Don’t Listen to Everything You Hear!

This advice was given by my Mother! And boy, the media has been quite full of what is happening in the Real Estate Market and Loan Market. You need to be aware but not necessarily swallow the “doom and gloom” that you are hearing. (Now O.J. is taking over the Media craze so the loan news has slowed down!)

Yes, a lot of the sub-prime loan companies are now out of business, closing their doors and filing bankruptcy but they had their “hay-day” and brought in enormous profits or they would not have continued to sell those loans. Now, remember sub-prime is just what it says, below market! These were high risk loans and they received more money and higher interest rates because they were high risk. That’s what you do when you invest in the stock market! Some stocks are high risk but the financial reward is greater! Such financing couldn’t keep prospering at such a rate and just like the housing market has to adjust and cannot continually go up!

Now, the sub-prime loan is not something we deal in nor sell. It is less than 12% of the market. But it is affecting the “good” market because of corroding the buyer’s confidence in the marketplace and causing more foreclosures to occur which will never help the values of homes for the sellers.

I will still say that the majority of these loans came from the lenders that are tied in with the builders. The builders have manipulated their prices and their guidelines in order to get people into homes. Builders offer incentives to buyers who go with their mortgage companies even though we have you pre-qualified before we take you looking at new homes. And most buyers who bought new homes with those sub-prime loans were not with quality Real Estate Professionals that explained the process and what they were getting into. While representing you as a buyer with a builder, we never accept what the builder’s lender is saying without comparing what that lender is saying with our lenders.

How is this affecting the sale of your home? The Buyer’s want a bargain is what it is doing! And Buyers can find bargains out there in the marketplace. There are certainly plenty of foreclosures to choose from! And foreclosures in good condition and in good locations, not the “junk” we used to see. The builders now are offering all kinds of incentives, more than ever, like Hovanian Builders taking off $100,000 to $150,000 off the price of their homes for a week sale! You have sellers that do need to sell, to move to another job, to reduce their payments to only one house payment instead of two now that they have bought another home, divorce or illness forcing people to move down.

With interest rates adjusting down a little, we are having more activity which is great! We, as Sellers, are going to have to be in better condition without flaws and without repairs needed, looking very sharp, and priced very competitively. That is a lot to ask in some situations but that is the market. I’m just reporting the facts!

Click HERE for the statistics in our area.