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When Good News Hits The New York Times, Sell
By Dale Rogers
Conversely one could surmise, when there is abundant investment bad news; investments opportunities may abound in the market place. Bernard Baruch was one of the more astute investors of the world. He was born in 1870 and died in 1965. He was an advisor of Presidents and an extraordinary investor. Many of his axioms and principals ring true today. Bernard Baruck also said, "A speculator is a man who observes the future, and acts before it occurs." He then went on to note, "Never follow the crowd". An early contrarian to be sure.
Everywhere you turn and observe in newspapers, magazines, cable, network programming, radio, Internet BLOGs, investment newsletters, real estate is bleeding badly. Bad news abounds. With a forest of real estate signs sprouting out of the ground with moss growing on the north side, things appear to have slowed in the just recent hot market. There is seller desperation in the market place. Just a few months ago, sellers would get four or five offers on a property with the winning bid at $25,000 or more above the list price. In that euphoric period, the list price was the "start" price. In that referenced selling climate, the seller would refuse any seller help to the buyer with the closing costs and prepaids. As far as repairs on flagged items found on a routine home and termite inspection. Sorry Charlie, "As-Is, Where-As" was the rule of the day. When too many buyers are chasing too few properties, prices soar. As the song goes, "What A Difference A Day Makes" When too few buyers chase abundant properties for sale-prices fall.
Now seller's, in many areas, are begging for offers and will pay all or most of the buyer's closing cost and prepaids if lender allowed and may even be willing to hold a second mortgage to facilitate a sale. Before this downturn, many buyers were shut out of the local market place due to accelerating prices and the high level of fierce competition for residential property. Fools will not be rewarded. With the goal of a great property at an affordable price and a structured plan to achieve it the possibilities are very good in many areas. This is not a scenario for a cash buyer. They will do nicely on their own. If a buyer needs financing then the exercise of determining affordability and payment level is necessary right out of the box. There really are too many pitfalls to go one on one with a seller unless a buyer has someone on their side to keep them safe and on track when making all those low offers with super buyer terms. Now that the worm has turned a buyer needs to focus on areas that they have a keen interest in living. A few criteria guide lines beyond the specifications of bedrooms, baths, garage size, counter tops, fixer, or recently upgraded and remodeled will be settled on from the get go. Then, to maximize the buying opportunity, the search should be focused on buyers under pressure.
The criteria would then be, a vacant home, low or no mortgage, recent price changes indicating urgency, recent move to another city, estates, divorces, or other event that may offer an opportunity. It will be necessary to check with the listing agent to determine if there is an atmosphere for negotiations on price and terms before ever viewing the property. There is no need to waste any time with an unmotivated seller. The agent will need to be probed as to whether the seller has expressed either on the MLS or shared with the agent communication for public distribution that the seller is willing to work with the buyer. This will include gauging a seller's willingness to negotiate the price and is willing to pay the buyer's closing cost and prepaids and fix ANYTHING flagged in the home inspection. If there is any waffling by the seller's agent on these requirements then the seller hasn't chewed on the agent enough to drive home the urgency of the situation and move on to a motivated seller. It should be noted that this is a dynamic situation. A down market will be influenced by net gain population increases or declines, employment levels and local and national economic situations impacting specific areas. Great buying opportunities will wait for no one. All parts of the country are different-take advantage.
Those just recently closed out of the prior hot market due to adverse credit histories may be able to negotiate a purchase in this down market. If per chance, a borrower could only qualify for a 95% loan-to-value mortgage previously they may now get the additional 5% down payment by way of seller held second mortgage. The second mortgage can be at favorable terms while also getting the seller to pay all the closing costs and prepaids for taxes and insurance as allowed by many sub-prime lenders. While this market is down, a buyer should be prepared to make multiple offers at very buyer slanted terms and conditions. An apparent low offer may be an ACCEPTED offer. If a seller has to sell, they HAVE TO SELL. Stocks are not the only investments that can go up and down. The market bends to those who seek a deal in a down market. Good credit or bad, no matter.
Dale Rogers
www.brokencredit.com
About the Author
Dale Rogers is a thirty-year mortgage veteran and frequent contributor to the Broken Credit Blog The BCB is a free website created to assist the general public with information about credit repair and responsible mortgage lending.
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