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Is the Media Trying to Ruin My Life?......

by Jeremy Larkin

I guess they may not MEAN to ruin our lives.....they just want to sell papers, TV time, increase Internet viewing. But they are ruining our lives anyway.

If you don't belive me, consider the following "incident" experienced by one of my Seller clients this week:

  • They listed their home with us a few months back and after a relatively short time on market, we placed the property "under contract" with a ready, willing and able buyer to close yesterday, October 9th.
  • They day before closing, October 8th, all parties were ready to go with a fully approved loan, documents waiting at the title company. My clients had moved 90% out with the exception of their beds to a rental home.
  • Mid morning the Buyer's agent recieved the following letter from their buyer: 

My husband and I have been watching the news very closely and it seems just too risky to buy a home. We know that the appaisal came in above the purchase price but we heard that houses went down 16% yesterday making this purchase worth way less than the price before we even buy it. For this reason I do not want to go through with buying the home."

Wow.

THE OUTCOME: Since (like most normal people) the Seller couldn't afford to pay both rent and a mortgage payment, they are now moving BACK in to their home without the proceeds they really needed to pay off some debt, etc. The Buyer missed out on a great buy on that home (truly), neither agent got paid, nor did the mortgage lender, nor did the title company, and the profit that everyone DIDN'T make DIDN'T go back into the economy.

Oh and by the way, houses didn't fall 16% in 1 day, nor have they ever done so in 1 single day, but the Buyer thought they heard that and the rest is history. That's a funny statement though.

As if the Country isn't already facing a huge economic crisis, the Media compounds the issues 40x over by printing headlines such as:

  • "Is your Wall Street Money Safe?" (CNBC.com) - How do you think that headline affects the markets? Do you think many people ran to their broker and said "CASH OUT!!"?..I'll bet so.
  • And my personal favorite: "Credit Markets Frozen!" (just about every news outlet in the world....) - How many totally able people may decide to not even try to make a home or other purchase by hearing that? "What's the use?" they probably say...

That's strange about the credit situation..my credit card still works, my home equity line is still completely open to me and people continue to buy and sell homes, cars and everything else under the sun right now.

Let's take this 1 step further. Been to Wal-Mart lately? How about In-N-Out Burger? What did you find? TONS of people spending money, that's what. People washing their cars, shopping at Kohls, fueling up, going to movies, going to DISNEYLAND!! (I LOVE Disneyland). I was in Costco today and the place was ABSOLUTELY PACKED.

The world of commerce has not stopped turning as near as I can tell.

Look, I DO NOT have a crystal ball, but many of us may be wishing we had lots of cash to buy up real estate, stocks, diesel trucks, whatever during this period. There are GREAT buys in the market on alot of items.

The world has not ended. On the contrary, it is actually revolving quite normally in so many regards. But we DO face some tough challenges in the short term. You may just have to unplug the news and stop reading the paper to survive this moment in time.....I know I have.

Aspiring First-time Home Buyers who have been sitting on the proverbial real estate fence may see their "ship" coming in this year in the form of a new Federal Housing initiatives.

In the latest move by the U.S. government to stop the national housing & economic bleed, first-time buyers will be able to take advantage of a temporary tax credit of up to $7500.00.

The stipulations look like this:

-Home must be purchased between April 9, 2008 and July 1, 2009

-Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for full credit

-Only primary residences qualify (no 2nd homes, rentals, etc)

It's no doubt that one of the challenges the encomy faces in getting jump-started is that of fewer financing options for today's buyer. The Media isn't helping either, but despite their mass over-dramatization of the issue, we have to expand rather than contract to beat this current situation. One of the best ways to do that is to get first-time buyers off the fence and into the equity-producing tax shelters we call home ownership.

Don't Forget New FHA Limits
One program that has made a HUGE comeback this year and, quite frankly, seems to work on 99% of the deals I've seen it used in, is the FHA loan. New loan limits for FHA will be the greater of $271,050 or 115% of an area's median home price.

Conforming loan limits for Freddie Mac and Fannie Mae will be the greater of $417,000 or 115% of the an area's median home price; up to $625,000. In Washington County this will be $417,000.

Get detailed info here: http://www.federalhousingtaxcredit.com/.

 

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Photo of Jeremy Larkin - The Larkin Group Real Estate
Jeremy Larkin - The Larkin Group
Keller Williams Realty
50 E 100 S, Suite 300
St. George UT 84770
435.767.9886
Fax: 435-359-5085

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