My New Blog

The glut of Short Sales and REO listings in the Greater Sacramento area has driven home prices to the lowest level in years.  If you've ever thought about buying a first home or investing in income residential property, now is the best time to make an offer.  Many homes are priced so low the sellers are receiving multiple offers and accepting offers within two to three days of being listed.  If you don't know what short sales or REO's are, I'll give a quick definition.  A short sale is a home that is being sold to avoid foreclosure.  Normally, the sellers can't make monthly mortgage payments so they list the home for sale before the lender forecloses.  After missing a specified number of payments, the lender notifies the seller that they are in default of scheduled payments; this notice is called a Notice of Default (NOD).  Once the NOD has been issued, the sellers have approximately 90 days to bring he loan current or risk losing the home to foreclosure.  Real estate agents communicate with the lender and submit documents to confirm comparable prices in the area.  The agent establishes an asking price and markets the property.  The agent submits offers and works with the sellers and the lender to negotiate approval from the lender.  This process can take a few days or more often, several weeks before the sale closes escrow.  Patience by the buyers is absolutely necessary, BUT the wait can be worth it if you end up with a killer deal on a home.  The market has been changing on a weekly basis recently.  Don't expect to offer a lower than asking price and get an acceptance unless the home was initially overpriced and/or in poor condition. 

REO's are Real Estate Owned properties that have gone through the foreclosure process and are now owned by the lender.  Lenders don't like to own homes; their core business is lending money to other people so they can own homes!  A real estate agent lists the property and represents the lender in the selling process.  Normally, the lender has established an asking price based on comparable prices of similar homes in the area.  The REO process usually progresses more quickly than the short sale process.  Make sure you have a Realtor who is experienced in representing buyers in the short sale and REO market so you don't waste a lot of time and energy making offers that have little chance of being accepted.

Contact me at 916-218-5427 if you are intersted in buying a home.  I'll help you determine the price level at which you qualify to buy a home, and we can then find homes that meet your specific wants and needs.

Am I qualified to buy a home?

Whenever a buyer asks me if they are qualified to buy a home in a certain price range, I always ask them for the maximum monthly payment they can afford.  The reason for the question is simple...they may qualify to buy a home they can't afford to pay for.  For example, if they qualify to buy a home for $300,000, the monthly payments could be approximately $2350.  If they can only afford to pay $2000 per month then they can't afford to pay for the house which they are "qualified" to buy.  Many buyers ran into problems during the past few years because they took out loans which allowed them to reduce the monthly payments so they could afford to buy the house they wanted.  There are several ways to reduce payments; interest only, adjustable rate, pick a payment, 40 or 50 year loans to name a few.  Those loans plus some lenders allowing buyers to "state" their income rather than "document" it caused the current surge in foreclosures.  In other words, people bought homes for which they "qualified" but couldn't afford to pay for.  In many cases, the interest only, adjustable rate, pick a payment and 40-50 year loans are an excellent way to purchase a home IF the buyer is informed and understands the pros and cons of such a loan.  For that reason, buyers need to select a real estate agent and/or mortgage broker who is sincerely interested in the buyer's welfare.  I stated at the beginning of this discussion that I always ask the buyer for their maximum monthly payment so they don't buy a home they can't afford to keep.  I do that because I consider it my ethical responsibility to inform them of the risks involved in overextending their ability to make the monthly payment.  I want satisfied, life long customers who refer friends and family to me, not ex-clients who went through the gut-wrenching experience of foreclosure.  Let me know if you want to talk about buying a home you can afford.  Call my cell# 916-218-5427 or my home office# 916-721-3536...or fill out the contact information on my website.

Mike Hendsbee

Realtor & Mortgage Consultant

Excel Realty and Mortgage