It's the Late Spring Market, The Right Time To Buy Real Estate ?

The Right Time to Buy

The professional knee jerk reaction is "Of course it is the right time to buy", "It always is". Then again, if that were case, how come there is so much much unsold inventory. OK, that is a bit cynical but the point is , the answer to that question is not an easy one to make in such general ways.

Great Opportunities For Buying

There are some great opportunities to buy property that is at or below our present market values. The caveat is, will our market values improve from here or not? And what determines if the price is at or below the current market value, prior to an appraisers opinion? The last one sold? And since no one I know has a reliable crystal ball on value in a declining market, the judgment about if this is the right time, depends on who is asking and what the longer term goals are.

Investors and speculators, this article does not address you , it is for Buyer(s) of single family homes and condominiums.

So let's analyze the market and see what opportunities that exist.

Kinds of Possibilities, Short Sales and REO's

For one thing there are lots of advertised short sales out there in our San Diego market. What you need to clearly know and understand is that just because the listing says that this is a short sale, that doesn't mean that it actually will be a short sale. In that dance there needs to be more than two participating. In the short sale scenario it takes at least 3 to complete the dance. Did you ever see three dance at one time? Who is leading whom? It will become clear if you ever try to purchase one of these properties. No one wants to step forward and lead the dance. Instead it is more reminiscent of the children's dance, ring around the rosies, pocket full of possies. No one leads, they all just move around in circles.

Back to the short sale possibility, it is just that. The lender has not approved that sale and the seller must meet a number of stringent conditions before the lender agrees to the short sale. Selling short is when there is more owed on the property than current market value. Just because it is advertised that way ( perhaps incorrectly in my estimation-since no sale has taken place) doesn't make it so. But to find out, it requires a Buyer to make an offer. One that the selling owner of the property might accept. After the seller accepts, it is then subject to the lender approving. Will the lender approve? That all depends. The criteria for lender approval is not written down somewhere to follow like a check list, it is often made up as they go along, depending on the circumstances. But this much we do know. They probably will not accept a lot less than the current value. So while you might save some money if you are lucky enough to find the motivated lender and can figure out what to offer, you best have lots of time and patience because these decisions are not made overnight. It often takes a number of weeks before anyone hears anything from the lender. With the number of offers this type of property often attracts, it becomes a little maddening trying to guess what it will take to secure approval. It has been reported that only 18 to 24 % of these properties actually close as a short sales. I can't speak to that percentage as accurate or not but I do know this is not an especially pleasant experience.

There are also lots of foreclosures called REO's or Bank Owner Property out here in the San Diego real estate market place. But are they a way to buy the best in the market place at prices that you would want to write home about? Maybe? But remember in California, the foreclosed property being sold by the bank as the seller, doesn't tell you anything about the property. For the reason that they never lived in it and know very little about it. A good contractors inspection is going to be the minimum of what you will need. Many of the properties have a lot of deferred maintenance and any number of possible other issues. But you will not likely be negotiating those issues or condition. If you can't visually see the issues, there is a good chance you will not know about some of them at least until after you own it. The properties are all mostly always sold "as is". How much does it cost to fix all that deferred maintenance and undiscovered condition? Are you lucky?

That leaves the new homes and the more conventional resales. The new home opportunities may have some rich opportunities as many builders need to clear out their inventory and the incentives are very creative and may offer some real advantages to the future buyers.

The resales represented by the multitudes of real estate professionals reflect many variations of value . We see some that are differently overpriced. We also see any number of the well intended but poorly conceived homeowner improved properties all the way to the beautifully upgraded properties with a lot of value added. You have lots of choices.

The Right Answer for You

The answer as you can see here is really looking at the opportunities and putting yourself out there to understand clearly your motivations and longer terms goals and intentions. Interest rates are currently low. That is also a factor that needs to weighed , especially if you want to take advantage of the lower rates. There is some reason to believe that rates may go back up later in the year because there is a serious need to stabilize the value of the dollar. That may have an affect on the long term rates of which the mortgage interest rates are based. I don't see them going lower, so which way is UP.

To answer the question for you, the answer needs to come mostly from you. If you are into owning a home for the longer term, I think it is good time to buy. If shorter terms apply to you, you will want to weigh the factors much more closely and be sure you understand your opportunities clearly and then decide.