New normal for real estate sales: Buyers have the power

Foreclosure properties still control the High Desert Real Estate market although over the last 4-5 months Shorts Sales and Standard Sales (sales between homeowners and buyers) have shown a substantial increase in numbers they still fall substantial short of the foreclosure market (market condition report).

Following the real estate market failure, lenders started requiring more money for down payments, higher credit scores to qualify for a loan, quite a different scenario than when subprime mortgages were flooding the market.  Although buyers have tighter credit requirements today and are primarily buying in a Bank Owned Market, the substantially reduced housing prices and low interest rates of today are a very beneficial offset to the high prices of a few years back.

For sellers the playing field is quite different too: you need lots of patient, competitive pricing and a property that shows substantially better than a foreclosure because buyers now have the power.  Many Economists, Real Estate and Mortgage Brokers in The High Desert say they’ve noticed a shift in attitudes that they expect will last for years to come.

The vast number of Foreclosure properties on the market and the preference of buyers for this product will tend to keep the Standard Sale at a disadvantage for some time.

Thoughts to keep in mind:

• Traditional sellers are finding that the number of offers received is not nearly as high as those received on foreclosure properties, which often receive multiple bids. The negotiation process also differs between traditional sellers today and traditional sellers during the height of the market. The Crown Team knows if a house is not being shown, then it is overpriced. The record number of foreclosed homes on the market gives buyers even more leverage.

• Resulting from the credit crisis, lenders now often require much more paperwork and thoroughly review borrowers’ credit histories, bank statements, tax returns, and job histories. The average mortgage applications today starts three times thicker than what it was at the start of the housing boom, and often gets thicker as the process moves along. One mortgage broker reports that now lenders want to know everything about the buyer, “It’s a true and full underwriting process on every particular loan.”

• It is not uncommon nowadays for closings to take 60 days. One reason is because of the adoption of the Home Valuation Code of Conduct (HVCC), which often results in appraisers evaluating homes in areas they are not familiar with and often using comparables that are inaccurate. This has caused delays in closing sales, and in some cases, undermining sales because appraisals are coming in too low.

• Just about everyone in the real estate industry agrees that another dramatic boom-bust cycle isn’t going to happen again anytime soon.

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