No bale-out for dishonest borrowers and dishonest lenders

The real estate and credit markets are in a terrible mess because of dishonest borrowers and dishonest lenders.  Lets be totally honest here, if the people who could not make the loans payments hadn’t signed on the loan none of this would have happened.  If the banks hadn’t given people that couldn’t repay the loans the loan none of this would have happened.  Oh I know there was some fraud, some dishonesty, but where is personal responsibility in this equation?  It is nowhere to be found.  Politicians, borrowers and the banks all want the people who didn’t make bad decisions and didn’t act in a dishonest way to bale-out those who did.  How much are we talking about?  It could be well over $300 billion.  A typical example of someone in foreclosure is as follows:  the person didn’t have to prove their income or that they could repay the loan; they got 100% financing; the seller paid all their closing costs; the loan costs were put into the loan; they have none of their own money in the property.  The borrowers knew or should have known they could not make the payments and now they want you and me to give them hundreds of thousands of dollars each so they don’t lose their home; the home they couldn’t afford in the first place.   It is sad to see them on TV, crying about having to move out of a home they always dreamed of having, but that’s life.  You make bad decisions and you suffer the consequences.  A small percentage of those in foreclosure are there for the traditional reasons; they lost their job; death in the family; divorce and illness.  But the vast majority of those now in foreclosure and who will go into foreclosure over the coming years are there because they were dishonest about their ability to repay the debt.  They knew or should have known they could not make the payments and they signed on the loan anyway.  No one held a gun to their head.  No one forced them to sign a document committing to make payments.  They did this to themselves.    My neighbor asked about the little old lady that refinanced her home three times and is now forced to go and live in a nursing home.  Yes this is tragic.  The lenders were calling her ten times per day, he told me.  My answer is simple; she should have hung up the phone each time.  The lenders would have moved on.  In fact, many tens of thousands of home owners did just that and the phone calls stopped. If we bale-out these dishonest borrowers and lenders where does it stop?  Life is about making good decisions and suffering the consequences for bad ones.  No bale-out for the dishonest borrowers and lenders.  

Things you must do to sell your home

In todays buyers market, with many more homes for sale than qualified buyers, you need to make sure you price your home at or near the bottom of the price range.  Your home will be competing with 10 to 15 like homes in your price range.  Even a small difference in price will put you at a disadvantage.

If at all possible you need to paint, carpet, up-grade old appliances and even stage the home to get the attention of buyers.  The home must be in move in condition or you need to be at a lower price than the competition.

You need to look closely at all the factors buyers look at; neighborhood, type of home, the condition of the home, size (dollars per sq ft), amenities, the yard, etc.  If your home is lacking compared to the competition in any of these areas you need to lower the price to compensate.

The hard true fact is it is a buyers market and to sell you must be competitive.  Many homes are sitting on the market for months and this makes it harder to get them sold.  Many homes simply will not sell close to the listed price.

How long will this last?  No one knows for sure, but many experts says for at least a year.

    

FHA is now the best financing for entry level buyers

The credit crisis has all but eliminated 100% financing for most buyers.  If you can get the 100% financing you will pay a heavy mortgage insurance fee each month.  The best option is now to get qualified for an FHA loan.  These loans are about 1/2 a percentage point less in interest than conventional 100% loans.  The standard FHA loan requires the buyer to put 3% down, but allows the sellers to pay some of the buyers closing costs.

For more information on the types and the benefits of FHA loans go to their website.

http://www.hud.gov/fha/choosefha.cfm

             

Foreclosures are a tough market

In the past a buyer could find a good deal in the foreclosure market.  Today that has become increasingly difficult.  Many if not most of the foreclosures have no equity and are going to forclosure sale at prices above their market value.  Add to that the influx of dozens of new players in this market and it is all most impossible to find a good deal in the foreclosure market place. 

My advice to beginners is to find an agent and take advantage of the current buyers market using the MLS and leave the foreclosure market to the pros… 

It is a Buyers Market

Buyers should be able to take advantage of this market and make great deals.  The market in King & Snohomish Counties is flooded with homes and there are very few qualified buyers.  Buyers should follow the following process to find and buy the best deal.  Have you agent find out what the sellers equity is for each property your are interesed in buying.  This equity is the potential profit the seller has in the property at list price.

Be willing to make low offers on homes you would like to buy and see if the sellers is interested in making a deal.  If not go to the next property.  If the seller has owned the home for 5 years or longer and is tryiong to make over $150,000 in profits he or she should be willing to come down in this market to sell the property.   

There are several other key factors in this simple process.  Email me for more info if you are interested.  Or see my article posted on Biznik…

Your comments and questions are always welcome…