About Big Bear's Big Bear Lake West

Previously Posted on www.tonycard.com

This past weekend, I had clients come to see me who wanted to buy a cabin in the Fawnskin area. For you who are not familiar with the Big Bear Valley, Fawnskin is a quite little community that sits on the north side of the lake. After listening to what this couple wanted, I knew exactly what to show them. There were a number of cabins that fit what they were looking for, but there was one in particular that I thought they would especially like. I was right! As soon as they walked in to this cabin, it was obvious that this was the cabin for them. After some back and forth with the seller's agent, we put the deal together and we are now in escrow.

These clients are more than qualified to purchase this cabin. Their lender has given me an approval letter, they are putting plenty of cash to put down and their FICO scores are through the roof. Based off of comparable sales in Fawnskin, there should be no problem with the appraisal. So, why am I so worried about this escrow closing? The answer is "The Appraisal"

In the 5 + years that I've been selling Real Estate in Big Bear Lake, the loan process was basically the same. Once the escrow was opened, I would always ask the mortgage broker to use a local appraiser for the appraisal. The reason for this was quite simple. The Big Bear Valley is made up of a number of smaller diverse communities. Because the value of cabins in these smaller communities vary considerably depending on a number of factors, it would be necessary that the appraiser have a good working knowledge of the Big Bear Valley. In other words, he needed to be Geographically Competent.

As of May 1, 2009 the way appraisers are selected has changed. In most cases, the mortgage broker can no longer select the appraiser. They must submit the request for the appraiser to an Appraiser Management Company (AMC) and it is the AMC who assigns the appraiser based off of the Home Valuation Code Of Conduct (HVCC). The problem that we are seeing in Big Bear is that we are getting appraisers from places like Moreno Valley or Temecula. Now I'm sure that these people do a great job in their local areas. But bringing an appraiser to Big Bear who is not Geographically Competent is only going to spell disaster. Time and time again, we are seeing appraisals come in low. In each case, there are a number of recent comparable sales to support the sales price, yet the appraisal is low. How can that be? Quite simply, these appraisers coming to Big Bear are not Geographically Competent. They don't know enough about the Big Bear Valley to be able to do their job competently. The Mortgage broker can ask the AMC to send an Appraiser who is Geographically Competent but there is no guarantee that this is going to happen.

All good things must come to an end and the days of not having to worrying about the appraisal is a thing of the past. Is it too much to ask for something as simple as an appraiser who is Geographically Competent?

The economic situation that we're experiencing in the United States today is unprecedented. I am too young to have experienced the Great Depression but I have read a lot about it and it didn't sound like it was much fun. You hear on the news day in and day out that there is no money out there; you hear that lenders aren't giving loans, yet we still have plenty of buyers in the Big Bear Real Estate market.

The bank owned, REO properties are sprouting up everywhere and for the most part, those are the properties that the buyers are picking up. I read last month that of all of the real estate transaction closed in September of this year, 47% of them were bank owned properties. With the prices that the banks are listing these homes for, it is no wonder that almost 50% of the sales are bank owned properties.

What does this mean to the home owner who has decided to sell his home? It means that he had better list his home at less than he hopes to get out of it. If he is going to be successful in selling his home, he MUST price the home so that it competes with the bank owned properties.

This isn't a market that you can stick a higher price on your Big Bear cabin and then sit back and see what happens. I can tell you right now that nothing is going to happen. Realtors and buyers are not going to be interested in a property that is overpriced. There are just too many deals out there that you are competing with. So, one of the first questions I ask a home owner at the listing presentation is simply, why are you selling? If he doesn't need to sell, then I advise him to wait until the market turns around. If he tells me that he must sell, then it is imperative that the home be listed at a price that stands out as the best value in its category. You have got to compete with the bank owned properties. Anything less will spell failure!

Even though you have priced your cabin to compete with the bank owned, REO properties, don't expect a full price offer. The buyers that I deal with in Big Bear seem to have a mindset that no matter what the cabin is priced at; they should be able to get it for far less. Just recently I wrote an offer on a bank owned property in Big Bear Lake that had been priced very well. It was by far one of the best values in that part of Big Bear Lake. The buyer couldn't accept the idea that it was already a good value. His attitude was that with the current economic situation, qualified buyers were so scarce that the bank should jump at his offer. Needless to say, he didn't get the cabin.

While showing property I am asked how far off the asking price they should be when making an offer. I try to explain to them that each cabin is different and there is no set number that you can use. Here are three different examples;

1. Some homes have been on the market for a long time and are overpriced. Those homes are great candidates for a lower offer.
2. Other properties may have been on the market for a long time, but have recently reduced the price to where it is now a good value. There may not be a lot of room with these cabins
3. Some cabins are priced right to begin with and in these cases, you will find that they are the cabins that have multiple offers on them and very often, they sell for more than asking price.

It all comes down to this. Are you as the buyer looking to low ball an offer or do you want to find a cabin that is a good value?