How to Bid on a Home

A buyer wanting an affordable, move-in ready home in east Orlando can expect to write numerous offers due to strong demand & competition particularly from first-time homebuyers. The competition for affordable homes in move-in ready condition is so strong, buyers are finding themselves in bidding wars, driving up the sales price over asking & still losing out on their first choice of home.

Successful home bidding is more than just price…it’s an art & a science to bid on & land the home you want. Here are five critical components of bidding on a home.

Realtor I would advise any buyer – experienced or not – to work with a licensed realtor. A buyer’s agent represents a buyer’s best interests throughout the entire transaction – from showing prospective homes, writing an offer & completing the closing process. Best of all, there is no cost to a buyer to work with a realtor – all commission is paid by the seller.

Price Come out swinging hard by writing a strong, supported offer from the start (low ball offers will get you no where). You may (or may not) even receive a counter offer from the seller, so make your opening offer count. Be knowledgeable about recent sales & homes currently under contract (prices of ‘active’ inventory mean nothing in writing an offer – only sold & under contract). Your offer should be solidly supported using up-to-date ‘comparables’ (anything older than 60 days is stale).

Time Nearly as important as price, time is of essence for all sellers – they want to close yesterday. New requirements & processes for lenders now require several additional days to close, so a 30 day close are history. Today, typical closing time on normal & bank-owned homes is 35 to 45 days. Your offer should state the soonest date you are able to close in (such as 11/25/2010)…don’t list a completely unrealistic closing date of 12 days from now, then not be able to perform - you would be out of contract & would likely lose your deposit.

Concessions Seller-paid closing costs & seller-paid home repairs are a thing of the past. Writing an offer today with any kind of seller-paid concession is likely to turn the seller off. With home prices at rock bottom levels, sellers have no room to give the buyer another dollar on the transaction. However, as the largest home seller in the country today, Fannie & Freddie are providing up to 3% seller-paid closing costs on certain homes (along with a free home warranty) – great incentives to watch for.

Standard Contingencies Your offer should be written using Florida’s standard residential real estate contract paperwork, which contains standard contingencies that serve to protect you, the buyer. This paperwork will include buyer contingencies for financing, appraisal, general home inspection, termite inspection & mold inspection. These contingencies are in place to protect the buyer & to get your deposit back in the case of financing not being approved, the home not appraising for purchase price or major inspection discoveries that are over the agreed upon repair ‘budget’.

Expect to Pay More For Bargain-Priced Homes

The best values in east Orlando real estate today are by far distressed sales (bank-owned & short sales). Buyers – primarily first time buyers & investors – are clamoring, competing & bidding up these distressed sales to an average of 1% over list in the past 60 days.

Competition for move-in ready, bargain-priced homes is fierce. When these homes hit the market, you can expect them to receive multiple offers in 48 to 72 hrs. Buyers, be prepared to write your offer for over list from the start. With the competition for move-in ready bargain homes, you’ll only get one chance to make your bid. These bank & short sale sellers will go forward with their highest offer immediately & you’ll be hitting the pavement again looking for the next best thing.

Five Mistakes Home Buyers Make

First-time buyers, without the burden of a home to sell, could benefit from the foul real estate market and the record low mortgage rates - but woe to the overconfident buyer. Here are five common missteps that first-time buyers make.

Read full story at wsj.com

The Roller-Coaster Ride Called a Short Sale

Short sales purchases are not for the faint-hearted. While there is a possibility for a good price, there is also a good chance that the deal will not go through. Many cooks are involved in this stew. The buyer must negotiate the price with both the seller and the seller’s lender. At the same time, the seller must negotiate with the lender on the terms for forgiving the amount still owed on the mortgage. Meanwhile the bank is negotiating fees for lawyers and brokers. The process can take six to nine months.

Read full story at The New York Times

Is a Housing Shortage Coming?

As the nation struggles to shrug off the worst housing crash since the Great Depression, it may be hard to believe a housing shortage could be on its way.

The nation is simply not building enough homes to keep up with potential demand. "It is ironic, but there is a growing consensus that there may be a new housing shortage coming," said James Gaines, a real estate economist with Texas A&M.

So far, the shortfall has been masked by a weak economy that has put a damper on home buying. Once the job market rebounds, however, people will look to have their own homes again. This pent-up demand could get unleashed on unprepared markets, causing shortages and rising local prices.

Read full story at CNNmoney.com

When Can I Buy Again After Foreclosure?

Walking away from a mortgage you can still afford to pay has consequences; everyone knows that. Your credit score is shot and it can be impossible to get credit.

While homeowners who default due to economic hardship such as a job loss or divorce normally must wait two to five years before buying a home again, homeowners who walk away from their mortgage may face double that time.

Read full story at CNNmoney.com