Cash buyers are obviously the best to work with. I've been getting calls from people who want to buy but it's gonna take them "a couple of paychecks" to come up with the downpayment (assuming it's a first time buyer and they're going FHA). If you don't have the money or credit score to purchase a house, save your money, work on your credit score THEN call an agent.

I would love to meet or talk to the 20% who thought that Interest rates is too high. Maybe if you show them the charts of what interest rates was in the early 90"s when I heard it was as high as 18% then maybe they would change their mind. Thanks for sharing Lesile.

Great post and good feature Leslie.  There's so many factors involved with the buyer burnout and the fallout is agent burnout!  The buyers that do qualify seem to be very unrealistic about the homes currently on the market in my area.  They watch to my HGTV and think they can get a dream home for little next to nothing.  The buyers that would really do well in this market aren't seeking an entitlement -- they just want a loan.  We've gone from the over-lending to under-lending in a matter of a few years.  Amazing.  Where's that happy medium?!?

If the banks were half this cautious 5 years ago there would be no crisis. At this point they are just overreacting and undermining their own best interests. 

J. Philip makes a terrific point. And what about the self-employed?

During the first consultation I go over the funds needed to purchase a home regardless if they are going VA or not. Earnest money - $250-$1000+, Option fee - $5-10/day; 7-10 days, Inspections - $275-350, Appraisal Fee - $400. Add this up using averages or maximums and $1500 is a great number to use. Do you have this set aside right now? Yes... Great!  No... Then how soon can you get it?  We will see homes when you are ready to shop in person. Until then... 88% of buyers start on-line 1.5 years in advance.

Leslie: Many buyers here are competing with investors who are paying cash. That means no appraisals and the properties are truly sold "as is". Someone who needs to get a loan just can't compete with that.

I can only imagine how fearful buyers are to go through the tribulations of trying to get a loan.  The hoops they sometimes have to jump through can be so invasive and in the end they still don't get the loan.

Leslie - So many people would like to buy but just can't right now.  Maybe they're upside down, maybe they don't qualify for what they want, maybe the loan limits have caused problems, especially here in Orange County.  Whatever the reason, sometime the buyer do just give up.

Leslie, theres not much that I can add to a well written post and comments but I am like most feeling that their has definitely been an over correction on lending.  It's still a good life though.

I think buyers should get there credit right. I understand some of the situations are tough, but I think many of them dont understand that a year or two of good work on the credit can make them a homeowner.

Leslie, in our Manhattan New York market place, first time home buyer truely have to come up with large amount of downpayment or whatever lender required just to purchase a home. And the enter prices for a one bedroom can be very high compare to the rest of the nation.

I recently did a home inspection for some clients from last January.  I thought they had bought the home last January, but it turns out they didn't. They got frustrated with the financing process and quit.  Now they're back, to try it again.

Hey Leslie,

I agree that this is a staunch over-reaction to what was an overly aggressive, impractical, and borderline stupid lending atmosphere just a few short years ago.

Best thing a prospective buyer can do from the lending standpoint is get all their documents (W-2's, pay-stubs, bank statements, cancelled rent checks, copy of Driver's License, etc) together to submit to the lender while looking for that right house.  The days of simply filling out the application and running the tri-merged credit report are thankfully over.  Saves some time and a lot of potential headaches.  It won't guarantee a stress-less transaction, but it will help make it a tad easier.  Setting expectations is key in my opinion.  It can and probably will be a hassle (buying a home) these days but can be one of the most rewarding and financially savvy moves someone can make, if done properly with the right team behind them of course.

Exactly my point, Leslie.  Perhaps there are alternatives in lending that can be considered ...

Gene