An Unrecognizable Housing Recovery

Normally lower home prices would be good for any housing recovery and good for first time or move up home buyers.

Home sales data indicate an upward tick after 2010, the worst year of sales in a decade. Any momentum however is not coming from the typical homeowner but from cash rich investors who are snapping up foreclosed and distressed properties at bargain prices. Homeowners or first time buyers crucial to sustaining a recognizable housing recovery are not a market force.

While the number of first time homebuyers has declined, all cash deals have increased, accounting for one third of all home sales in January 2011. A record number of foreclosures have continued to depress prices. The median sales price of existing homes in January fell to it's lowest level in 9 years. Lenders are requiring much tighter lending standards and higher down payments from borrowers searching for financing. In most cases the average requirement is 20% down with perfect credit. The inability to find available conventional financing results in fewer buyers shopping for homes and fewer sellers putting existing homes on the market in order to upgrade.

Cash rich investors are only interested in properties at risk of foreclosure or already foreclosed. They can aquire them at bargain basement prices. The average blue collar worker or first time home buyer can't take advantage because they cannot get the credit needed to buy. A major barrier for the first time homebuyer, preventing many from buying even when the median price fell to it's lowest in many years.



A record number of coming foreclosures or "shadow inventory" still loom large over the next 2 years. As prices continue to decline any housing recovery as we know it will also fizzle out. Supported only by cash we may never recognize or look at the real estate market in the same ways we had. Housing may be becoming a cash commodity for those who are willing to play and gamble. Banks obviously are not playing anymore.
George Sinacori
GES Real Estate

Tricks & Traps of Foreclosures - Buyer Beware!

 Considering buying a foreclosure? Here are some tips that may help. When dealing with a bank for an REO (Real Estate Owned) property expect tricks & traps at every junction. Here are just a few that you'll want be aware of.

- "AS IS WHERE IS" - Banks sell properties in a strictly as is condition. If you look at a foreclosure and it needs substantial work to make it livable, don't expect that the bank will make these repairs prior to closing. Anything short of an environmental or health hazard will ultimately be the buyers responsibility. Make sure your inspections are thorough even if it costs a bit more initially.

- "Real Estate Disclosures" - There aren't any! The bank has never seen or lived in the property and has zero knowledge of the history, prior or existing defects, or the surrounding areas. typically a Sellers Disclosure is obtained by a buyer prior to submitting an offer. Don't expect any from a bank.

- "Contract Terms" will change - Your initial offer may be accepted verbally however, soon thereafter you will receive a whole new set of documents & addendum's to review and sign ASAP if you expect the contract to move forward. You'll find that many of the terms, times and conditions are very different than what you thought was accepted. The only thing that is accepted is "price". All other conditions will be incorporated in the bank or investors contract. Take it or leave it.

- "Escrow Deposit"- You will likely be required to work with the banks chosen escrow and Title Insurance company. They will rush you for your deposits and afterward take their time on processing the required signatures and meeting deadlines. Typically they are slow and unorganized "Foreclosure Mills".



Have realistic expectations. Work with a Broker who is familiar with the process and potential complications. Call 561-306-6736 or email directly with any questions about buying a foreclosure.