Posted on 14. July 2010 02:42 by qmiskini

This is a tough housing market. Property prices that soared during the housing "bubble" have dropped like a rock since the bubble burst.  Many sellers are paying mortgages on homes that are worth less than they owe, and may be valued at less (meaning negative equity) for some years to come.  There are more foreclosures and distress sale properties on the market than in recent memory.  By some estimates an astounding 12% of all home mortgages are in some stage of default - as many as 7 million home mortgages in default!

For Buyers, there seems to be a lot of "good deals" available. But when you find that good deal, finding a loan to purchase that home is like walking a tightrope in a circus with a blindfold holding flaming torches while being dive-bombed by bees... at least that's how it seemed to one buyer who did finally get his loan but was exhausted and frustrated by the end of the process.  Why is the process so difficult? Because lenders have no confidence in the economy and less confidence in you. As a consequence, lenders, despite ads and ministrations to get you in the door with low interest rates and a variety of new lending plans, look at the economic landscape and continue to make the underwriting process as tough as possible in order to weed out as many future defaults as possible.

That does not mean no loans are available to qualified buyers - people with good credit scores, a consistent work history, money for the down payment and closing expenses, and a property that will appraise at the sale price or more. It does mean even well qualified buyers will have to jump through hoops - prove, verify, re-verify and re-prove their credit worthiness. For buyers whose financial picture is less than perfect it's the tightrope walk for you.  So what do you have to do in order to get a mortgage loan for that good deal?  Homework!

Yes, homework.  Buying a home is actually a business deal... and a pretty big one at that. So if you are not a real estate expert, a significant part of doing your homework is assembling a team of experts to help you through the process - jump through those hoops or walk that tightrope with knowledge, patience and persistence.  Key members of that advisory team are your Realtor and your loan officer. You Realtor will tell you that the most important first step in the process, taken BEFORE you even begin to look at homes, is to work with your loan officer to become a PRE-APPROVED Buyer. Pre-approved means getting, in writing, all the requirements of the lender's underwriters to qualify for a home mortgage loan. Then work with your loan officer and go through the process - right up to the point where the only element lacking is a home that will appraise for a loan. 

You'll get a Pre-Approval Letter from your lender and will have jumped through a bunch of hoops. But when it comes down to obtaining final loan approval for that good deal, there will be no tightrope walk and far fewer hoops.  

 


Posted on 12. July 2010 06:23 by qmiskini

 

 

"Is there any wiggle room in the price?"  It's a great, simple innocently straight-forward question every well-schooled Buyer's Agent should always ask. Why? Because it sets up the conversation with the Seller's Listing Agent that hints the Buyer is interested and is looking at options - of which price is always a big concern. It's a good psychological tactic - and it gets the Listing Agent prepared, when an offer is received, to feel there is flexibility on both sides ("wiggle room") so that the Seller becomes more inclined to find a pricing solution and not be insulted if the original offer is lower than expected.

These days, the strategies and tactics employed in helping a Buyer get the absolute best deal on their home purchase - one of the principal roles of the Buyer's Agent, or helping the Seller receive top dollar for the sale - one of the principal roles of the Listing Agent, requires a higher level of negotiating skill and problem solving posture than any time in recent memory.  So what constitutes a great deal and a win-win for both a Buyer and a Seller?

For short sale and Foreclosed properties, it's all about finding the seller’s lender or the Foreclosure Bank or Investor's bottom line.  The bank's and investors have no emotional attachment to the property; they have a balance sheet and a time-line and are managing revenue and expense - gain and loss and an ever-increasing pile of federal legislative dictums.

Despite the media focus on foreclosures, retail sellers still populate the majority of the home selling market (counter to the belief that distressed properties make up the vast majority of homes for sale today.) Balancing the Fair Market Value (FMV) of a home, the physical condition of the property, level of “showability” and the true bottom line requirements with the perceived “hot competition” of all those supposed “undervalued” distress sale properties is becoming an art as well as a science. 

Everything should start with the bottom line – what is the net cash left in the transaction for the Seller after all fix up costs, fees, expenses and the like. Sale price is actually less important than the net figure at the end. And of course, market pricing in this tough Buyer’s market is critical.  For the Buyer, working with a Realtor who can clearly understand and articulate what the Seller is facing and needs to achieve makes framing a smart, price conscious and negotiable offer – one which beleaguered Sellers can work with – a very important part of pre-offer research.  The same goes for Listing agents who must carefully and fully brief their Sellers on the current prevailing Buyer psychology so that Sellers do not get over emotional when receiving low first offers, and do not miss the opportunity to find areas of agreement that can overcome price negotiations and unnecessary hard feelings.

If ever there was a market that requires patience, persistence and GREAT RESEARCH AND NEGOTIATING SKILLS, well… we’re here!