Mike Giles

I have thrown this out in other forums and get very mixed results. I need to explain that my opinion is based on the "given" that we are going to spend hundreds of millions of dollars trying to stimulate the economy. I need to make this disclaimer to fend of the "We should not give anyone anything" crowd.

As it stands right now, we are directing this money towards two of the three main groups that need help in this market. The first is obviously the first time home buyer. I think that we can all agree that this group will help the economy by being active. My problem is, HOW MUCH MORE INCENTIVE DO YOU NEED TO BE A FIRST TIME HOME BUYER? Prices are way down and so are interest rates, what more do you need? While the former $7500 loan and current $8000 credit are great benefits, I'm not sure if these folks wouldn't be active even without them.

The next group to be saved are the many people that for one reason or another are being forced to short sell or be foreclosed on. While it is impossible to paint any situation with a broad brush, many of these loans never should have been written. This is another point where we can get off track playing the blame game. My only point in reference to stimulating the economy is that you are spending money on a group of people that will not be able to enter the market again for five years. I don't want to sound cold and I do understand the need to keep people in their homes, I just think that the criteria for hardship should be a little more strict and that people that entered in to contracts that they never had a chance of paying off should not be allowed to walk away with little or no penalty.

This leads us to the third group of property owners that could really get the ball rolling but are not being addressed within the current stimulus package. This group consists of the people that didn't over extend and settled for smaller homes and condos when the market was at it's height. Again I'm generalizing, but many of these people would like to take advantage of the lower prices to get more house for the same money but need to come to the table with too much money in order to sell their current units. If the government followed through on their original plan to make the first time home buyer credit available to anyone buying a primary residence home, it would lessen the hit make a move more achievable for many responsible home owners.

By addressing the first time home buyers and the financially able upgraders, banks can start loaning money again making it more palatable to restructure some of the bad loans. Imagine people buying homes and getting financing while others are modifying their loans to keep from getting foreclosed on and adding to the inventory. Just a thought.

Why is my Realtor against me?

I think this is what some of my clients think when I am giving them advice on pricing and negotiation. After all, that is really what you hire me for, ultimately the final decision should be yours. My expertise is derived from working in the Real Estate business every day and dealing with many buyers and sellers that all look at things a different way.

Too often when negotiating, buyers and sellers alike spend more time worrying about what the other side is thinking and doing as opposed to what they are doing. Some times this leads to you actually negotiating against yourself based on how you would approach being on the other end.

Example: Three common ways of looking at going in with a low bid after determining what the house is worth.

1. "Let's go a little higher if I go in too low, they will be insulted and won't even respond"
2. "Maybe we should go even lower, to get them to counter at what we think it is worth"
3. " Let's wait until they get realistic and drop the price closer to where it should be"

My View:

We have been through the house and have determined that based on it's condition and comparable homes sold that it is worth between $xxx and $yyy. (this range should be within 5-8 thousand dollars of each other). As part of my service I have already determined if there are any offers currently in or if any have been made and fallen through for some reason or another. If there is an offer(s) in then put your best foot forward and offer $yyy. If you lose you will at least have peace of mind that you gave it your best shot. If there are no offers in and it's a buyers market you may want to go towards the lower end or go high and ask for money back to pay closing costs. At no point have I thought about what the seller is thinking or how they would respond to the offer.

When a client knows that there are offers in and still wants to go in $35,000 under asking on a home that we feel was close to being priced correctly. I am going to tell you that you are probably wasting your time. You shouldn't hire a Realtor just to tell you what you want to hear. Again, the final decision will be yours but I need to give you the best advice I can based on my knowledge of the market, Don't take it personally.

One Realtor that has been in the business for a long time once told me that when he has someone that likes the property but can't decide what to offer, he tells them "Next month, when you see what this sold for, what is the highest number that will make you kick yourself in the ass for not making an offer?" It can really be that simple.

01/01/2009-01/31/2009: Total Sales(Single,Condo,Multi)= 16

Break down: Single: 12 Avg. Sale Price: $402,083 Avg. Market Time: 84 days

Condo: 2 Avg. Sale Price: $208,250 Avg. Market Time; 159 days

Multi: 2 Avg. Sale Price: $234,950 Avg. Market Time: 257 days

01/01/2009-01/31/2009: Total Sales(Single,Condo,Multi)= 22

Break down: Single: 11 Avg. Sale Price: $507,318 Avg. Market Time: 133 days

Condo: 8 Avg. Sale Price: $236,613 Avg. Market Time: 158 days

Multi: 3 Avg. Sale Price: $350,167 Avg. Market Time: 41 days

Comments:

The six sale drop (@27%) is significant, but predictable considering the dramatic changes in the mortgage industry. Last January you could still get 100% financing without paying PMI. It is obvious that the sharp decrease in sale prices for single family homes has effected the condo market significantly. Multi's have been struggling in Beverly for a while now. Lower Prices, Lower Interest Rates, $7500 Tax Credit, and eager sellers all add up to this being a GREAT TIME TO BUY!!

                                Make a great deal better with an FHA 203K loan!!

  If you are like most of my buyer clients, then you are attracted to the low priced short sale and bank owned properties.  The problem is that once you get in to see them, you instantly think that they are over priced based on the amount of work needed to make them livable. 

These homes can be converted into Great Deals by utilizing an FHA 203k Loan Program . This program allows you to determine what work needs to be done, get estimates from a licenced general contractor and then borrow both the purchase amount and the amount needed to fix the property up to acceptable standards.    Obviously, you will need to be able to qualify for the total amount based on your credit score. There will also be an appraisal done to make sure that the property will be worth at least the amount of the entire loan after the work is completed.

You will not have to start any work until you have closed on the property. Once that has occurred the program works similar to a construction loan, with payments being made to the contractor in phases as the work is completed and inspected.

Most Banks and Mortgage Companies have access to this program. You can use the link above to get a more detailed idea of the guidelines.  This program is not for everyone, but if you have vision and patience, you can create your own GREAT DEAL!