Reality Check # 1
"The Feds have approved raising the conforming loan limits - soon it will be raining Buyers!" In a word WRONG! Yes the conforming loan limits appear to be heading up to around $725K or so in high cost areas (yes like CC County - this is driven on a county by county basis) BUT that does not mean that the banks will either agree to do so or they may add a surcharge onto a loan above the current $417K effectively negating the limit increase. Just because it is "conforming" does not mean the risk has been lowered! Even Fannie Mae and Freddie Mac do not have to play along! Plus this may be a TEMPORARY increase, about a year. So what does this mean today? To the Seller it means do not turn down a solid offer based on potential limit increases and more potential buyers. To the Buyer it means make your best deal now and do not delay thinking that if you wait you will get a much lower rate. There are simply too many "if's" involved. The banks may raise the rates even though the loan is "conforming". If you re-fi into the "new" rate you will pay fees and possibly penalties plus incur PMI if that takes you below 20% down payment.
Reality Check # 2
Over on one of my daily read consumer blog sites I keep seeing the same question posed by "Buyers". "How much lower than asking should I offer on a home in _________?" Other "Buyers" usually give a numerical answer such as 5% 10% etc. Gee (I say smugly to myself) if the house is already priced 20 percent over market than the Buyer will only end up paying 10% over market. Perhaps the home will not appraise at the Buyers accepted offer price and the Seller will simply refuse to sell at the appraised price. (This is not just hypothetical - trust me). Now the Buyer has wasted from a few days to a couple of weeks and possibly missed what they were really looking for. Buying Real Estate is not (no really, NOT) like standing at the Craps table yelling COME ON HARD 10! (I have personal experience from the Seed Foundation Casino night on that one!") A Buyer MUST evaluate all the data. As I am a major proponent of consumers having access to all the information, the caveat is that they must then have a professional filter and guide them through all the data. So please avoid the temptation to simply look at an asking price and assume that you can buy that home for _____ % lower. The rule of thumb (in a normal market) is that a properly priced home will sell within 3% of it's asking price. BTW - The same theory applies to WebMD.com. Check out all your symptoms, look at the treatments but talk to the Doc before anyone cuts!
Reality Check # 3
I got a call the other day on one of my listings from a Buyer who was out driving around. He wanted to know if the home was still available and some of the details. His next question was "is this a short sale or REO (bank owned foreclosure?") When my answer was "no, it is simply properly priced for this market" we were done talking. His assumption was that if the Sellers were not "in trouble" than this house could not possibly be a "deal". How wrong he was. Some sellers bought there homes a number of years ago - say 8-15 years and did not spend the next decade using their home like an ATM with nice window coverings. Some have actually paid them off! (Shocking but true - I have seen them!) These Sellers are selling now for the usual reasons (retiring, closer to kids etc.) and in some cases still doubling their money selling "below" market and the home is beautiful to boot! My point? Shorts and REO's are not always such a great deal! Many of them need major work and virtually all have deferred maintenance. The Banks do not make either of them easy, and may take WEEKS just to get an answer on your FULL PRICE offer (which they are under zero obligation to accept)!
If you are looking for a HOME - now is a great time to look. There are always great deals, but you need to LOOK and not ASSUME!
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