Is The Foreclosure Market Really a Buyer’s Market?
Good home deals appear to be everywhere, but more and more folks are looking for a great deal, which complicates things a bit.
That’s the lesson Wayne and Theresa Crawford have discovered as they scour the foreclosure market, as they have been for six months, looking for a fixer-upper starter home for their son, Waylon.
California's Foreclosure Competition
According to Keith Reid, reporting for the Stockton Record, the Crawfords entered the market in late 2008 as home prices crashed and interest rates hit record lows, creating the ultimate buyer’s market.
Their son is a single father working as a grocery store cashier, and can afford a monthly mortgage on a $75,000 home.
In the current market, that amount can buy a three-bedroom home in a decent neighborhood, and Wayne Crawford and his son are ready to make their own repairs.
So far, however, the search has been fruitless.
“We’re fully qualified, have a 20% percent down payment, and we’re offering above asking,” Theresa Crawford says.
“We put in our bids and we don’t hear back, or they tell us we’ve been outbid. It’s been so long now that interest rates are going back up again.”
To Have a Shot, Buyer’s Need to Overbid
The Crawfords are experiencing a common dilemma in the current housing market: Though prices and interest rates suggest a buyer’s market, the competition for these homes is so fierce in some areas that buyers need to overbid in order to have a shot to win a ban-owned property.
The inventory of such properties is shrinking, thanks to a 90-day moratorium on foreclosures, giving banks the opportunity to work with homeowners and modify their mortgages.
Stockton realtors are working overtime to explain to their clients why they aren’t having more success.
“It’s a learning process for every client,” says Art Godi, a real estate agent in the area.
“They make their first offer under asking and they don’t get it. They make their second offer at the asking price and they don’t get it. Then, they start going over [the asking price] and it’s still hit or miss.”
“There are frustrated buyers who have written 10 offers on 10 different homes to no avail,” says another agent, Ben Balsbaugh.
“There are listing agents working with the banks who have to deal with five to thirty offers on each of their properties.”
Crawford believes his son would have more interest reciprocated if he were hunting in a higher price range.
He has learned that in the market for five-figure homes, real estate agents see cash offers, which are more enticing than financing offers, as he is making with his son.
Cash Offers May Not Have Automatic Advantage
Real estate experts believe that cash offers can sway banks somewhat, but the best offer, regardless of how it is broken down, will usually win out.
“The asset manager at the bank makes the decision,” Godi says. “A good offer is a good offer.”
After a half a dozen offers that apparently did not make it into this category, the Crawfords are beginning to lose hope.
“It’s a dream for Waylon,” says Theresa Crawford. “He lives at home now but wants a place he can fix up and have a room for his daughter.”
In the current real estate market, there are plenty of dreams, all of them targeting the same sort of house to settle into.
Source: Stockton Record
