The media have decided that we are “at the bottom;” this actually occurred about 6 months ago, by my reckoning, based on the fact that it took, even at that time, 5-6 offers to obtain a property in one of the lower price ranges), so the news organizations are not too far behind. However, we now face another problem–the banks have decided to manage their inventory, so that it is more difficult than ever to obtain the property you want, if you are offering in the lower price ranges (appx. $350K and under).
I recently failed to obtain a property for a client, although I believed the offer was good, based on the condition of the property (it was a real mess!), and the fact that my client had cash. Someone offered more. It’s also evident that the banks are now treating the offering process as a sort of “silent auction,” and you have to be “the best.” You also MUST have a lender preapprove you, and many experienced agents want you to prequalify with “their” lender–they cannot force you to use that lender, but there have been so many problems with “prequalified” buyers failing to close that agents often require a prequalification from someone they know.
However, there’s hope.
Here are the instructions for success as a buyer in this real estate market:
1. GET PREAPPROVED! That is the single most important piece of advice I can give. Unfortunately, you cannot always go to your local bank for this. Banks are withholding approvals in their retail divisions (they have too much business) on lower-scoring (lower FICO’s) clients. However, the right broker can often get you approved.
2. DON’T GET A FUNKY LOAN! The very best loan program is the 30-year fully amortized home loan. You always know your payment, and it pays off over time. IF YOU MUST, other programs are available, but they are decidedly worse choices. Please check with me about loan options. I no longer do loans, but I know what a bad deal is, and I know what should work in this financial environment without exposing you to too much risk.
3. Use a good agent. I like to think I’m the best, of course, and I always seek the best interests of my clients, but I do recognize that there are other agents with excellent skills and qualifications.
4. Expect to make multiple offers. This is simply a fact of life for the current market. You will not succeed unless you are “Johnny on the Spot” with your offer. If I tell you to “offer today,” I’m not just saying that to “hard sell” you. I’m saying it because I know that particular house will be gone tomorrow.
5. Be persistent, and be open-minded about area. You may find that one or another area is beyond your reach. With prices this low, it’s better to get something than it is to get the “perfect house.” Of course, you should never go into a neighborhood you truly don’t like, but you may have to broaden your choices to be successful.
