The Real Estate Dilemma - Home Made?

The Real Estate Dilemma

Home Made Crises?

This is my personal opinion only and may or may not reflect the opinion of fellow Realtors or the company I am working for. 

As a Realtor in Southwest Florida since almost 15 years I have seen and worked in both, Buyers and Sellers Markets. Normally it is just a healthy cycle and the Real Estate Market based on supply and demand regulates itself.

But this time around it seems to be more complex. Not that we don't have buyers and investors who are ready, able and willing to buy. They are here,  Europeans are very attracted due to the good exchange and a lot of Americans agree NOW is the time to buy.

We would be able to reduce the inventory way faster than it happens right now. But the lenders and banks are trying to compensate their mistakes from the past with the other mistakes today. From lending to everybody in the past they tightened the guidelines and make it extremely hard to obtain loans. Even the Federal Rate Cuts are not really helping, just for this reason.  

A lot of those properties bought in the sellers market to high prices and with adjustable rates are ending up in short sales or bank foreclosures. The supply increases, the prices drop.

This is not the only problem we are fighting in today's Market.

Lets take the "Short Sales". In a Short Sale the lender agrees to take less money than is owed for the property. Unfortunately in a lot of cases the "less amount" is still higher than the current market value. The educated buyers and investors have a lot of inventory to choose from and they will choose the "best deal" for their money. Overpriced short sales are going into Bank Foreclosure and are creating an even higher loss for the lender.

Here an example out of my own experience. I had a very nice, brand new home listed on a golf course. This property was offered as a Short Sale. The Seller owed about $500,000 Dollar. The list price as a short sale property was 399,000. Another Realtor brought me an offer for 340,000 cash and fast closing. This actually was over fair market value. After month and month with no word from the lender in regards to this offer, the lender finally  denied. A few month later the same property went into bank foreclosure and is now offered for 235,000. Beside the costs for the lender to go thru the foreclosure procedure and the consequences for the owner, they also lost about 120,000 just in not taking the original cash offer.

This is not a single case and unfortunately Realtors can fill books and books with similar stories.

Buyers, Investors and Realtors are getting frustrated because there is no communication, no update from the lender for weeks or month. For just this reason a lot of Buyers and Realtors are simply avoiding short sales all together.

We have cases of willing and able buyers or investors, with 30 - 40% Down Payment, applying for a commercial loan, for land, construction or development. A development which would create jobs in construction and later to manage and run. Most conventional Lenders are not even looking at loans like this anymore. Even so it would solve a lot of problems for our economy. Those investors have two options - either leave it alone or turn to private investors. I am personally working with an investor who is planning to build a unique facility in Fort Myers. Since almost 1 year we are trying to line up the financing. My client has 35% down payment and an excellent credit and reputation. Another client of mine is trying since about 4 month to invest in a good going business including Real Estate, he also has almost 40% Down payment toward the loan. This seems to be a "mission impossible". Federal Rate Cuts are not doing any good here either.

Still not enough - Dealing with Bank Foreclosures is not that easy anymore either. Most Banks hire attorneys, those attorneys are overloaded and to get closing documents takes weeks and month. Even cash deals, supposed to be so easy are taking for ever until they can be closed. Those buyers are getting frustrated and turning away for good. They do not need this stress just for spending their money, they can do that otherwise and way more relaxing. Banks and Lenders should realize that every day the property does not close costs their money, adds up interest and other costs.

We Realtors could help to overcome the current Real Estate and Economic crises, we just would need some lenders or attorneys to realize that they need to hire able people to make the whole procedure of buying Real Estate easier and smoother. They should not lay off people, they should hire people, may be Realtors, who know what they are doing and get things done in a timely manor. This actually would save them money since they get those properties faster off their books.

Banks and lenders should not go from one extreme (lend to anybody and everybody) to the other extreme (tighten their guidelines to nearly impossible). They need to find a golden middle. Learn out of past mistakes, draw a line and make it better (not worse).

We all are sitting in the same boat (Lenders, Investors, Buyers, Realtors and actually everybody world wide), we need to realize this, everything is going hand in hand. We need to work together and we can turn the whole economy  around (not only the Real Estate Market). We can make it work again for everybody.

This is my personal opinion only and may or may not reflect the opinion of fellow Realtors or the company I am working for. 

Monika Wilson