I’m writing this post to make the point that it’s still worthwhile to buy real estate, but that the rules of the game are constantly changing. It’s not as easy as it once was. It has to be treated as a game. Winning the game has enormous rewards, though. Besides the obvious eternal reasons for home ownership (pride, tax savings, pay yourself, build equity, control of how you live, no landlord, etc), there’s terrific opportunity to get into a home at prices we haven’t seen in 3 years.
You’re going to need help from a great agent, a great lender, and maybe even a great therapist before it’s all over. But it’s WORTH THE TROUBLE, and you might even get one of the easy transactions where everything is predictable and goes the way it’s supposed to.
Yes, they do happen, but not as often as they used to. In my 20 years of selling real estate and and consulting with buyers and sellers, I used to have a problem of some sort on maybe 1 out of 10 deals. Usually we’d get it fixed, and overall only about 1 in 20 had serious complications, and only about 1 in 50 where things couldn’t get fixed and actually fell apart all together.
Those numbers have changed dramatically. Buyers, sellers agents and lenders need to be wearing their track shoes. Everyone has to be prepared to punt. All of us will need a lot patience and flexibility. The banks, whether they’re the seller or the lender, aren’t making it easy. But that doesn’t change the fact that it’s worth pursuing.
I’ve spent 20 years figuring it all out. How to negotiate. How to promote, and market listings. Knowing what the buyer will buy before they do. Common business courtesy. Pricing strategies. Contract clauses. FHA “livability” Standards, Rules of Law. Checklists.
All of it for naught in this market. Everyone is just making it all up as they go along. Every listing, every agent, every brokerage, every deal is a new variation of the game of real estate. But that’s what makes life exciting. When things zig, I’m always ready to zag.
I thought the banks were putting ridiculously low prices on properties to get bidding war going. Except, I just made a deal on one of them last week that was accepted below the ridiculously low low list price. We were the only bidder. At that price I thought there would be a dozen. The buyer would have bought it for 30 or 40,000 more than what it was listed for.
I submitted an offer on a property last week that wasn’t a foreclosure. I emailed it last Sunday, 8 days ago. I faxed it in on Tuesday because the listing agent hadn’t returned my 3 calls on Sunday and Monday. I started calling the broker on Wednesday, who says he can’t reach the agent, and doesn’t have a phone number for the seller, who lives in Michigan. We’re frustrated but we’re ready to start over.
5 counter offers on a bank owned property, and each counter took 4 or 5 days to get a response. The final form the bank sent over was never presented with the first counter. It has a clause in it that says that the “contract is not binding on the seller. The seller can cancel at anytime and for any reason and return the earnest money to the buyer”. The listing agent says “it’s just routine”. HUH? Will the buyer sign it? Will the bank take the deal with that clause removed? I’ll know today.
The bank evicted the former owner after the trustee sale. The former owner’s wife had moved away and filed for divorce and wasn’t on title in the first place. The title company says they won’t give title insurance until she signs a paper for them. I think trustee sale wiped out any claim she might have had. Buyer’s ready to go and the bank/seller can’t provide clear title. HUH?
The mortgage company approved the buyer loan. The buyer signed the loan docs. The funder says they don’t want to do the loan anymore. The seller moved out yesterday. There’s a terrific house on Zane Circle back on the market today, btw (not my listing or my buyer, I just got a call since I’d shown the house a couple of times). Something similar happened on Susan and Steve’s deal, but we got a new lender and it closed Friday. I’m hearing this story a lot lately.
The buyer said he had the money for the down payment. We made the deal, but when we went to verify the funds, it had just miraculously shown up as a big deposit in his account. Turns out it was really a loan from the parents. The parents wouldn’t sign a “gift letter” that said he didn’t have to pay it back. Deal dead. Sometimes buyers cause their own problems.
Short Sales (where the bank is owed more than the house is worth) is another whole ball of wax. There’s a huge catch 22. The bank won’t tell in advance what they’ll take as a payoff without an offer on the table. The bank won’t decide if the seller is even eligible for a short sale till there’s an offer on the table. To get an offer, it has to be priced as if it’s already a foreclosure, so the price isn’t a real price after all. Only about 5% of the short sale listings that get an offer actually get closed, but short sales make up about 30% of the inventory. I think they shouldn’t even be allowed in the MLS until the bank has agreed to accept XXX dollars.
What have we learned?
Hire a great full time agent. Hire a great full time lender.
Be patient and forgiving and flexible.
If you’re in a hurry or have a tight deadline, avoid the short sales and foreclosures.
Have your loan fully in place before you start looking. Lock your interest rate at the first possible moment.
Have a back up plan ready just in case there’s last minute delays or problems.
Don’t be attached to the outcome, especially during the negotiating period.
Lots of deals are closing without even a hiccup, but a lot more than usual require a lot of extra work and a lot of extra zig zagging. I’m up for it, and you ought to get in line while the getting is this good. Give me a call.