The current housing market on the Westside is very appealing to buyers fortunate enough to have secure financing, good credit, and employment. There are many homes available in all price ranges and local areas, and often the prices are quite attractive. For owners who wish to sell local homes, there are a lot of prospective buyers who are now more willing to make offers to purchase, encouraged by more affordable prices and historically low interest rates. The sales rates have increased noticeably since the Spring and multiple offers are occasionally in evidence once more.
On the other hand, lenders often require down payments of 25 percent or more now, plus proof of significant financial reserves. For homeowners who are looking to move up, this can be more challenging because they typically will be selling their present home in the current market and will be getting less than they had previously anticipated. For sellers, this may result in requests to carry back part of the financing, and/or to have a longer time to sell while their buyer gets their own place sold.
Since the recent government regulations have tightened standards for loan approval, and with fewer lenders available to provide financing, the entire purchase process has become more challenging for the real estate industry. If the appraisal comes in too low for the financing being sought, it can result in the transaction failing to close. To minimize the risk of this occurring, it helps if the parties are working with an experienced real estate agent who knows the Westside well.
New appraisal rules went into effect recently that have added about an extra week to complete the paperwork. Because both buyers and sellers may become concerned due to an escrow taking longer than expected, good communications between the agents and buyer and seller are essential to reducing anxiety. Also, it can be very helpful to have contract terms that are more realistic in today’s new financing environment. This will establish reasonable expectations from the outset and possibly avert an emotional reaction that ultimately terminates the transaction.
Another challenge in today’s market is due to a significant shift in the respective roles of the buyer and agent. The empowered consumer has diminished the home-screening component of the traditional agent’s role. Because buyers are doing a tremendous amount of research on their own now, agents must be prepared to deal with far better informed clients and to being a source of greater knowledge for buyers on the myriad issues, details and programs that might impact the buyer.
One particular area of current real estate where many buyers have some misconceptions involves foreclosures and short sales. For example, although uncommon in the Westside, the sale of bank-owned properties often results in multiple offers and sale prices that are higher than the list price. Also, the “short” sale process is surely not short in time – in fact, many buyers have walked away from escrows that have gone on for three or more months. The process is highly complicated and often leads to long delays, especially if the real estate agent handling it is not highly trained and skilled in the details and procedures required.
Michael Edlen, an agent with Coldwell Banker, can be reached at 310.230.7373 or Michael@MichaelEdlen.com.