Bank Owned Properties Are Opportunities in Fresno Market!

If your looking for good deals on bank owned properties, check my Featured Listings page on my website FresnoHomes.net These listings seem to be the most aggressively priced listings in the current market. Many are priced below other similar properties that are owner occupied. These are the deals I hear most people asking for in 2007. What you need to understand is, that these properties are sold on an "as-is" basis, without warranty of condition. Many of the properties are in poor showing condition, due to being vacant for some time and lack of maintenance. For some buyers, this becomes a great opportunity for to get a good price.

"Short Sales" are not well understood by buyers!

There are hundreds of "short sale" lisings in the Fresno MLS today. I have found that most buyers I consult with in the Fresno real estate market today do not understand or know what a "short sale" is. A short sale is a situation whereas the existing loans are larger than the asking price, and the owner of the property is behind in payments. If you were to make an offer on the property, the exisiting lender would be making the final decision on the offer, because the lender would be taking the "short" payoff. From what I see, many lenders are taking their time making these decisions and it is frustrating and misleading to the buyers. The buyers get an offer accepted by the owner, only to find out weeks later that the lender is not approving that sale price!! I see many listings where the listing price of a home is $100,000 less than the balance of the existing loans!! Do you think the lender is going to be cooperative and quick to lose $100,000?? I think not! Many times the lender will not appprove of the short payoff, so foreclosure is the remedy. Typically, the existing owner must be able to prove to the lender they are having a financial hardship to get approval for a short payoff. As an agent, I have to make sales. I avoid showing short sale listings most of the time and discourage most buyers from getting involved. Sometimes it will take weeks for the lender to answer an offer, or the owners hardship is not approved, or the lender just forecloses rather than take a short payoff. Also many owners will find out that if the lender approves of a short payoff, that the amount of debt releived is considered income by the IRS, so there can be an income tax consequence for the existing homeowner who sells under a short payoff sale.

Mortgage Business Changing Fast!

The mortgage guidelines have been changing rapidly over the last few months. We are seeing more escrows failing to close due to financing issues. Due in part to the subprime mortgage crisis, and the increase in foreclosures, the lenders are scrutinizing loans and buyer's qualifications. We're seeing them tighten their belts, and declining loan applications, or making them unaffordable with higher than average interest rates or higher mortgage insurance costs. It's no surprise to me, I could've told you that this was going to happen. Now it's back to the old days, when you had to have verifiable income, good credit scores, and money to put a down payment. The days are mostly over for 100% financing, stated income applications, and marginal credit scores. If you were pre-approved for financing a few months ago, you might want to contact your lender again to go over your loan options.

Motivated Sellers Are Willing To Pay The Costs!

Buyers are asking for help with the closing costs, and they are getting it. This is commonly happening in the Fresno market these days. Most of the transactions I see today, the buyer is asking for at least 3% of the purchase price to be contributed to the buyers closing costs. There are truly motivated sellers that are negotiating on purchase price as well as closing costs. I counsel my sellers to expect to see this kind of activity when they list their home, so it is not a surprise when they recieve an offer with these terms. Most lenders will allow up to 3% of sales price to be contributed to the buyers closing costs. Some lenders allow up to 6%, however this seems rather excessive if you do the math.

The subprime mortgage correction period is happening!

Without a doubt, the subprime lending market has been tightening their belts over the last couple of months. Due to increasing loan defaults and foreclosures, this tightening means more people are pushed out of the market. These buyer will have to qualify now like everyone else and qualify on their income and credit scores. They'll have to save for a down payment and build income to manage payments. Gone are the days of lending 100% financing with stated income, or 100% investor financing etc., where any buyer with a pulse can get a loan. These practices, now referred to by the press and media as "predatory lending" have lead to a decline in consumer confidence and decline in housing sales abroad. The changes will be good for the future, and hopefully there will be some legislation to help prevent these unscupulous practices among loan brokers.

Subprime Mortgage Blues!

You've heard it in the news lately, about the subprime mortgage market that's now in trouble. Well, it's about time! We all knew it would catch up to them someday. It just didn't seem right. People were buying houses with loans they shouldn't have qualified for. Stated income, and or 100% financing and other exotic loans are now bad business and referred to in the media as "predatory lending". The notices of default are coming in very fast now as many of these loans were adjustable rates with prepayment penalties and or balloon payments. With the interest rates rising above market level on these loans, monthly payments increasing beyond affordability and many of the borrowers put little or nothing down, it's no wonder that they are walking away from them and letting their property go into foreclosure. Just today, I had a sale transaction fall thru because of these lousy subprime loans and the lenders involved. It was the second time that this escrow fell thru. Both times the buyers were investors going for 100% financing from the "subprime" market. Both times I had pre-approval letters and from the lenders. I will now be very skeptical of this type of financing in offers presented to me on my listings.

Worthless Pre-Approval Letters!

I can't tell you how many times I receive worthless mortgage pre-approval letters with offers on my listings. They say "congratulations, you are pre-approved for a home loan", then it goes on to say that this pre-approval is based on verbal information given to the lender or some sort of inadequate information disclaimer. The letter is not based on a review of a complete loan application, credit review or anything like that!!! It's a letter that's not worth the paper it's printed on. I see this happen all the time. Do these buyers and their agents think this is acceptable? It's not professional to say the least, and they lose some credibility in the offer. If buyers want their offers seriously considered, they should use a reputable lender and be pre-approved based on a complete review of a credit application, verifications of income, job and bank accounts and have a letter that states all this has been verified. With a valid pre-approval letter in-hand, the buyers offer will have more power.

Short Sale Listings Are Increasing in Fresno MLS!

I am noticing many "short sales" in our Fresno MLS. My advice to active buyers right now is to avoid getting involved with short sales if at all possible. Short sales are situations where the owner is typically behind in his mortgage and owes more on the loan than what the value or asking price is of the property. Even if the owner accepts your offer, you may not get the property, because the mortgage company for the seller has to approve the "short", or approve how much money they will lose by selling to you. Most of the time, it's a huge waste of time for buyers and agents alike because the lender drags their feet and eventually denies the short sale or tries to negotiate different terms than originally accepted by the owner. With so many homes on the market, why get involved in a short sale escrow?

Has the Fresno Real Estate Market Bottomed Out?

One thing's for sure. The market is picking up! Our office is seeing increased activity in 2007 now after the holidays are over. The market was slow during the fall months of 2006, but now I see many buyers and sellers believing that the market has pretty much bottomed out. Many buyers are coming out of the woodwork to look at homes. My website www.FresnoHomes.net has had some incredible traffic increases, Jan 13th getting 459 visitors! On the average I get about 250 visitors per day. I got 3 offers on an investment property I listed, and that is a good sign. Many investors have left the market over the last year, but now I see more of them coming back. The Fresno market is attractive to many buyers, basically it's still one of the lowest priced areas in California. Do you think the market has bottomed out?

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[via FresnoBee.com: Local]

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[via MortgageNewsDaily.com]