| The problems with selling homes in a home buyer's | | | | Home sellers need home buyers. In a market like this |
| market are in the news everyday. While the politicians | | | | one there is tremendous emotional turmoil when a |
| may think it is up to them to legislate the solutions, | | | | house or property gets no traffic, no interest, and no |
| given a chance the market has a unique way of | | | | offers to buy. When a prospective home buyer |
| solving its own problems. Instead of looking to the | | | | makes an offer to purchase your property, that is a |
| government, mortgage lenders, or banks for help | | | | very good thing. At least you have a starting point |
| perhaps it is time to look to one another for some | | | | towards the sale of your property. |
| very simple, creative, and effective mortgage funding | | | | It is extremely important for the seller to understand |
| solutions. | | | | there are many ways to sell your property. In most |
| This buyer's market is severely impacted by a | | | | cases it will be either a cash sale or a terms sale. If |
| tremendous credit crunch. One of the results is the | | | | you expect a "cash" sale, be prepared to discount |
| crisis suffered by the investment bank Bear Stearns. | | | | your sale price. How much of a discount depends on |
| You have probably heard by now about the buy-out | | | | your situation. Consider the location, condition, and price |
| of Bear Stearns by JP Morgan Chase at an | | | | of your property. |
| astounding $2 per share. Bear Stearns' stock fell from | | | | If you need debt relief and a full price sale, you can |
| a 2007 high of $158.39 to about $30 last Friday. The | | | | expect to structure some sort of "terms" sale. This |
| sale at $2 per share is not zero, but it is too close for | | | | arrangement will get you closer to top dollar for your |
| comfort. | | | | property, but it will take a little more time to cash out. |
| The dominoes continue to fall in what began as the | | | | A clear understanding of what your particular |
| sub prime mortgage crisis. Credit for everyone is much | | | | circumstances are will make it much easier for you to |
| more difficult to get regardless of credit score. | | | | effectively negotiate for the sale of your property. It is |
| Underwriting guidelines typically require a 20% down | | | | not as simple as running comps, establishing a value, |
| payment, much lower debt to equity ratios, and six | | | | and adding on to the sale price to cover ancillary costs. |
| months of capital reserves. What is even more | | | | Lots of properties are over financed, or worth less |
| disturbing is the fact so many lenders don't have | | | | than the mortgage balance. That is a major reason |
| money to lend as a result of the credit crisis. | | | | why Bear Stearns was sold for $2 per share. Too |
| This high profile credit problem has the attention of | | | | many mortgage backed securities have inflated |
| both the private and the public financial sectors. Don't | | | | property values. By contrast, too many foreclosures |
| be surprised if we end up financing the recovery of | | | | are deflating property values. |
| the problems created by outrageous behavior by | | | | The property seller must have a clear understanding |
| selfish and greedy individuals and businesses. | | | | of what your objectives are relative to the sale. This |
| Let's quickly define the problem and a solution. Home | | | | will help you determine whether a "cash" or "terms" |
| sellers need home buyers. That is pretty simple right? | | | | sale provides the best solution for your situation. |
| When a property is for sale the normal question a | | | | The property buyer must make sure your financial |
| buyer will ask a property seller is, "how much do you | | | | home work has been done effectively. This is a great |
| want for your property?" | | | | time to determine how much you can afford to invest |
| In a home buyer's market like this one that is not the | | | | in home ownership. Work the numbers, and be sure to |
| right question to ask. The question you must ask is, | | | | make arrangements for savings and investment funds |
| "how much is the property worth to me?" You see in | | | | in your cash flow projections. If you don't how will you |
| a home buyer's market inventory exceeds the | | | | be able to handle unexpected emergencies? |
| demand for property. In some markets the estimates | | | | If you have resources that allow you to offer both a |
| are fifteen sellers for every potential home buyer. | | | | "cash" solution and a "terms" solution, that would be |
| According to the National Association Of Realtors | | | | ideal. If not, simply make a well researched and |
| there is enough inventory in the market right now to | | | | constructed offer to purchase the property. |
| last ten months in the best circumstances. As you | | | | If you are a potential home buyer, this is the perfect |
| know these are not the best circumstances. | | | | time for you to find the property you really want, to |
| The most difficult reality to overcome for the current | | | | organize your resources, to make an offer that is |
| home sellers is the fact most properties are not as | | | | almost impossible to refuse. Every offer needs to be |
| valuable as they may have thought. In truth a property | | | | considered by the property seller. The lenders are |
| value is determined by market demand, not by how | | | | intimately familiar with the problems in the housing |
| much you owe. While it may be true that a property is | | | | market. Taking more properties back in foreclosure will |
| not likely to have zero value, if it doesn't sell within an | | | | not solve their problems. Getting properties sold will |
| acceptable time frame, is there much difference? If | | | | solve the problems of everyone involved. Home |
| you can't cash in when you need to, the value may as | | | | buyers this is your time. Take advantage of it. |
| well be zero. | | | | |