Sunday, March 4, 2012

Cash Is King in the Housing Market








Current homeowners looking to downsize, upsize or relocate are increasingly using more cash to purchase  their next home.

Despite near record low mortgage rates, homebuyers are finding it advantageous, in the current housing  market to shop with cash. Low returns on money deposited in banks as well as mortgage approval hassles also are pushing homebuyers to consider all cash or mostly cash transactions.


Using cash is a definite way to get discounts when buying distressed properties such as foreclosures or short sales and it's unlikely that the proportion of distressed property will be declining anytime soon.
An enormous number of foreclosures remain in the pipeline and the artificial suppression of that inventory by mortgage servicers has kept the proportion of distressed property lower than it otherwise would be.
Hassles with slow underwriting, accentuated by tardy appraisals, cause some homebuyers to give up on mortgages.

It takes about 60 days to close a ‘non-troubled’ FHA loan. About 30 days longer than it had prior to the housing bubble bursting. Other government insured Fannie Mae and Freddie Mac loans are taking about 45-60 days. Appraisals are also holding things up.

These are the average prices reportedly paid for various types of properties in Florida over the past 12 months :

                              Foreclosure
                    Damaged        Move In Ready               Short Sale                  Non Distressed

Florida         $92,765         $166,155                         $148,716                      $248,575

National       $105,247        $187,415                         $198,054                     $257,338



Looking at these statistics makes you wonder why more buyers and sellers aren't taking advantage of the current opportunities to buy and sell short sales. Many properties that are foreclosed could have been sold earlier as a short sale. In many instances faulty processing of the short sale file by either the borrowers agents or the lenders servicer still make them difficult to embrace. Lack of acceptance by 2nd mortgage holders also contributes to the inability to close a short sale. Typically if Fannie Mae or Freddie Mac are the 1st mortgage holder they will allow a small percentage of the 2nd mortgage balance to that lender. If the 2nd demands more the deal will likely die, opening the door again to foreclosure. Closing a short sale is not impossible. Sometimes the stars align. It requires diligence, communication and patience. Three virtues that actually work.

If you have any questions please call me directly at 561-306-6736 or email me.  I'll be glad to help in any way that I can.

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