There is lots of good information available throughout the real estate blogging community about Obama’s plan to reduce foreclosure and increase loan modifications.
Jillayne Schlicke of Rain City provides a lot of information and asks the very important question:
“IS A LOAN MODIFICATION IN YOUR BEST INTERSTS?”
Jillayne also tells it like it is: “If your home does not sell, the price is TOO HIGH period”. Sellers please pay attention, if your home does not sell, it is proced to high - bigger ads, more open houses won’t get it sold if property is priced above current market.
I recently sold a BRAND new home in prime west Menlo Park for slightly over $1M. This spec built home came on the market at $1.5M about 6 months ago. The price was too high since property is located on a busy street. If property was priced at $1.3M, it would have sold first week. Developer then chased the market down always behind the curve and after the stock market tanked in October 08, the market slowed further. As a result of over-pricing; my client - THE BUYER - has made an excellent purchase posied for long-term appreciation - AVERAGE price in west Menlo Park is about $1.8M.
As I have mentioned before, there are signifcant and complicated legal and tax impacts on loan modification, short sale, or fireclosure. Be sure to consult legal and tax advice before AGREEING to ANYTHING. For example, a lender could agree to a short sale but NOT release you from the balance remaining on the loan that was not paid in the short-sale.
Charles Feldman of Bigger Pockets questions as I do how effective this program will be.
3 responses so far ↓
1 PublicEnemy#1 // Mar 4, 2009 at 8:45 am
“As a result of over-pricing; my client - THE BUYER - has made an excellent purchase posied for long-term appreciation - AVERAGE price in west Menlo Park is about $1.8M.”
This only works IF the market doesn’t drop a lot further.
What if another 50% drop from today’s prices happens?
Then suddenly your buyer has made a bad decision.
The builder may have chased the market down, but your buyer could just as easily catch the falling knife now that he/she owns it.
2 Arn Cenedella // Mar 4, 2009 at 8:23 pm
Dear PublicEnemy#1
You are certainly right!
The real estate market may continue to go down.
I do not think it will and right now I would much rather have my money in the real estate market than the stock market. Stock market down 50% and it provides NOTHING tangible. Real Estate in Menlo Park and Palo Alto maybe down 10% to 15% and does provide SOMETHING tangible - a place to live.
I choose real estate.
The areas where prices have gone down greatly are lower cost areas financed by sub-prime mortgages.
I do not have exact stats but I would bet over half the homeowners in Palo Alto and Menlo Park have been in their homes 15 to 20 years - they carry small mortgages compared to market value. These folks will never be in danger of having to be forced to sell. They will sell when they WANT to sell. This will provide a good bottom for market values in my local area.
But your point is well taken. There is no guarantee about the real estate market. Time will tell.
I appreciate the comment - somehow I do not think you are public enemy #1.
3 PublicEnemy#1 // Mar 5, 2009 at 4:42 am
I completely agree about the stock market. Right now I am just sitting tight on my shekels and hoping they don’t get inflated away to nothing before I purchase again.
Got out of the stock market in Q1 2007, got out of RE in Q4 2006.
I will jump back when the time is right. I still think we have a ways to fall though. I am looking ahead to Q2 2010 to Q1 2011 for the true bottom in RE.
We are obviously in a deflationary environment right now and I hope that continues.
Buy a home to live in and don’t buy more than you can afford.
That is what was missing from the last 10 years of RE appreciation.
I am a bear though, and think we will hit 1995-1998 levels before this is over.
Enjoy the roller coaster, whether up or down!
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