August, 2009

In this month’s report, we saw gains in every part of the nation: the buyers — who up to now have been on the fence — are writing contracts.

Also this week, the NAR released its latest study on housing affordability. In some markets, we’ve seen gains in home prices which is great news for sellers! But, when you combine those gains with the fact that interest rates have been edging up somewhat in the past few months, housing affordability, although favorable, is not as good as it was.

Housing affordability is still way above last year’s levels, but, it’s not hitting all-time records, like it was earlier this year. While low- and moderately-priced housing markets have taken off in many parts of the country, the higher-end market is still struggling, according to the Wall Street Journal. Observers say sales are slow and more price declines are imminent. Economists point to management job losses, and resetting adjustable rate mortgages held by prime borrowers as partly to blame.

However, the other issue is tighter lending standards at the high end of the market. Most banks that offer jumbo mortgages are generally requiring down payments of 20% to 30% or more, knocking out potential buyers who don’t have enough equity in their current homes and have seen retirement savings fall.

How quickly can you purchase a home, in today’s market?
With the latest in technology, the verifications can be done quickly: your credit report which can be run in moments; and, income can also be verified right away with tax returns. Recurring debts can also be accounted for with the credit report.
An appraisal would also have to be done on the property. The appraisal could be ordered and in a few days could be taken care of. So, all-in-all, you’re talking about a relatively short period of time for somebody to qualify, when all the facts are there, the income ratios are correct and the home appraisal is done.

Does the speed of the deal pose any risks to buyer or seller?
There’s no risk to either the buyer or the seller in the transaction. The lender takes the risk on making the loan, and there’s title insurance insuring the property. The speed of the transaction does not pose a risk to the buyer or the seller.

Can a home inspection be done right away? Should I right a clean contract after the inspection is all done?
The home inspection is done differently in different parts of the country. For example, in Long Island, the home inspection is done prior to the contract being signed. The term “contract” refers to coming to an agreement on the house, giving a preliminary offer and accepting the agreement – after which the home inspection is done – this can be done in a couple of days. The inspector meets with the purchaser, and familiarizes them with the property. Once this is done, the risk is relieved for the buyer.

The biggest challenge with a quick deal, is mortgage approval.
This can go quickly, if you have income verification and paperwork ready. Then it’s simply a matter of finding the right house, and having your home inspection done.

It’s the surprising how objectives change from the beginning of the process to the end. Some house hunters start with a list of deal breakers at the beginning of the show, and by the end of the show, end up choosing a home that has one of those deal breakers. The emotional component factors in during the search — the objectives of a perfect home change, and items that were important go out the window when the buyers fall in love with a home.

There some surprising reasons why people walk away from a home. Parking issues, home décor, and even paint color of the walls can turn off a potential buyer. For this reason, it’s important for the seller to remove all personal photographs and items that make it seems like it’s someone else’s home. House hunters want to imagine the house being their own home, and these items make it difficult to do this.

Some people will overlook some flaws for the sake of getting a good deal quickly. Make sure you hire an inspector that you have fully checked the credentials of. It’s possible to get an inspection license just after 2 weeks, and know nothing about what you are doing. You have no recourse once you bought it if it’s not up to code and noted by the inspector in your inspection report.

Unlike a traditional sale — where you advertise, hold open houses, put out flyers or email campaigns and wait for offers — Auctioning real estate doesn’t involve that open-end waiting game. At auctions, the traditional marketing methods are employed, but the difference is that the process is accelerated. Very extensive marketing is done in a short time and then, on a specific date the buyers must decide at that time — no more waiting for tomorrow to go and look at other choices.

The sellers can be protected during the process as well. The auction company works with the sellers before the auction, during the listing period, and there are several ways that the property can be sold. The sellers can set a reserve price auction where they set a price, and if a bid doesn’t come in at that price, the property is not sold. At a minimum bid auction, the auctioneer will announce to the buyers that there will be a minimum price they need to start their bids at. And, finally, the third way is an absolute auction where the property is sold to the last and highest bidder, regardless of what the price is.

In an auction sale, there are no contingencies – not on financing, not on the home inspections, not even appraisals and not on getting family members to approve the home. None. An auction does require a larger deposit and if the buyer don’t close they forfeit their deposit. This brings out the serious buyers. But, it is important to know that auctions force the buyers to complete their diligence before the auctions. Financing: if required, needs to be pre-qualified with a commitment from the institution before bids are made. Bring a home inspector out before the auction date.

The auction company will work with the buyers to answer all their questions, and satisfy all their requirements before they close, and before they make their offer.