Who has the Advantage? Buyers, Sellers or Lenders?
July 20th, 2009 categories: Finances, Home buying, Real Estate
Getting Your Offer Accepted
I read an interesting article recently that outlined the differences between a buyers market and a seller’s market but added the newest player…the lenders. Yes, it’s true that prices have dropped significantly and interest rates are hovering around 5%, and it would appear that the buyer’s have the advantage but it’s really the lenders that seem to be calling the shots.
It’s easy to see the truth of this when you realize that the banks have a shadow inventory of about 2/3 of the current inventory on the market. Lending requirements have been tightened to the early 1990’s standards (10% down) with only FHA or VA alternatives. Additionally, they disregard the time frames and procedures regarded as standard operating procedure for the real estate industry as a whole. It’s no wonder the buyers get frustrated and walk away from offers. Some real estate agents refuse to show short sale properties even though they represent 75% of the current inventory on the market.
So what is the solution for buyers eager to take advantage of the situation? The first rule of order is to get your finances organized. Once you have your paperwork in hand and can sit down with a lender, they will be able to qualify you for a loan. I always tell my buyers to make sure this is done first BEFORE you go shopping. Once you find that perfect house you don’t want to feel as though you’re being held hostage to the lender, so get the financing out of the way so you are confident in your offer.
Always get a Good Faith Estimate (GFE) from your lender because this is what you can use to shop around for the best rates. Once you decide on who you are going to work with get a Desktop Underwriting (DU) approval which is considered gold when it comes to offer submission. Remember that once an offer has been accepted the seller is required to show the home as pending sale and cannot continue to offer it for sale. You want to reassure the listing agent by submitting your offer with a DU so they can tell the seller with confidence that you can complete the transaction.
Now that the financing is in order and you know what you can afford, determine which neighborhood you want to live in and work with someone who is familiar with the area. I once had a listing in Rocklin that a buyer’s agent recommended to her clients from the bay area. They bought it as an investment but didn’t see the property until 5 days before we closed escrow. When the agent finished showing her clients the property she called me to ask why I didn’t tell her there were numerous rentals on the same block. I countered that I had done my job in selling the home but she didn’t do her’s in telling her clients about the community. Always work with someone who you trust to be your eyes and ears…if all they are interested in doing is pushing you to sign a contract then realize who’s interest they are truly representing.
Finally make sure you understand what your obligations are when you sign your purchase offer. Too many times buyers assume they can walk away from their contracts without penalty. I recently had a seller who kept the buyer’s deposit due to her agent’s negligence. Remember that the final decision is your responsibility and as the saying goes you can delegate responsibility but you can never give it away.
To subscribe to my newsletter click on: http://www.feedburner.com/fb/a/emailverifySubmit?feedId=2571487
[...] Folsom Lake Homes » Who has the Advantage? Buyers, Sellers or Lenders?They bought it as an investment but didn’t see the property until 5 days before we closed escrow. When the agent finished showing her clients the property she called me to ask why I didn’t tell her there were numerous rentals on the … read more… [...]