About College Park's Hollywood

I attended a meeting at my office yesterday and listened while a highly experienced loan officer gave us an update on the current mortgage situation. It was a mixed bag, really, and the bottom line message was that being able to obtain a mortgage to buy a house isn't that easy anymore.

Because of the downturn in the housing market mortgage insurers are no longer insuring 100% mortgages which means that lenders will no longer offer them. This means that home buyers will need a minimum of 5% down and, more likely, 10% down in order to qualify for a mortgage. So, for a modest $300,000 home in the Hollywood section of College Park you'll need somewhere between $15,000 and $30,000 in order to buy the house.

The alternative is FHA financing which only requires 3% (which is still $9,000). There are ways to have the Seller provide a gift of the down payment through down payment assistance programs like Nehemiah. A lot of Sellers are doing that very thing. Yet, you can't depend on it with every Seller.

Here's what the end of 100% financing means. There will be fewer Buyers in the market place attempting to buy homes because they flat out don't have the money for the down payment. That, in turn, means Sellers will have to wait longer to find a good, qualified Buyer.

Recently, I was asked by Realtor colleague from the Houston area if I would assist with the sale of the family home in College Park. She had a sister in the area who was the Personal Representative for the Estate who would handle all the details with her husband, my colleague's brother-in-law.

After taking a look at the interior of the house, it was obvious that it needed a lot of repair. Most of the repair was cosmetic in nature. The hardwood floors needed to be refinished, the unfinished basement has some issues, the roof was old, it needed painting.

However, in this market most people want a house they can move right into without making any repairs. There are lots of foreclosures and "short sales" to compete against.

After some discussion and a review of the data for comparable homes in the area, the Sellers agreed to price the home aggressively at $214,900 -- a great price for a single family home in the College Park area.

Sure enough. The home began to get lots of showings almost immediately and three separate offers came in within the first week. Last night, I sat down with the Sellers and went over the pros and cons of each offer and they accepted one.

What this tells me is that there are still people out in the world looking for homes and that, if priced right, homes will sell even if they need repair. It is a real tightrope act to be able to come up with the "right price" for a home. This is especially true if there is an outstanding mortgage that needs to be paid off. However, if a Seller has equity in the house and there is room to price the home aggressively than I am confident the house will sell.

By the way, since this particular home was priced so well, the accepted offer was actually higher than the list price.

The moral to this story is that, as scary as it might be to offer your home at a supposedly low price, it might actually be beneficial if you get multiple offers that result in a sale.