PARAMOUNT MORTGAGE - LENDER'S BLOG

October 1st, 2009 4:49 PM
What the housing 'rebound' means for you

Homes are selling again, but the market today is divided by price point. What's the best strategy for your buyer or seller in this market?

Reported by Amanda Gengler, Money Magazine staff writer

Money Magazine reported this week, "Home sales are rising." Mortgage applications increased nearly 10 percent for the week ending September 3. With housing prices no longer in free fall how do you approach this housing market?

Whether you're selling or buying, your strategy will depend on the value of the home you want to buy or presently own. Cheaper homes are selling fast - but mid-range properties are still lingering, and high-end homes are gathering dust. "The luxury market still looks ugly," says economist Joshua Shapiro at economics consultancy MFR.

HOT
(The bottom tier - big demand and less supply)

Buyers: See homes the first day they're listed. If you find one you want, "submit an offer immediately," says Phoenix realtor Susan Ramsey. "Don't expect a deep discount; prices for lower-end homes are stabilizing. Put down 20% or more, if you can, to compete with cash-rich investors." Pat Lashinsky of ZipRealty offers "Buyers in most areas are now going up against multiple offers." Offer not accepted? Check in with the seller's agent a few more times; many deals fall through, so persistence pays off.

Sellers: Forget trying to compete with foreclosures on price. Some buyers will pay more for a home in move-in condition, so spruce yours up and sell that fact hard in your marketing materials. Many of the other listings are likely to be short sales which can take months to close. Offering a quick, flexible closing date will give you the advantage.

COOL
(The middle tier - demand is soft)

Buyers: Unload your current home first, so you know what you can afford to spend on a new place. "When you find a home you like, offer 10% less than the asking price - a realistic discount for a lukewarm market," says realtor Ramsey.

Sellers: Stand out from the pack. If your home is sitting on the market, go for one big price cut instead of slowly ratcheting down. A bold move will attract attention and prevent the listing from going stale. Offer to cover closing costs and throw in some necessary improvements, such as new carpeting, blinds, or painting.

COLD
(The top tier - prices may fall 10%)

Buyers: Get pre-approval before you shop. Ask for freebies. While sellers often balk at low-ball offers, they should be willing to negotiate, including paying closing costs and other extras. Moreover, foreclosures are rarer at this price level, and homeowners, unlike banks, are reluctant to slash their price. "You can set the terms," says ZipRealty's Lashinsky. If the seller refuses, move on.

Sellers: You'll need to seriously undercut the competition. The reason is "prices on high-end homes will probably fall another 10% until the market hits bottom," says Mark Zandi, chief economist at Moody's Economy.com.

Link: Housing Rebound
Posted by Customer Service on October 1st, 2009 4:49 PMPost a Comment (0)
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