Americans have been watching the real estate market fall for the past five years and consumers want to see a change. Real estate professionals are watching for any sign of hope, looking for a sign that the market will get better. Recovery is in the distance, but, unfortunately, we won’t see it in 2011.
It’s so bad that agents have had to take second jobs or leave the business all together. On top of that, many smaller real estate offices are hurting, and they may end up having to merge with a larger company to keep their doors open. National franchises will be more appealing to newer real estate brokers.
Real estate prices have been cut in half over the last 5 years, so first-time home buyers have more choices that are more affordable. Until the job market recovers, worries about the future will hinder the ability to sell and move up. The main buyers in the market will be first-time home buyers. They will negotiate because they can’t afford to do otherwise.
Almost all home-owners are suffering in the downturn right now. Pretty soon even the wealthy homeowners will get tired of watching their retirement savings dwindle and begin to fear their investments will continue to fall.
Interest rates will stay low and money will be available to those who can afford to borrow it. The problem with this is that lending requirements are so strict that few borrowers qualify. To get a loan, a borrower’s FICO score has to be above 620 for FHA and 720 for conventional. Banks get FICO scores from 3 credit reporting agencies and use the middle score.
To positively impact the real estate market, the government will try to keep interest rates low in 2011. Cutting the mortgage interest deduction would devastate the housing market, and the government isn’t willing to do that.
Ask any home-owner who is facing foreclosure how they feel about their bank. They will tell you they hate their banks. Even real estate agents are trying fix failed loan modifications and sell on a short sale before the home-owners end up deep in foreclosure. Real estate agents advise against loan modification because they are the government’s, and the banks’, attempts to put a bandage on a gaping wound.
Right now, every investor with cash on hand is getting into real estate, but they, too, are cautious. For the most part, they are staying away from higher priced homes. They are looking for the lowest prices and end up getting a better deal because they are paying cash. As long as they can fix those fixer-uppers, then rent them out, cash investors want a piece of the real estate market and beat out their competition; the first-time home buyers.
Congress recently passed the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. As of January 1, 2011 all mortgage brokers are subject to the guidelines. This could limit the number of mortgage brokers operating.
The fees to comply are four-figure, and mortgage brokers have to pass a state and national test, take 20 hours of education, complete a criminal background check, and a credit check. Mortgage brokers have been hit by the downturn, too, and most of them can’t afford to comply and they are upset that bankers aren’t required to comply with these rules.
Consumers have access to the Nationwide Mortgage Licensing System and Registry. It is in place to show which brokers have complied with the licensing requirements. If this system had been in place before the mortgage crisis, the fallout might have been reduced.
What could be worse than losing your home as a short sale? What about being sued by your bank for a deficiency judgement?
In California,there is a four-year statute. It expires for short sales completed between 2006 and 2007. Just because the bank hasn’t contacted the short sale seller and asked them how they plan to repay their debt, it doesn’t mean the seller is free from responsibility. Agents who told sellers that they were free from the debt after the short sale will be sued, as well.
If you are facing foreclosure and need to sell your home quickly, it’s best to seek the advice of a real estate attorney. They can assist you in coming up with a solution that will help you from legal action from your bank.
Although all of this seems to be a harsh slap in the face, the reality is, things are beginning to get better. Keep watching the housing market and the economy for changes. We should soon see an upturn and things will start to return to normal.