Market Watch Report October 2007

There was a party on Wall Street when the Federal Reserve lowered the fed funds and the discount rate by a half percent. But what does this mean for buyers and sellers in the Bay Area?

For buyers it is opportunity time. This lull will not last. There are still plenty of jumbo loan monies available. We are still seeing multiple offers in the market. In those cases, the number of offers has decreased and the percentages over listing price have dropped.

For properties selling with one offer, buyers have the ability to negotiate terms and price. Buyers will be able to negotiate on more properties, although there will still be some that because of location and scarcity, will require buyers to go to the max if they want to be the successful bidder. Buyers should also be cautious of which lenders they work with, otherwise they could end up having to seek a new loan if the lender they used is unable to fund. They also need to increase the length of their loan contingencies, as lenders are taking longer to qualify buyers and properties.

Sellers will require more patience as volatility in the financial markets will most likely continue in the months ahead. There are still plenty of good well-qualified buyers looking for homes; however, they are more cautious than they have been over the last two years. They want to make sure the properties they are buying have value and will not fall. Therefore, pricing, location and quality of the home will determine its salability.

It is important for sellers to make sure that the lender the buyer is using will be able to fund their loan. We have seen some sellers taking lower sales prices from buyers who have lower loan to value ratios – this means they have larger down payments and lenders feel more confident in funding their loans. Also, if sellers are in a position to carry back second deeds of trust they could enhance the chances of a sale and potentially reap more equity out of their homes.

The buyer demand has not subsided. However, their willingness to make offers has slowed appreciably except for the best priced and staged properties. Until buyers feel confident in the economy, the housing market will be in a period of inertia.

As with any market, the best time to buy is when others are not. The buyers who dive in will be rewarded in the long term, as sellers are more willing to negotiate and give favorable terms.
Copyright © 2024 | Information deemed reliable, but not guaranteed. | Real Estate Website Design by Dakno Marketing.