Okay, normally I call this my "Realtor Update" but I thought we all needed a dose of optimism. (at least those of us that are still out there and still trying to make a dollar in this industry!) Here's my theory: "We can turn this market around with our own optimism and positivity!"
Remember when Johnny Carson made an announcement that there was a toilet paper shortage? There really wasn't a shortage at all, but within hours the stores were almost depleted of their supply. As we are continually hearing about the troubles in the housing and mortgage industries, it seems to further those issues. Maybe if we take a new tactic and focus on all the positives, we can start bringing a turnaround into place.
One of the things that I keep hearing over and over is that even though there is an amazing supply of homes on the market, many buyers are waiting for rates in the mid 5% range. We need to show them that the rates are extremely attractive in the low 6% range right now and couple that with the lower home prices due to the glut in the market, and it's just about a wash.
Here's an example. I did a loan for a buyer a few years ago. She purchased a property for $140,000 with 10% down. Her rate was 5.5% at the time. Recently, my client wanted to refinance to possibly get a little cash out for home improvements. The appraisal came in at $130,000. She was very disappointed that her home was worth $10,000 less and it precluded us from doing her refinance. But...back to my example....the house at $140,000 with 10% down at 5.5% had a principal and interest payment of $715. That same house at $130,000 with an interest rate of 6.25% would have a principal and interest payment of $720. That's just $5 a month difference.
Basically what I am saying is that with the drop in home prices, the payment with the slightly higher rate is about the same as getting the lower rate a few years ago with the higher prices. (I know..that's a confusing statement)
This is an amazing time to buy a home and we need to do all that we can to encourage everyone we can to purchase a home NOW!
I have talked to a couple of Realtors lately having success with working with renters. They pick an apartment complex and get the individual addresses for each unit and send out postcards. Repetition is the key when you are doing any type of farming project. So..be consistent and repetitive and hopefully you will see results, too.
Many Realtors are sitting on a pile of listings. I asked if the sellers are out looking at homes and in the majority of the cases, the sellers are waiting for a buyer to buy their home before they begin looking. Well...here's an interesting approach. Why not see if you can get them to make a contingent offer? Since it's all set up like a dominoes game, if we can't get the first domino to fall, we can't get the rest to move either. We have all these sellers out there that won't make a move till they sell...and we have to spur them on a bit.
(Oh..and make sure your sellers are preapproved, too! Recently a panicked Realtor called me and asked for help for her client who had an accepted offer and was unable to get a new mortgage to purchase a new home. Sadly...there wasn't anything that could be done, but this should have been discovered before the property ever hit the market)
In closing, I would like to wish you a very happy and prosperous New Year. I hope that 2008 will be the year where the true survivors in this industry...you an me...are able to truly shine.
Happy New Year!
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