We noted last week how the jumbo mortgage market is back-pedaling in two ways. Banks stopped funding jumbo loans with 10% down payments, and the program that qualified the self-employed borrowers by using their last 24 monthly bank statements was also terminated.
The actual impact is hard to gauge, but we can say the buyer pool is quite a bit smaller today than it was a month ago….and those loan programs won’t be coming back anytime soon.
For the remaining buyers left in the hunt, won’t they have their way when negotiating. How many other buyers are competing to buy that house? Any?
Doesn’t that mean the sellers have to come down off their price? Shouldn’t there be a correction?
The reason that sellers hold out for their price is because they have other options. They have plenty of equity so they can get additional financing if they need money, instead of moving. They can also rent their house for a ridiculous amount if they don’t need to tap their home’s equity. The majority of sellers need to leave town to make the move worth it, so there is a natural reluctance to give up the familiar – unless they get their price.
Today we hear agents say they don’t know when the market will come back.
Let’s identify which market. They don’t know when the sellers’ market will come back.
It’s going to be a buyer’s market for the next 2-4 months, and the vast majority of agents have never seen a buyers’ market, let alone know how to navigate it. Over the last ten years, listing agents have gotten away with doing little or nothing to accommodate the buyers – their mantra has been, “hey, if you don’t like it, then cancel and we’ll get someone else”. But will there be any other buyers today? If so, at what price?
Buyers might get talked into escrow at a price close enough to list to make the sellers happy, but getting them to the finish line will be a major challenge today.
Here are my tips for sellers in a buyers’ market:
- Get a pre-listing inspection, and fix as many issues as possible before going on the market.
- Have specific quotes available for other issues that aren’t fixed yet.
- In spite of furnishing this data to the buyers, expect that they will want to re-negotiate.
- Build a defense in advance.
You may still need to do a little something for them to get the deal done, but at least being prepared will keep it to a minimum.
If the sellers have no job how will they tap their equity?
Private money based on equity alone.
Looking at that list it favors the buyer’s column EXCEPT for inventory, which is low. I think it boils down to the quality of properties in a given price range. Buyers will have fewer choices but will be drawn to those properties that stand out more. Sellers may have to give in a bit too. I think we’re in uncharted waters at this time but JIM the realtor will dust off his handy 18th century Ramsden sextant and lead us to bountiful islands with hot babes wearing coconut shells and nothing else.
Oh boy….18th century? 😆
Probably the finest 18th century instrument maker was the Englishman Jesse Ramsden. His specialty was accurate scale division. Ramsden’s major achievement was to invent a highly accurate “dividing engine”—the apparatus used to divide the scale into degrees and fractions of degrees. His design was considered so ingenious that the British Board of Longitude awarded Ramsden a prize of 615 pounds—in 18th century terms, a small fortune. His “dividing engine” now resides in the Smithsonian Institution in Washington.
https://timeandnavigation.si.edu/multimedia-asset/sextant
Sextant, made by Jesse Ramsden, last quarter of 18th century. The sextant became the symbol of navigation. The instrument is named for its scale—60 degrees or 1/6th of a circle—and can measure even greater angles than the octant.
The only thing more precise is Billy Zoom on his Gretsch.