Low inventory levels are a common occurrence as we start out in 2012. This is consistent with other areas of the nation that experienced rapid appreciation previously. But it isn’t consistent throughout the country. As prices corrected and then fell, first-time buyer and investors took advantage of the Tri Valley and Bay Area market. The market has spoken – real estate is on sale ladies and gentlemen, and so are mortgages. For the first time in a very long while, many are finding purchasing to be a better financial option than renting.
Multiple offers are once again part of the market. Supply and demand is in full swing, and some buyers are extremely surprised to learn that. Especially, if they are moving here from out of state.
Banks continue to be a significant participant in home sales, as they bring foreclosed properties to market. However, those representing the banks in a transaction behave very differently that traditional sellers – they aren’t emotionally involved. They are pricing their foreclosed properties at or below market value, so are not likely to entertain lowball offers, when more buyers are lined up and waiting. And you can expect to purchase that property in As-Is condition.
Short sale processes have improved, but they’re not without risk. Agents are more skilled in dealing with them than when they first hit the market, and banks have streamlined their paperwork. But short sales are complex and require more time, documentation and patience that traditional sales.
Guidelines and rules may change while you are in escrow. The industry has been under scrutiny since the bubble burst, and rightfully so. Even if you’re an experienced buyer or seller, things may have changed dramatically since you last bought or sold a property. Don’t be afraid to ask questions of your lender and your real estate agent, throughout your transaction. New guidelines and laws are in ongoing refinement.
Pay attention to HOA’s. Many homeowner associations have been hit hard by reserve shortages. When properties are marketed as short sales, there are often arrears to the homeowner association dues. The health of the HOA is an important part of your future financial picture, so take ample time to review their financials. Their financial well-being is important to your lender too. It is not uncommon to have a loan denied when the lender finds something they deem to be risky with the HOA or complex.
Don’t underestimate closing costs. Your lender may have requirements for reserve funds (property insurance, mortgage insurance, taxes and HOA dues) that you will pay in advance. Err on the conservative side in working through your budget.
Every home requires maintenance throughout the year. Knowing that, give yourself a financial cushion to handle those unexpected costs associated with home repairs or maintenance. The home inspection you receive when buying your new home will summarize those items that will need routine maintenance or eventual if not immediate attention. Plan those maintenance items and budget for them.
Paperwork. Real estate transactions have always included a good deal of paperwork. And the amount of paperwork has increased with the changes in the market due to short sales, foreclosures and guideline changes. You may need to set aside more time to review documents than you would have in the past and that’s a good thing, as these changes have been implemented to protect consumers.
But don’t panic. Agents who have stayed in business through this downturn have had to take classes, learn new technology and be constantly tuned in to the ever-changing landscape that is real estate. You won’t have to go it alone.
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