Real Brain for Saturday April 11, 2020
Real estate prices are coming down. The most obvious thing on the economic planet. We don't know how we are going to come out of this but we do know that millions of people are going to not be able to work, companies are not going to generate net income like they used to. In other words there will not be enough disposable income by enough people to keep the demand for the current real estate prices.
Real estate prices are coming down. Ted Baxter knows that.
So, why are people looking at home? One couple I am working with in the Seattle area told me that they found (online, of course), the exact type of home they had been looking for. They made a state approved 6' away appointment directly with the listing agent. (I would use rently and never go, btw- even safer!!). They loved it.
Great, now what? We made sure the financing from a large institution (a real bank) was still cool and so were the rates. Next, how to price it. This is the fun part. We have turned from a seller market to a buyers market overnight. What we decided was, what do we think the number will be after all is over. Boeing has layoffs, Microsoft and Amazon have learned how people can work out of the office. Therefore, people aren't going to be glued to the current 3 most important thing in real estate: LOCATION, LOCATION, LOCATION!
That's over. Work for an Omaha, NE based company and live in Pittsburgh, PA. It may not matter. We are finally going to the real digital age. This time will be a complete readjustment of how things will work. The analog people are just finished. They will have to depend on younger people that "get it."
So what are the three most important new things in real estate?
Financing - Right now, if you don't have 680 credit scores and a verifiable job, you are probably not able to get a loan. A prepapproval is, as always vital, even more now. Underwriting will be getting tougher. Lenders are going to be picky. They want clean just like after the 2008 crash. Sub-prime, aka non-qm loans are all but gone unless you have a lot of downpayment and are buying or refinancing an investment property.
Property- Does the property make sense for me now? You have to ask yourself that question. If so, the good news is in addition to the owners taking lower prices, they will have to fix things. Become a PITA with owners. Make them fix things. They don't have a load of buyer to fall back on and they probably need the money. Make sure you get the full home inspection and ask the seller to buy you a really good home warranty.
Knowledge- Become aware of the process and the speed bumps for a purchase ahead of time. Come up with a strategy to make the seller realized that your deal makes sense. Seek out professional and of course, make sure you use a real estate broker that gives rebates!
I still say you should wait because there will be more to chose from at a lower price, but if you can get the deal of all deals and you don't care that the value may go down more before it goes up, then go for it.