Q. I read your description of “shadow inventory” last week. So why aren’t banks selling off their foreclosures?
A. Observers say several factors are at work.
The “pig in the python”: Digesting all those foreclosures takes awhile. It’s time-consuming to conduct the foreclosure, then get a home vacant, clean and ready for sale. The system is overwhelmed by the volume. In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month.
Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. With banks in the stress they’re in, they’re not anxious to show losses in assets on their balance sheets.
Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don’t fall as fast. Dropping prices affect every asset yet to follow, so it behooves the bank to keep prices from plummetting.
Besides the “shadow inventory” foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they’re negotiating with homeowners about loan modifications or other ways to keep them in the home. This process is also time and labor intensive, on already short staffed and over-worked lenders. But some speculate that banks also could be deliberately foot-dragging for the same three reasons listed above.
Q. I’m a first time home buyer. What should I look for in a buyer’s agent to help me find the home of my dreams?
A. First of all, congratulations on stepping up and becoming a first time homebuyer. Your timing could not be better: interest rates at historic lows, along with buyer incentives and values at some of the best we’ve seen in almost a decade.
Finding a Buyer’s Agent that really knows there stuff is important.
The first thing is, trust your instinct. How do you feel in their presence? Are they genuinely interested in your process? Can they take the time to answer your questions? Do you like them?
Second, are they a member of the board of REALTORS®? The REALTOR® you work with could be one of your most valuable resources. Under state law, you must have a license to represent a buyer in a real estate transaction. While all REALTORS® are licensed, not all licensees are REALTORS®. Unlike many real estate agents who are simply licensed by their state to do business, REALTORS® have taken additional steps to become members of the national and local board of REALTORS®, have taken additional training and have agreed to act under and adhere to a strict Code of Ethics. And having a REALTOR® in your corner may just be the edge you need to get the home you want.
Third, do they have a team in place of other professionals to help you with each phase of the transaction? You will need a lender, an escrow office, a title officer, a notary and a transaction coordinator. It’s a good idea to review each of their qualifications to be sure that excellence of service is the standard.
Fourth, be very clear about how much you will pay for each service. Is the seller paying for any services? Be sure you get an estimate of costs up front, known as an “estimated closing statement”.
Fifth, after you have chosen your REALTOR® and the team, ask for references from them, and call those people. Ask about their experiences, and if they were satisfied. Did the REALTOR® deliver as promised?
Sixth, check with the local board of realtors or the Department of Real Estate to be sure that their license is in good standing. The REALTOR® you’re interviewing should give you their license number and a phone number for you to contact to verify them.
Last of all, do they work with first time home buyers? How often? First time homebuyers have special needs, for information, knowledge, and explanation. Nothing should be taken for granted. Make sure the REALTOR® you choose will be able to meet those needs.
By doing this homework up front, you can be confident you will minimize your risks, and have an exciting and joyful home buying experience.
Have a question you want answered? Contact us at TheBremnerGroup.com, and let us know. Or just leave a comment below. We are always happy to help.