It amazes me that each year since we started this down market presents a different challenge for Buyers and Sellers. Here are my thoughts on buying real estate in our market from the Southern California Inland Empire to Southern Nevada in 2013:
1) IT WILL NOT BE EASY BEING A BUYER IN 2013- As I am writing this I received an email informing me that my Buyers offer has been rejected by a Seller. My Buyer wrote a full price offer on a short sale within 5 hours of the property becoming available. The Listing Agent informed me that she was going to wait six days to discuss the offer with her client. Here is the problem, Why? We offered full price within hours of the home becoming available for sale. The Sellers Lender will ultimately be the one to accept the price to short sell the note. As you can imagine my client is furious and she should be! On many occasions, and I will elaborate on my third point, the blame is with undereducated Agents. BUT…by the middle of 2012 we were seeing a very real shortage of inventory for sale which caused multiple offers on homes as they become available. Many of us see 20 to 50 offers within a few days of the listing. Most Buyers don’t know the real estate game but many Brokers offer a larger commission split for the Agent if the sale is represented on both sides by the Brokerage (the same office represents the Buyer and the Seller). This encourages Listing Agents to make decisions that are best for their office (and themselves) but not particularly right for Buyers. We could argue the ethical issues here but the reality is that between cash buyers verses buyers needing financing, office politics, timing, and poorly educated real estate Agents the Buyer will lose out a great deal of the time. Buying real estate in 2013 will require a great deal of patience from both the Buyer and their Agent.
2) FINANCING WILL BE MORE DIFFICULT IN 2013- As we watch the Stock Market reach 14,000 it is clear that many investors are leaving the Bond Market and placing their bets on the Stock Market. Home financing is tied to the Bond Market. As the pool of investors in the Bond Market shrinks, the Market will have to bump interest rates to attract them. This will cause a small increase in interest rates over the year. The more pressing problem is with our appraisal system. Appraisers are hesitant to address an upswing in market value. A very real problem this year will be getting the offered price accepted by the Buyers Lender if the Appraiser does not address an up market. With the new system implemented by Regulation Z, Appraisers are picked at random from a pool. In many occasions the Appraiser is not familiar with the area and will take a more conservative approach to valuing the property. It will be important that Buyers use a well educated Mortgage Professional. And while I’m at it I strongly suggest you use a real person and not an internet company. Someone you can visit, touch, and connect with. This way any issues can be addressed promptly and the Buyer can achieve a higher level of comfort that their Lender is work to get the job done.
3) HIRE THE RIGHT REALTOR- Since this is my blog and web site, I can toot my own horn. I am a licensed Broker in two states. I am required to take a great deal of continuing education. In addition, I spend hours each week reading and educating myself on current laws and policies, sales trends, and form revisions. I have a couple of friends that are highly regarded attorneys who emphasize real estate in their practice that regularly update me on the ever changing laws governing the market. When you hire a Realtor you are really hiring their experience and knowledge to protect you in your very large purchase. TAKE YOUR TIME AND DO YOUR RESEARCH! Remember that all it takes is about $400 in class work, $400 in fees, and $300 to join a Board of Realtors. Pretty small change for some big rewards. This is why we see a great amount of part time Realtors working in the market. Make sure your Realtor is full time, ask lots of questions about their experience, and make sure you feel comfortable with them and can trust them. Being a Buyer in 2013 may mean you will have a longer relationship with your Realtor than has been normal in the past.Tweet