The Second Run of Investors
“But I thought it was a buyer’s market” … That’s what the last buyer said to me that had put in a half dozen offers on homes and lost the contract on every single bid. It is, in fact, a buyers market but there are also a lot of buyers out there, especially in the $400,000 and under market. The $400,000 and under market accounts for about seventy eight percent of the closed sales during the month of July.
Here’s an interesting bit of information, about sixty percent of those sold properties were paid for with cash compared to about thirty one percent five years ago. The investors are back and it looks like they’re taking a second run at the real estate market.
While it’s important that there are investors in the market to help absorb inventory it’s also a hindrance to the first time home buyers that must rely on getting a mortgage to finance their home.
Banks that are selling foreclosures, just like any other home seller, have the right to choose the best price and most favorable terms to make sure they get their real estate sold. It shouldn’t surprise anyone that when a lender has more than one offer from which to choose that they just might choose the cash offer over an offer that has a financing contingency.
If you’re in the first time home buyer market and you’re experiencing difficulty getting an offer accepted it might be helpful to know that of the foreclosures and short sales that are closing sale about sixty five percent of them are cash transactions. Right now cash is king and many banks accept cash contracts over offers with financing even if it means taking a lower price.
What’s more, if you’re trying to finance with an FHA loan, most foreclosures do not meet the strict guidelines. If you’ve been actively looking for homes you’ve probably seen some pretty sketchy places. Your agent may not know that when an FHA loan is involved normally the home requires a working kitchen with a stove and working kitchen sink, no termites, no broken windows, no structural defects such as foundation cracks, plus more.
The government is willing to back your mortgage but they won’t do it if the home is a hazard or considered uninhabitable. Since most of the homes that go into foreclosure are beat up and stripped out they’re not remotely close to meeting a good portion of the FHA guidelines.
If you are dealing with foreclosures or the homes that fit your budget are mostly foreclosures, you might want to look into a different type of loan.
You should also keep in mind that bank owned properties are often priced well or even drama priced to get attention and bring in multiple offers. Full price offers don’t cut it if the home is priced below market value and the keen buyers who have done their homework bid what the home is worth, not the price it’s listed at.
Many buyers do research to make sure they aren’t over paying but forget that in a competitive market the property could be underpriced and will sell for more than list price.
Real Life in Bonita Springs is a project by Chris Griffith dedicated to writing useful blog posts for consumers about the Bonita Springs, Florida area. Find out what it is really like to live in Bonita Springs, Florida by reading about our fair city. You’ll get the latest in local real estate information, Bonita Springs real estate market reports and a little bit of humor. If you have topic ideas, feel free to request a story about the idea, after all, this site is just for you.
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