But unless you are a Realtor used to making huge commissions on beach houses or a lender who’s tightening the reigns on your loaning capabilities because you have too many foreclosures, than this should actually be great news!

True, it is a cause for economic concern because lenders are indeed tightening their leashes and those looking to sell their homes (especially near the Gulf of Mexico oil disaster) are probably going to have a difficult time doing so.

But if you’re looking to buy a new home, guess what?  You win! And now is a fantastic time to start looking because the Los Angeles real estate market is flooded with homes for sale that are much more reasonably priced than they were in the past couple years.  Here are some industry negatives being widely reported that translate to great prices for buyers:

This Past May, Home Sales Were the Lowest Ever Recorded:

Though May recorded about half of the home sales nation wide that it usually does, a decrease greater than any other since our government started keeping stats in 1963, this is mainly due to expiring tax credits the government had offered previously to first time buyers in an attempt to stabilize the industry.  The good news? With expired government incentives, prices for homes have fallen.

Internet Searches for Listings are Down Almost 20%

This is likely a reflection of the income situation of the U.S. as a whole.  The good news?  There are tons of listings! If you are considering buying a home, you are much more likely to have a variety of homes to choose from in your target areas.  In a buyer’s market, you actually get to be picky!

The Median Home Price Has Fallen Since This Time in 2009

The median home price has fallen to about $200,000 nation-wide.  This means… you guessed it, prices have fallen!  We clearly learned from the “real estate bubble” that home prices were significantly inflated over the past couple years, and now those prices are falling back to where they should be in relation to mortgage rates and income levels.  This translates to a better chance of a good investment return long-term.

Foreclosures are Setting All Time Records

The plus side? There are many short sales and bank sales that are getting approved.  If you are looking for fixer-uppers or discounted homes, today is a fabulous time to get great real estate deals.

It is More Difficult to Get a Loan

With banks tightening their reigns on loans, those responsibly looking for a home purchase are much more likely to be able to pick and choose since many real estate listings will have less interest from under-qualified buyers.  More loan restrictions mean you need to be in a good position to buy, and falling prices ensure you’ll get a return on your long-term investment.

To learn more about our low interest rates or to apply for a mortgage loan visit us online or call us at 818-500-4124

In essence, a short sale is getting a lender to take a loss on their initial inflated terms of mortgage, allowing the homeowner freedom from the initial debt. This can be a very convoluted process, since many lenders may be involved and all will have to agree on the loss.  A buyer is necessary as well, and though short sales typically have a very attractive price tag, most of the time cash is the preferred method of payment since convoluted financing is what caused the unreasonable mortgage to begin with, and cash is much better to cover losses than credit that may not be there in the future.  It’s not uncommon for there to be at least 10 or 20 offers on a home being short sold, and oftentimes the offer with the most cash constitution—not necessarily the highest dollar amount, is the most desirable.

This can be a good thing for investors, as they typically have much greater capital than families or first-time buyers, but the process can be extremely arduous and contain rolls of red tape based on the number of parties involved that have to negotiate and agree on the deal. Many short sale offers ultimately fall through.

This is where the Obama Administration is attempting to step in. With a new standardized short sale plan that is rolling out this year, parties involved are required to use uniform documentation, pre-approved terms and accelerated turn-around times in an attempt to avoid the long drawn out negotiations that sometimes ruin short sale offers. It also offers incentives in the way of homeowner relocation grants, mortgage servicing fees, real estate agent commissions and stipends for secondary lenders and investors.

Though the jury is still out as to whether the streamlining will be effective and encourage more short sales to be initiated and taken to completion, it seems any kind of standardization process will be in favor of investors with cash capital that can benefit from purchasing these homes, as well as homeowners that need to free themselves of over-inflated mortgages.

If you are interested in learning more about the short sell process or want to invest in properties that are offered for short sale  please call me at 818-241-5196.