Buying and Selling Real Estate in this Market

by Nancy Osborne, COO of ERATE

Simply stated, if you are a buyer, you are now in the driver's seat in most markets across the country. And if you are a buyer who can put 10-20% down, along with having already obtained a mortgage credit pre-approval, then you are rock solid in the eyes of a seller. While it is certainly more difficult to obtain a loan approval today, if you have a credit score over 660, along with a job with good earnings ability, in addition to having money in the bank to cover both the down payment and reserves, then you are a seller's and listing agent's dream. The inventory of unsold homes is at record levels, which means a terrific selection of homes to choose from. For serious buyers this translates into lower prices due to little to no competition when making an offer as the days of multiple offers are long gone now. The primary caution for buyers is to be aware that home prices are unstable and might not have hit bottom in many areas yet so buying for the short term (of less than five years) is not advisable. As prices may be expected to continue to decline, it is best to find a seller who is willing to negotiate. If you are working with a buyer's agent then it should not be difficult to determine the concessions which have become commonplace in the market or area you are looking to purchase in. Of course individual sellers are not the only ones willing to negotiate today, perhaps no one has had a tougher time coping with excess inventory than builders. As all tides seem to have risen and now fallen together nationally, builders with nationwide exposure are feeling the pinch on many different fronts. Lastly, if you were a recent buyer who acquired your home before the explosive 2006 market year, then you may not be in for the dip in value that many of the 2006-07 buyers may be facing. So hopefully you were a buyer for the long run and not one of the notorious, now ill-fated, flippers who hoped to cash in and then cash out quickly. If you purchased your home as your primary residence with the intention of occupying it for the foreseeable future, you should likely come out of this market just fine as long as you can safely make your mortgage payment(s).

As for those hoping (or worse having) to sell their homes, they are in for a tougher road today. Accepting this fact is the first step in making progress towards a sale, that is having truly realistic expectations of where prices are and how you should begin to list the price of your home. In many markets across the country it is expected that if you need to sell your home in three months or less, then you'll need to deeply discount the list price at least 10% to 20% below comparably listed homes in your area. So in essence if you need to move quickly it's going to cost you and you must be prepared to accept this. Because the best chance of selling your home is during the initial listing period, it is essential that you get this part right. There are far too many other listings available now for buyers to consider and if you don't price your home correctly from the start, buyers might not be willing to come back and take a second look at your home sometime down the line when you've come to your senses and realistically re-priced it. As loans have become more difficult to obtain in the post sub-prime environment, when you have an interested buyer who has money for both the earnest money deposit, along with the required down payment, you would be foolish not to seriously consider the offer of each and every qualified buyer. In today's real estate market even the previously immune high-end luxury homes have been greatly impacted because of the drying up of investors in the jumbo or non-conforming market. This is an unfortunate by-product of the sub-prime implosion which has scared many investors of mortgage-backed securities out of the market for the time being leaving only the so-called "A" paper conforming borrowers (those with credit scores 660 and over) with ample loan options available to them.

  Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.

"I am addicted to Bloomberg TV" says Nancy.