting this is the greatest oppurtunity ever to buy as I think many people did that last year for same reasons they are doing it this year (rates, home prices, etc) and prices havent reflected growth yet. However I do think this is a time to pick and choose your spots. Buying a home is not like buying a stock where you may turn around and sell in short period of time. Long term investments like homes should not use potential equity as only requirement. Way of life and enjoyment of the home is what should be considered. Growth is just an added benefit.
You make some very valid points! The fact is that we are at the bottom, mortgage rates are at historical lows and inventories are at decent levels; make it the right time for a buyer to purchase! The perception of the difficulties of getting a mortgage is just that, a perception. Yes, mortgage companies have become stricter and appraisals are closer to the sales price and sometimes challenging but this is a prime time to buy.
For sellers, they must price their homes correctly and equally important, they must stage their home or have a professional do so. Buyers make their decision typically within the first 20 seconds of entering a home. The exterior and landscape must provide excellent curb appeal. The interior must be de-cluttered, walls painted, flooring clean or replaced if required and the kitchen must be up-to-date in relationship to the competition. If most homes in this price range have granite and stainless steel, than this must be a consideration.
The bottom line is that sellers must do everything in their power to have their homes ready for market prior to listing. The market is slowly coming back and for buyers, this will only mean higher prices and mortgage rates. Take advantage of the home prices and mortgage rates while you can!
Regards,
FrankDolski MBA, ABR, e-PRO
Associate Broker
CARTUS Certified Relocation Specialist
Coldwell Banker Hearthside Realtors-Lahaska, PA
http://www.FrankDolski.Com
poor victims who got caught up in the crossfire of corruption. Seems to me while the perpetrators are rewarded, the victims are punished. Ronnie Phil
I also like Jack and James comments ... With the need to move housing and get through this MESS, government will have to continue to incentive home buying - I hope they wouldn't be STUPID enough to do away with mortgage interest deduction for another few years.
Also pointed out above, there are sales - slow sales but the market isn't dead totally. I did a twitter post on your article... good stuff.
http://zingervotes.blogspot.com
For all your Ocala Real Estaste needs Call Dawn Rupersburg 352.553.3369 or visit my web site http://www.ocalaflhome.com for the best MLS search engine.
They will suggest low balling the price to get the house sold, but unless there is tons of equity built up- The seller won't make thousands of dollars as the realtors will. Something to think about !!
My mom is trying to sell her house. It has been on the market for 14 months. My husband and myself are living with her as our house sold and we are waiting on her house to sell. We are all moving to another state together. Her real estate agent has done nothing to help her. I know you probably hear this a lot, but I am telling the truth. The agent won't even show the house. He calls and tells her he is busy and is sending someone over to look, and we have to show it ourselves! Over the past 14 months he has sent a total of 4 buyers and he has never shown it once! He also brought us the open house signs so we can have an open house hosted by us!! I don't know how she ended up with such a long listing agreement, She only renewed once, which was in february this year ( wish she hadn't) she said she renewed for another 6 months. When I called the reale state office they informed me the listing run out in February 2011!! I told her to go to the real estate office and get a copy of what she signed but she won't. The problem is she is friends with the real estate broker and won't say anything. I told her a friend would not treat her this way. I read the first listing agreement and it says nothing about the agent having to show the house and nothing about the agent having to host an open house. Is there anything I can do to terminate this listing without her??? Is this the way agents behave?? We sold our house by ourselves in 2 months! I would like to sell my mothers without this agent. I fell he will be getting a commission for doing nothing!! What can I do, leagally?? ..
Great article. I just had a potential buyer express concerns about the uncertainty of the market. Good insight for both Buyers and Sellers.
1. They do not have that income with job lossess and more lost jobs to come
2. Credit has been ruined from new credit laws from this administration and job losses and the banks
3. They have no one to borrow from being in the same situation
4. More foreclosures are yet to come with 11,000,000 (MILLION) in the waiting. Not even the commercial buyers can get loans to up-grade or bring on new workers
5. Jobs are being held back as companies don't know what their tax burden is going to be and the health care we never wanted or asked for. It reaches deeply in pockets totally by 2016, but new ones in January will hurt EVERYONE. What ever happened to "We the People?"
6. Most people selling houses can't afford to give away litle meaningless comps as suggested above
7. Foreclosures are NOT trustworthy and NEED work NOT knowing how much. With these houses, their mortgages were immediately bundled up and sold to China and others. This idea for a moratorium is setting owners up to fail just like the oil in Louisiana moratorium COST jobs and did nothing positive since removed.
8. There have been many articles written about home owners given permission by their banks who have come back years later to the seller to say they owe the difference.
9. It's NOT fear of the buyer but TRUE facts of their situations; it is NOT true the home bubble has lessened. Figures were incorrect from the last time to seem like sales are going on. Empty houses are bringing down their neighbors homes and equity value. Crime has risen.
10. Making people YOUR buyers being forced to buy by saying the housing market bottom hit and force a sale, will find intelligent buyers avoiding the sell as car dealships do. They will RUN!
11. What good would 0% interest rates be when there is no job or the job number is so much higher than reported. People have fallen off the roles to collect as they exhausted their checks an giving more will just make the deficit worse. Others have given up looking. Still others enjoy their unemployment checks as they collect on jobs under-the-table. These are NOT paying into the tax base! It's NOT that they WILL NOT buy, they CANNOT
12. Desperation selling----trying to get buyers from where you work or college campus. College campuses students are NOT buying or staying in a dorm. They get together as 2-4 people and rent a house for $2000-4000 with a pool! That means the average person can't rent in their college towns when rents were $400-600!
13. People do NOT know their jobs will last 7 years or they may be transferred and can't sell their home from pushing sells like car dealerships needing that quota for the end of the month or end oif the year.
14. Let's start looking at the buyer AS a PERSON not their flawed credit scores and disinformation on them. THIS is too much like Portersville and not Bailey's Town in "It's a Wonderful Life."
15. Arlington, Va. and Washington, DC is like another country outside 3rd world America!
16. Only the mega rich can afford a retirement home or vacation home. This is REAL LIVE AMERICA out here. Get your heads OUT of the sand. YOU are here to make commissions which have fallen greatly. YOU don't care about the buyer or seller unless the 2 of you worked together to help the average unemployed get over their shock and figure how to pay their necessities.
Myself and a nephew have rented our homes we no longer live in for FREE or as they can pay. My home is many states away with NO property manager. I have look-outs. THEY ARE SO GRATEFUL!!! When they are fully gainfully employed, we can raise the rent or start charging it. There is even handy-people who do work on the home instead of rent. It's a win-win situation.
It's time, PAST TIME, to help others so YOU will be BLESSED.
A story impressed me on the upper East Coast years ago when the factory that made the town and provided the jobs and the jobs from it and the tax base for the town, burned to the ground in the winter. The owner looked at his employees and said he is NOT only going to rebuild to give their jobs back, he paid ALL their wages and benefits for 1-2 years. These people and their families were so shocked, when their jobs came back, they worked harder than ever! Let's GET into the GIVING and THANKSGIVING season of OUR lives.
This is NOT against sellers and buyers but facts from many sources. GIVE FIRST. WATCH WHAT HAPPENS!
Homeowners can do this as well as sellers and banks and those who became investors out of this. DO THE RIGHT THING!
AND STOP TRYING TO SELL IN THIS COMMENT SECTION; we KNOW WHAT YOU ARE TRYING TO DO!
"I advise buyers that we don’t know the “future,” but we know “now.” Now the rates are in the 4% to 5% range, which can translate to tens of thousands of dollars in saving when compared to a 6% -7% rate. They may not “profit” through appreciation per se, but they need to be shown that a lower interest rate will save them money long-term."
We looked at Short Sales, ForeClosures, and Traditional Home Sales, and we were not happy with what we found within our price range (regardless of process). We ended up being stuck in an extremely high priced rental, in the area we were interested in buying into, but only because it was our only option for keeping our Medium-Large Sized Dog. I'm offended that you suggest I'm waiting for the housing market to bottom out when all of the houses in this area are still being priced at pre-2008 prices, which do not reflect the current quality of the Historic neighborhood, the uncertain economy, increased crime rates in this specific location, care/maintenance of the city, or condition of the available houses.
Outside of this neighborhood, I would like to eventually re-locate to Western N.C. I have family down there, but have found home prices in that area to be extremely unrealistic due to available jobs/commuting, and available technology (the specific area I am looking at barely has DSL Internet, Reliable cell phone providers, not to mention tech jobs). Yet prices and expectations are even beyond my current living situation. Up where I'm at now, if I could break my overpriced lease, I can now afford a brick, 2 story, 3bedroom with garage and a "small" fenced yard for my dog. Down there, the same price will get me a 2 bedroom trailer on a LEASED Lot. Are you kidding me? And there aren't even any jobs in that area to pay for that trailer (Ive looked at all job skillsets I am qualified for, IT, Communications, and even Manual Labor and Customer Service).
Maybe everyone reading this article should shift focus, and consider that we may become a nation of Renters and TownHome Owners again, just like in the mid-late 80s (all of which, I just remember being a child living in a Townhome).
I understand that some realtors will look at me as being "unrealistic" or not having the "correct" perspective, but I am sharing a common sentiment shared by several associates I've met at work and through friends who are also looking for homes in this troubling market.
With the lack of jobs in some areas, and constantly shifting uncertainty in the job climate (what I see in the news differs from what my friends and parents say at the dinner table when we meet up), realtors are losing money because less people are being "stupid" with their money, though there still seems to only be undesirable or unrealistic offers out there. Every penny I have needs to be put toward the best, reasonably priced decision I can make, and I have yet to see those opportunities out there.
I would not have a financial institution prepare various loan options for open houses because buyers need to fall in love with the property first & then deal with mortgage options. Too often, the buyers focus in on the #'s instead of the property & then becomes scared & "resistent" & walk away.
I am working with a very knowledgeable realtor on my side, she is great. The problem is with the other side, they have no clue selling a short sale. Unfortunately, that leaves us with the wait and ponder issue. Either the banks need to step it up, or re-education for RE teams on milestones to achive success on sales. Otherwise, I cannot pull the trigger and buy my home.
Anne Hatch
Boulder, Colorado
and Stimulus. Best, Shiela-Marie Ventura, Relator, CSP - Silver Creek Valley
Thank you for sharing!
Great read for diversified audiences--Agents, Brokers and of course...buyer's and seller's! I enjoy a Broker/Agent that "gets it". So many agents think of the "now", and fail to look at the aggregate picture that you clearly depict and shed light on KEY issues related to most real estate markets across the U.S. There is minimal inventory (I'm in Socal), that is mainly Short Sale inventory that are distressed sales, which investors are picking up. However, some more analytics for you agents, there are 33% LESS open contracts on properties (esrows) now compared with April '10! This is primarily due to the first time homebuyer credit funds being depleted officially on Aug 15th. If you didn't have a buyer in escrow by April and closed by Aug 15th, your buyer lost out on the $8000 tax credit. I predominately list for investors because I've proven myself to understand how to maximize exposure in this enemic market. Most agents can't equivocate analytics (lucky for me), Combined days on market, List-to-sell ratios, how much exposure you as the agent compared to the average agent in the area. He/she who can syndicate through the most sites--and most importantly, who is able to understand fundamentals like we need to drink water (e.g. anwering our phone, prospecting in neighborhoods where are signs are, utilizing sites that are affordable or free to yield the highest ROI for the seller). We must bring value to our seller's and buyers by understanding all the dynamics available to us, and relate the information the market is churning out as best we can. In return, you will inevitably have buyer's and seller's to deal with, because we are selling a need in life. Relating to Maslow's Hierarchy of Needs, everybody still needs shelter, people will have to scale down, pay off revolving debt to qualify on the DTI ratios, and live more conservatively than we did as Americans between 2002-2007! There is no more ATM machine out of the home equity. Lastly, I do feel that the banks/gov't (same thing--LOL), are utilizing Keynesian (supply-side) Economics that they felt would work to keep prices stable from falling into double digit depths--once again. I feel it is still a very strong possibility (double-digit percentage drop in price) if...
*mortgage rates go up at all(and remember folks, look at what the 10-year bond is doing--not necessarily the FED);
*unemployment maintains at 12.8% in California(on a side note, Riverside County is 15.3% unemployed, Orange county is trending much stronger, mirroring the national average at 9.6%, San Diego is a little weaker at 10.6% versus 10.3% in '09);
*If banks release more "Shadow inventory" we've been hearing about for the last 2 years;
*More gov't taxation on real estate purchases, or the removal of the mortgage deduction (they're trying very hard);
*If the stock market were to drop drastically or crash. This is another anamoly that's currently happening that the real estate market is dismal, the stock market is doing averall--pretty well, and rates are at unprecedented lows. Even though unemployment is still a major concern. This is truly an anomaly!
2. The values are still too darn high/inflated, especially here in California. All of these ancient one bath homes, many with multiple bedrooms, are priced at modern-day prices which is utterly ridiculous. Everybody still trying to make a crooked killing on their sub-par properties even in substandard neighborhoods, that you want to sell "AS-IS".
3. Difficulty to get financing due to the crash that the lending industry forced buyers into, so that they could get grand-theft returns, thus ruining buyers, their credit, the nation, and the world.
4. Misuse of Capitalism which is whatever the market will/can bear. Well, capitalism was manipulated by unscrupulous Lenders, and collateral entities, forced markets into crawl-spaces that did not fit. These creatures forced capitalism into a 'Humpty-Dumpty' character. They tried to force the market to do what it could not sustain and was not meant to sustain. That's because they are CROOKS. All these crooks know is that they want "mo money". All of you!
They are still at it. They are now trying to brainwash potential buyers to get them out of the mess they created which will cause the new buyers to also default. But they don't care -- they will have their money. Round and round we go and where it stops nobody knows.
Buyers, my advice is to ignore the experts and let Capitalism work the way it is suppose to. The same way that Capitalism works for the poor. If we, the poor, make poor choices we have to live with it -- nobody bails us out. The experts think that is right for us to suffer, but when the poor choice is committed by themselves then welfare becomes a good thing for themselves because they don't think they should endure circumstances. But, they think the poor should suffer their consequences, because "we're USED to it."
They want to keep the poor in their place and want to add more poor people to the mixture. After all, we are here for them to suck on and bleed. We are the fodder used to make and keep them rich.
Listen, I am one of the nobody's with little education but I have the common sense and mother-wit to see that the RICH have high-jacked our government. Everything done is in favor of the Haves, including laws/legislation that allows them to rip-off the little people with impunity. Every thing done in favor of Big business and NOTHING but a swift kick for the rest of us. Big business don't want to pay fair wages and don't want to pay fair taxes. They keep we-the-people over a barrel because we depend on them for jobs and they show they don't care about us by giving American jobs to anyone but us. Yet the poor idiots still go out there and vote for them to allow them to continue to keep us over a barrel and their foot on our necks. Poor dumb people are between a rock and a very hard place. This makes me think about the revolutions of the past and why those people were pushed to overthrow their government. Only a Revolution can turn things around unless the Lord returns and take over His World.
How ironic, here we find ourselves fighting for the same reason the Europeans came here in the first place. Goes to show that IF YOU FORGET (or ignore) THE PAST you surely will repeat it ... and we have. How very sad.
The fact that you not only admit but encourage people to lower the price of their home, pay more in repairs and staging costs to increase the perceived value, offer perks, go searching for potential buyers, pay closing costs, etc. shows that the market is a long way from the bottom.
Where's the bottom? If it takes 7 years to reach parity, subtracting 12% for commision, sales, property, and capital gains tax, inflation (4% in the best of times, 10% or more now) -- your looking at a very very deep bottom without taking into account any investment value. No one is going to buy a home that depreciates. And with a 30% minimum liquidity COST to buying a home, that's a huge handicap, even if the economy stabilized, the inventory cleared, and buyers gained confidence.
In other words, to buy a $200,000 home, I have to pay $60,000 above the value of the property for the privilege and be willing to hold onto it for 7 years just to break even assuming the bottom has already been reached, and the economy has recovered and will stay recovered for the full 7 years.
We are in a depression, just like the one 80 years ago. Remember how long that one lasted? Eight long years, despite F.D. Roosevelt's best efforts. Except there's not going to be a Pearl Harbor to pull our nuts out of the fire and get us back to full employment this time around. Happy Halloween.
You can't trust those EXPERTS who are in the business. They were trusted before and look what happened. They are trying to feed you this false pep-talk because they are sinking deeper and deeper. Let the ones who created this monster ride out their creation like good Capitalists should. I was born almost four years after the 1929 depression so I experienced it and it is very similar to the present depression (yes, depression because that is what this is). The '29 depression did not START to turn around till after the beginning of WWII. This one is much worse because we have more crooks now and more people live in cities instead of the rural areas.
None of you young people are trying to believe that this is more than a bump in the road. But it will take a LONG, LONG, time for a recovery, especially since people are trying to pretend that it is not as bad as it is. I never thought I would live to see the repeat of 1929. But that is what happens when you close your eyes and think it won't happen to you. You big brainy and greedy business have got people to manipulate and ripoff on your way to your riches.
Back then, the powers that were, tried to put rules in place to prevent the same thing from ever happening again, but oh no. The young folk thought they knew better and ditched the rules of the old fogies and got on with where their brilliant minds were leading them (to their riches).
Well, you got it --- now roll with it Richard.
People keep what little money that you still have under a mattress or in your safe Credit Union. These cockroaches are trying to slick you out of what ever little savings you may have lying around. See what the article is saying -- that some (still) have ways for the unqualified buyer to get loan. That alone tells you they are dirty rats trying to find a way for you to make bad choices. Then, when that stuff hits the fan they will say "they shouldn't have tried to buy beyond their means." See the victim is the one to blame. That is what they did before. Let them keep their problems or reduce those prices to rock bottom or let their properties rot to the ground or they can tear them down or burn them. Let CAPITALISM work!!
Jason
http://www.california-realtor-directory.com/Napa-Realtors
The previous owner had "stolen" the kitchen, hot water heater, appliances, light fixtures, even the outlets. We had the home put into like new condition for about $16,000.
The banks are shooting a hole in the bottom of the boat. When I'm representing the buyer it's a good thing. (For my clients). For market stability, it is not a good thing.
This is a tremendous transfer of wealth being subsidized by the taxpayer.
http://www.BuyPierceCountyForeclosures.com
We are part of the blame; we let our jobs go off shore. We let them take away a lot of our rights. We let them allow illegals into this country. We allowed them to let illegals have EVERYTHING free. Now it is time we stop allowing the government and we take our country back and build it back up!! I have never met a polition that was not greedy! Those that were good, honest men became lost as soon as they got intangled with the "good-ole-boys." Given the choice, either change to their way or their political career was over!!
Thank you!!
Problem: housing not selling.
Reasons: consumer confidence & umemployment.
Solution: price properties at their market values, keep adjusting them if necessary, and movie on.
You are also saying your buyers are so stupid they cannot see a home's potential unless it is staged to sell a "lifestyle". I have to agree with others who have commented that we have lost our way as a country although I am still (gasp) an eastern liberal who would be considered by many "not a REAL American" though I was born to US born citizens 71 years ago. Our extreme political divide is only adding to the economic uncertainty; we cannot elect leaders who tell us the truth because we don't want to hear it. We are living in a different global economic reality and living so much longer the old economic models don't apply. This recession/depression will take several years to shake out and we will not be the same country in 2020.
Nj Central Nj, we have so many condominium homes avialbale where they pay less in mortgage payement then
rent, but all buyers are waiting for what ? i do not know, i tell all my buyers if you can not afford now you will never buy a home, as prices are lowest, plus you can negotiate plus intrest rates are lowest in decade, what more you want.FHA is giving loan to first time home buyers with low down payment if they qualify,
Since I am not a realtor I will come right out and say it: Face Facts. Lower prices is the only way this huge inventory is going to clear. Low rates aren't getting it done and realtor happy talk isn't going to do it either. If prices don't adjust to get more buyers off the fence, then the market will continue to be unbalanced and inventories will keep building. Get real now or have it forced on you later.
less than they were in 2006-2007. Some of these places have been on the market for more than 2 years. You cannot find anything other than a foreclosure or a short sale for under $300,000. When a foreclosure worth the
money in a desireable area is released from the shadow inventory it is snapped up by brokers or well heeled
investors with access to inside information. The majority of the foreclosures that do make it to market are priced
at virtually the level as a normal resale. The financial institutions are attempting to prop up values so they will not have to absorb as big a loss as they would if it were priced realistically. This in turn translates into appraisals being nowhere near what they need to be for financing purposes.
Not to mention the fact that the federal government, with their "loan modification" programs is trying to keep people in houses that they were not qualified to purchase in the first place.If current trends continue %75-%80
of these people will re-default after the modification is completed. This of course slows down the foreclosure process thereby continuing to prop up values.
Most people do not want a mortgage obligation of more than $1000-$1800/mo. That is tough to achieve with a finance balance of $350,000-$400,000 for a very basic property in a decent area.
It is difficult getting a loan from one of the big four banks because they drill down to the finest detail. My wife and I are in the 800 FICA range, 40% down ($700K+) for a second home and got rejected because of some minute issue. Bottom line, no big deal for us, but I feel real sorry for the hard working folks out there who deserve to have the pride and joy of owning a home and CAN afford it but get rejected.
~http://miniurl.com/64340
Given all the coming loan repurchase demands AND Putback Purchases for "Breach of warranty and representation"(READ:FRAUD).. And bought Credit Default Insurance to reap more benefits of Manufactured Condition.. nice..many have come to this conclusion..
Who knew that when we were participating in a "Sound"(and I use that term very loosely) Financial system we were helping set up Economic Destruction..?
signing for a mortgage as we come to find out has cost jobs, devalued dollar, state and local budgets decimated, reduced safety services, slashed school funding, etc etc..
little did we know so many ticking time bombs lie just below the surface.. and that's not counting the first dominoes (Home Loans Going Sour) that have fallen in the last 3-4 years.. sad
Hopefully this can be avoided next time around.. so as not to have so many walk-aways that have realized the ponzi nature of it all..
I'd like you to meet my friend, the 800 pound gorilla... look to your left, he's sitting right next to you..
http://www.esonomacounty.com
Thank you Tara!
http://www.youtube.com/watch?v=BvxQ_3R_rzg