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Three lessons learned.

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Three lessons learned.

By Tony Jarrett of Allen Tate REALTORS

In today’s real estate market, new and unique challenges are facing our clients on their journey to homeownership. When approached correctly, we can often discover success as we overcome hurdles during the journey. My parents used to tell me to always look at your mistakes as an opportunity to learn. In other words, you need to get caught up in the experience so it doesn’t happen to you again. Those words have stuck with me, especially when it comes to my job. We are living during a period where there are many uncertainties, but those uncertainties give us an opportunity to learn from any and all mistakes we may make as we navigate through this unchartered terrain.

One of the most noticeable challenges I have noticed is transactions that aren’t closing on time. Here are the top 3 reasons transactions don’t close in today’s real estate market:

“You have been declined for the mortgage loan”….

This is the #1 reason a buyer doesn’t get their dream home – they were declined for the mortgage.

Solution = get PRE-APPROVED, NOT pre-qualified.  The mortgage process is changing and getting more restrictive in today’s economy.  Buyers who apply for the loan process before finding the home have a much higher success rate.  This way the only contingency to complete is the appraisal process.

The property didn’t appraise”….

When you read that sentence you may have thought that the reason a home doesn’t appraise is due to price.  Well, you might be surprised to know that the reason a home does not sell is due to property condition and/or repairs which is a direct reflection on today’s appraisal process. New appraisal standards not only note the value of the property, they also note many condition issues.  The appraisal process is now very similar to the inspection process.  Trying to sell “as-is” is no longer passing the appraisal process.

Solution = Sellers should get their homes inspected before placing them on the market. Approaching the process this way will allow you to address any condition issues before your home is placed on the market.  Price and condition are the two most important elements in any market, but condition is becoming more critical to the appraisal process.  Also, don’t discount the cosmetic issues – that peeling paint could be the one repair item that causes the red-flag on the appraisal, especially when dealing with FHA and VA loans.

“The house is a short-sale”….

Almost 30% of all sales in North Carolina are now distressed sales which means the seller is going through foreclosure or the house is now owned by the bank.  The challenge with these sales is the time investment to get that “great deal.” Have you heard of sweat equity?  These transactions require the buyer to put patience equity into the deal.  The average distressed sale in North Carolina last year took 340 days to close.  Many buyers cannot or are not willing to wait because the process takes so much longer than a normal closing process.

Solution = there are a many steps involved and the length of time it will likely take to get one of these properties closed maybe out of your control.  Make sure you are working with a Realtor who understands this process, or at a minimum, has access to a great partner in the distressed arena who can advocate for you with the bank.  The value and affordability can be like hitting the jackpot, but you must be prepared for the length of time that could pass while trying to close.

Make sure you take proactive steps in today’s real estate market. It will help you get your home sold or help you move into that dream home.  Learn from these lessons in today’s real estate market so your success is ultimate result!

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Comments (1)

Stephen Proski
Real Estate Kailua Kona, Hawaii - Kailua-Kona, HI
Real Estate Kailua Kona Hawaii

Yes it is always in the best interest of your client to be pro-active versus reactive.    The market has changed and we need to change as well!

Jun 29, 2011 04:57 AM