Normally, my blogs are more informative. Normally, they are filled with charts and usually have a positive tone. My mom always said, "If you can't say something constructive, then don't say anything at all." I've even received responses that say I need to interject more of my own opinions into the articles and be less like a journalist . This time, I am breaking all the rules.
What is wrong with the realtors and agents in the South Florida area? My specialty is helping buyers in a price point that seems to be on fire at the moment. Most of my buyers are looking for properties in various townships around the South Florida area in the price range of $100-$250k. At the present time, the condition of a property in that price range means very little. No matter what township, no matter the condition, every property is receiving at least a half-dozen offers and the lenders are salivating.
Here's the issue. Why, if you have received several offers, would you put them all through to the bank? In most cases, agents are playing a passive role for their Sellers and as a consequence, the banks who already take way too long to review the offers, throw them all back to the agent and ask for a "highest and best" offer round of bidding. Thank goodness that appraisals are going to keep a lid on the craziness of overbidding for a property. However, it's more than just the price that will win the bid. Some are removing their rights to inspections, some are changing from a safe loan to a more costly loan for the sake of being able to close a bit faster. It's absolute insanity.
While the tax credit has helped to bolster the confidence of the average buyer, I am waiting eagerly for its end. The tax credit has created a frenzy that can only be equated to the stampede in Pamplona, where they run the bulls against the people. There will be tons of disappoint on the part of those marginal buyers that tried to stretch for their part of the American dream. Some however, just need to realize that at the present time, it's better to rent than buy. No one should stretch so much as to falsify or lie about their current economic status for the sake of buying a place. We've already seen the results of such behavior.
There are so many parts that are broken in this frenzied scenario. Here are just a few:
Banking issues
•1. Short sales should typically called, "long sales". The banks generally don't even start the process to review the paperwork on a Seller's home until they receive an offer. This process seem to take forever to get through anyway, so why not start immediately? When an offer does come in, the buyer would wait much less and there would be a stronger likelihood that they would actually close.
•2. The lenders shouldn't press people for a "best offer". As previously stated, if there is a bidding war, the price can only go so high before the appraisal will stop the foolishness at hand. Encouraging people to remove safeguards is reckless since they will ultimately be holding yet another foreclosure should the new owner have bitten off more than they could handle.
•3. Most loans in the price points of $100k-$250k are still going FHA or FNMA Homepath for their financing. This is because banks are generally still not loaning money. After being bailed out by the taxpayer's dollars, it seems rather hypocritical that they are now players watching on the sidelines while enjoying their recreated bubble of pollyannic serenity and huge bonuses. If a borrower has a credit score at or over 700, isn't he a good enough risk? Some people are still being denied a loan or being offered higher interest rates. Lender's prefer scores now that exceed 725 in most cases. In the multi-family arena where a lot of properties never received an initial FHA approval, help is needed from the private banking sector. Time and time again, rejections are seen and great homes then are ultimately sold for much less to a cash investor rather than a future home owner.
The Agent issues
•1. Pricing a home way below the market price to stimulate a bidding war is insane if you know that the price range is already hot. Many times, however this practice seems to backfire or I wouldn't see several listings each day returning to the market marked as active in the multiple listings. This only serves to frustrate the buyer's agents, the buyers that initially were interested as well as the Seller you supposedly represent.
•2. Submitting every offer, no matter how ridiculous, only serves to make the bank believe that they have a lot more interest than they actually have. There is no unethical behavior when exercising your using professional judgment.
•3. Get money on each offer. This nonsense of making the deposit on the initial offer subject to the lender's acceptance is not really an offer. You're booking an airline reservation. Maybe you should change professions. When there is no money placed in escrow on the part of the buyer, they will likely go to several properties and place similar offers, maybe with different agents! These buyers making multiple offers on different properties is no different than the behavior buyers exhibited when they purchased several homes they knew they couldn't afford it. This behavior is no different. Well, actually it is. The buyers with no money down have absolutely no commitment or risk involved in the process, while other deserving and earnest buyers are being left in the dust.
•4. When a buyer's agent calls for information on an actively listed property, at least have the courtesy to communicate in some fashion with him. We're all in the same profession and it seems the code of ethics is being severally abused or broken in many cases. I personally have attempted to get information several times from different Seller's agents, only to be met with a wall of indifference. No return calls, not informing a buyer's agent if special offer instructions are known, etc.
We know what's good and right. It's unrealistic to think everyone will conduct themselves with the utmost of integrity, hence the throngs of people that receive disciplinary action each month from the FREC (Florida Real Estate Commission). However, I will be better at reporting the abuses going forward. I could literally spend my entire day just reporting violation after violation from the verbiage used in the MLS listing. The local board, who has a task force to check for abuses, must be overwhelmed since I can pull up a majority of listings that will violate at least one rule.
Okay, now that I have taken the sheet off the 800 pound gorilla sitting in the corner, what do you think?
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