An introduction for buyers

Making Sense of Today’s Real Estate Market An introduction for buyers Sunday, July 19, 2009 1 Today We See... Historically low prices in Southern California Government Incentives for 1st-time buyers Stimulus & incentive programs evolving in the banking sector BOTTOM LINE: IT’S A GREAT TIME TO BUY Sunday, July 19, 2009 2 Same Questions Loom Will prices continue to fall? Will interest rates come back down? Will we see credits again? BOTTOM LINE: All of the above are possible, but the current combination of factors is unique and unlikely to last. Sunday, July 19, 2009 3 Why not just “Dive-In”? Transactions, while favorable to the buyer, are inherently complex. Escrows, if mismanaged can drag out for months...or longer. Home prices are heavily impacted by foreclosure and short sale trends. BOTTOM LINE: Timing is excellent, for the careful buyer. Even with a qualified Realtor, the process can be confusing. Sunday, July 19, 2009 4 Driving Complexity Out of Buying a House Establish a relationship with a lender Conduct credit check and loan application Get pre-approved with documentation BOTTOM LINE: Establish a confident negotiating position before making an offer. Sunday, July 19, 2009 5 Choosing a Buyers’ Advocate or Realtor Today’s technology makes property searching easier than ever. Many buyers find property on their own before contacting an agent. Web sites like Movoto and Trulia help buyers set their base-line expectations The agent’s contribution is most valuable in the escrow closing process BOTTOM LINE: Choose an agent, like a lender, only AFTER you’ve established trust and raport at the end of the day, you are in partnership. Sunday, July 19, 2009 6 Buying without representation A good option for the experienced buyer who has read and understands all aspects of the purchase contract and disclosures Not a good option for buyers who are more comfortable knowing that an agent’s license, reputation and insurability are on the line with each transaction BOTTOM LINE: Read the 8-page purchase contract before making a decision and/or making an offer. Sunday, July 19, 2009 7 Things to consider: Resale Shortest Waiting Time Seller = principal in transaction and must directly disclose Can be Toughest Negotiation on price and terms Often emotiondriven in negotiation Perform professional inspections Build contingencies into offer Scrutinize all disclosures until YOU fully understand their meaning and impact BOTTOM LINE: HAVE OPTIONS IN MIND BEFORE MAKING OFFER Sunday, July 19, 2009 8 Things to consider: Short Sale Property can be acquired for less than market value Eligible for tax credit Negotiate directly with lender Approvals can take 90 days up to one year Buyer’s often trumped late in the game by higher offer Watch out for differed maintenance Paperwork must be flawlessly filled out BOTTOM LINE: GOOD OPTION FOR UNEMOTIONAL BUYERS WITHOUT TIME PRESSURE Sunday, July 19, 2009 9 Things to Consider: Foreclosure Deep discounts Eligible for tax credits Low price often yields multiple offers Banks meticulously screen buyers for strongest financing Home often need significant repair Inspect professionally and meticulously. Home is sold to buyer asis...beware REO’s are exempt from some disclosures BOTTOM LINE: GOOD OPTION FOR RISK TOLERANT HANDY-PERSON Sunday, July 19, 2009 10 Things to Consider: Auction Great discounts Quick process immediate occupancy Eligible for tax credit Risk of Overpay in heat of bidding All-cash transaction Inspections rare if at all Expect to pay for termite or hazard reports No contingencies No warranties, as-is BOTTOM LINE: DO YOUR HOMEWORK ON THE NEIGHBORHOOD BEFORE AUCTION Sunday, July 19, 2009 11 Things to Consider: New Construction Builder incentives Early-birds get best worms Good warranties Big tax credits Smaller landbuilding ratio Potentially cumbersome restrictions Make sure your agent has your best interest at heart. BOTTOM LINE: FOR PRICE PREMIUM, THIS WORKS WELL FOR TURN-KEY BUYER Sunday, July 19, 2009 12 Some closing thoughts Don’t hold back on inspections, where allowed. Check comparable sales to uphold negotiating position Be willing to negotiate with an open mind If using an Agent; establish trust and be transparent as possible Sunday, July 19, 2009 13 800-381-0226 www.mcalisterteamrealty.com Sunday, July 19, 2009 14