During a casual conversation with a friend, I mentioned that it was a “tough” market we were in and quite a few things had changed. Her question: “What does that mean exactly?” prompted this blog. We thought there were other people out there that may want to know…”Is it still a good idea to buy a home?” The answer: YES! Definitely!! You just have to be patient, be smart, and most of all, be informed!!
1. Not only informing sellers and buyers of how the market is right now, but also convincing them.
We’ve had so many years of “easy to get” loans, that us Realtors have had to re-educate those in the current market on how it is. Those loans, the credit score loan, the interest only loan, the loan you could get by having a good score and showing 12 months of bank statements only, the no money down loan etc… no longer exist. In fact, most if not all of these loans, resulted in a lot of the fraud that occurred and contributed to the Real estate downfall.
2. Banks are making it hard for buyers’ to qualify for a mortgage.
It is a buyers’ market right now. Which should be a good thing if you’re a buyer. The problem is getting approved for a mortgage. Due to the high foreclosures and losses, banks are not so user friendly when loaning money now. The credit score limit has steadily increased from 580 to 640 and continues to climb. Banks are requiring more and more documentation from buyers’ to try and ensure the info they’re receiving is true and correct and not falsified. They have also limited many of the programs they were promoting like the ones mentioned in #1. Buying a home is already an emotional enough experience. All of this “extra” make it even harder.
3. Foreclosures are being repaired and marketed as “move-in” condition homes making them direct competition for a regular seller.
It used to be a known fact that if a home is a bank foreclosure, it’s gonna need work. The downside of that for banks is that most of the current buyers are getting qualified for the government loans such as FHA, Homepath, or VA. These loans require the home to be in a certain well maintained condition in order for the buyer to be able to purchase. HUD first noticed this and decided to allowed some of their inventory that were in good condition, to be sold to a buyer using insured FHA loans. This allowed the buyer to be able to add the monies needed to repair the home to the actual loan. Fannie Mae, Freddie Mac, Chase, and several other banks have went farther than that. They have actually started to repair many of their homes prior to putting it on the market. Many of these homes will feature anything from new carpet, paint, furnace to appliances as well. Most all homeowners have lost much of the equity in their home already, now, they are losing to foreclosures. As banks are still pricing their renovated homes at low foreclosure prices.
When I started in Real Estate in 1999, investors were required to put down 20-30% when purchasing an investment property or pay cash. Buyers’ were required to put down 3-5% depending on the loan product. You had to have 12 months of clean credit meaning no late pays, no judgments, no collections. This is now much of the same case again since the breakdown of the market in 2007. Except buyers now have to put down 3.5%. And, there actually are a couple programs I’ve heard of recently for 580 credit scores and low income families. So, I don’t want to sound like I think it’s not worth it. Owning real estate is still a good idea and is many of our biggest and only investments. It’s still happening everyday! Thanks God!! I just believe it’s best we all know and understand today’s tough market so we can make intelligent and informed decisions. Then, buckle up and try and enjoy the ride!Keya Benberry Broker / Owner Buy With Benberry Realty Group, LLC
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