There are many changes in the real estate business..... what it all means.

Since entering the real estate many years ago, there have been numerous Peaks and Valleys in the business, as well as the U.S. economy in general. A Purchase Agreement was a one-page form. Any changes were handwritten on the margins; these changes were simply initialed. Lawyers did not dictate our world at that time.

The residential real estate business was almost analogous to a "handshake” between 3 generally friendly participants: seller, seller’s agent and buyer’s agent (me) - sitting around the kitchen table discussing the best for the respective clients and how to close an amicable sale.

In today's market buyers and sellers have become adversaries in many cases.

A Peak is generally a Real Estate Seller’s Market.
A seller asks for and generally gets their price while the lenders are too liberal and agree with the price.
During this past peak, many people were able to “qualify” for loans on homes they and their lender assumed would continue to gain equity (go up in price).

Everyone in a real estate property sale potentially gained. The lure of “fast money” attracted many, in all facets of the business.

Many homes were sold several times in a year. A large appreciated price tag was visible on each sale.
Appraisers cannot escape blameless in this game of inflated prices. They have been found guilty of massaging their reports.

• The value manipulation is and can be done by those with knowledge of the system and also few scruples.
  
• Buyer presented a purchase figure. Seller agreed to accept sales price – in most cases, netting the sellers huge monetary gains.
  
• The buyer's lender's appraiser was apprised of the sales price and accepted the responsibility (so to speak) of meeting that figure.
  
• A basic truth: No loan is ever approved for funding (closing) unless an appraiser and buyer’s lender’s underwriter agree to the buyer/seller sales price.
  
• Buyer loan packages were manipulated drastically to assist the borrower to close the escrow. The new home owner was assured by their “professional” representatives that when their ever-increasing percentage loans became impossible to meet, they could simply refinance.
  
• The "throwing the dice" results were perhaps two-fold:
  (1)     the house would appreciate in value
  (2)     the borrower’s income would increase


• Goal: borrower’s monthly payment would be reduced through that famous term "Refi" (refinancing) - a new loan. The homes did not increase in value. The owner's financial situation got extremely tight and a painful Notice of Default (NOD) was filed by the lender. Foreclosure was eminent.

  A Valley – today is usually a Buyer’s Market.

  Traditionally, a prolonged inflated priced market comes to an end.
  The result: A glut of homes for sale.
  A “Buyer’s Smorgasbord.”

  In this market buyers generally are not subject to the seller’s desire to make a profit.

  Homeowners have restrictions as to how low they can sell their home – even if they only wish to move and possibly save their credit. i.e. they owe (including mortgage principal, interest, penalties, back taxes, etc.) more than the house is presently worth.

  There are more than one category or type of seller in today’s market.

  (1) (REOs) Many properties today are lender owned
  The owner lost his home in foreclosure. The lender is now the owner and has many properties to market - most of which are listed through the Multiple Listing Service (MLS).

  (2) Owner/seller - short sale - lender is willing to accept far less than what is owed.
  The seller lists the home seeking a qualified buyer to make an offer which his lender will accept. The price asked is often low and the buyer often decreases it in his offer price. A waiting period of weeks to months is quite common before the lender replies ... oftentimes counter-offering with what the lender deems "their best offer." The buyer is then required to either accept the "new" price or to walk down the street to another home. It can be frustrating for both the buyer, but especially the seller. Many of these Short Sale homes are in various stages of foreclosure.

  (3) Standard - The property has equity. The owner might be an investor or an owner-occupant. The condition of the home is often in good condition and ready for occupancy. Many upgrades might have been added to increase its value and appeal to you, the buyer. FAST response to your offer is a great "plus."

  joni@askjoni.com, [E-MAIL]
  Not Your Ordinary So. CA - Riverside / San Bernardino County - Broker / Agent
  I want to be your Southern California Realtor®
  909 . 653 . 4341

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