The Greater Nashville Association of REALTORS released the sales statistics for the month of October 2010 as compared to October of 2009. The numbers would alarm almost anyone with a brain – a 30.1% DECREASE in number of home sales for the month. With no other basis of comparison, the logical conclusion might be that it is virtually impossible and/or stupid to buy a house in this market.
After all, why should YOU buy a house at a time when relatively few other people are buying houses. What do all the other people know?
I know that “The mass of men lead lives of quiet desperation” Henry David Thoreau
It’s those folks who think differently who make the greatest gains during tough times.
WE all know that things weren’t going swimmingly in October of 2009. The National Economy was a train wreck in progress, but let’s not forget that there was this little thing called a “First Time Home Buyer’s tax credit” that was expanded to include all home buyers who had lived in their houses for 3 years or more.
I got my $8,000 by buying a house in March . . . Not sure we would have moved then had it not been for that tax credit.
So . . . I’m thinking that it really doesn’t really make a lot of sense to put much credence in a comparison against what happened 12 months ago . . . but that’s “the way we have ALWAYS done it” and it is a point of reference for perspective.
A ray of sunshine is that the aggregate number of home sales for the year is only 1% off of last year’s mark . . . That stat might make us feel better, but I don’t think it adds any real meaning.
So . . . Let’s keep it in perspective and talk about how to make some lemonade out of these lemons.
Let’s quit looking in the rear view mirror and focus ALL of our energy on TODAY!
One might come to the conclusion that it’s DIFFICULT to buy a house in today’s market and that’s why the sales are down.
DIFFERENT yes – Impossible no
Patience is essential . . . and attention to detail.
Buyers MUST work through the financing meticulously before submitting any offer to purchase . . . In fact if you really want a smooth process, get FULL BLOWN UNDERWRITING APPROVAL before investing time and energy looking at houses.
You credit does NOT have to be PERFECT, but it does need to be strong. Banks are raising the “floor” of minimum acceptable credit scores (now @ 640) . . . and many underwriters are no longer using the average of the 3 reporting agencies but are counting the lowest.
You’re going to have to have some skin in the game . . . some money for down payment. While there are some 100% options out there, they have additional requirements that may not fit your scenario. FHA financing allows you to bring only 3.5% downpayment. Of course with FHA, you can have “Gift Money” from relatives for this 3.5%.
If your qualification is not stellar, seek assistance from parents or other relatives who may be willing to co-sign on your loan.
This is an environment in which, you cannot have more than one “whammie” (No cash for downpayment, low credit score, High debt/income ratio).
When you do get positioned financially to buy, set yourself up such that you have TIME and can have PATIENCE for the process . . . Keep reminding yourself that this is a PROCESS and not an event. A large percentage of the homes on the market now are Short Sales or foreclosures which require several layers of “approval” and can be lengthy processes.
Position yourself well enough that you can take full advantage of ANY opportunity out there in the market . . . such that you can seize one of those “DEALS” and stay in the game throughout the potentially extended process (could take a few months) . . .
Staying power/ability will always win in this environment.
Be sure not to back yourself in a corner. Make arrangements with your current home or lease that are flexible. This might mean accepting a slightly higher rent payment to go to month-to-month lease so you can move when the time is right . . .
If you own a home consider all of your options – Can you keep it and lease it to someone else? If your choice is to sell it, get it on the market IMMEDIATELY after you know you have full qualification to buy your next house.
Worst case, have a contingency plan for an “Interim Move” in case your current home sells before your purchase deal comes together. Timing can make or break every deal, and flexibility with timing is your friend.
Once you’re under contract, things can still happen. Underwriters are reviewing your credit and employment and bank balances etc all the way up until the day before closing.
DO NOT DO ANYTHING FINANCIALLY BETWEEN THE DAY YOU BIND A CONTRACT AND THE DAY OF CLOSING – PERIOD!
The closing date is the closing date, right? Not always . . . Last minute delays are happening frequently even with the most meticulous preparation . . . so . . . design your move with some leeway . . . just in case.
How to do all of this and keep everyone in the game til the end?
Especially when the process gets long and drawn out, all parties must keep each other in the loop and call each other “just to connect” . . . That keeps things fresh and moving forward.
I sat down to write a short post . . . and wrote a book.
Here’s the deal . . . There has NEVER been a better time to buy a house. My personal sales are at an all time HIGH these days. We do NOT have to accept the statistics as a “Self-fulfilling Prophecy”.
If you have ANY inkling whatsoever about buying a house ANY time in the next several years, I believe NOW is the right time to do it.
If you’re a REALTOR and you’re not as busy as a bee right now? Consider whose rules you are following – Yours? or the rules of the “Mass of Men”?
Another great Thoreau Quote:
Any fool can make a rule
And any fool will mind it.
I’m just sayin’
BTW – Pareto Realty is quintessentially positioned with our fresh, new approach to real estate sales and service to take this bull by the horns and support others to find SUCCESS in this market environment . . . REALTORS and Home Buyers and Sellers . . . Just contact us for details