I Don't Have a Crystal Ball
Written 12/2/07 by Vickie Arcuri

Dear Future Homebuyers:

I appreciate the fact that you are interested in my professional expertise and opinion, but I don't have a Crystal Ball. If you're interested in buying a home and are wondering if prices will get lower or if we've "hit the bottom yet", I do not know. No one knows. They can predict, but they do not know for sure. Remember, I don't have a Crystal Ball. I am but a mere Muggle without access to the magical world of Wizardry. I have been trying to get my hands on the Train schedule for Hogwarts Express in hopes of becoming a Student at Hogwarts School of Witchcraft and Wizardry and learning the wonderful skill of predicting and controlling future outcomes, but alas, I can't find out when the Train leaves and the Tracks are invisible. This whole Crystal Ball situation has become quite troublesome...quite troublesome indeed. I shall have to keep you apprised of my progress in this regard. (Wizardry analogies are from Harry Potter).

I can, however, provide you with FACTS about current prices and price data/trends based on the prices of recently listed and sold homes.

You need to remember that not only is Real Estate LOCAL, but each Real Estate purchase is very specific to your INDIVIDUAL needs, wants, and abilities. Media Reports often "paint with a very broad brush". They have no way of knowing YOUR circumstances and how those circumstances will affect your ability to purchase or not purchase the home that you're interested in.

But you heard that "The Market is Bad" and that "Tax and Insurance are High"

"Bad" and "High" are all relative terms. What's "good", "bad", "high", or "low" all depends on what your Financial abilities are and what you're willing to pay. I talk to lots of people who don't realize that Taxes and Insurance vary SIGNIFICANTLY from one house to the next and from one Neighborhood and City to the next. I have lived in South Florida since April of 2003 and have owned a home here since May of 2004, so I am fully aware of the significant increases in home prices and Taxes (in some areas) that occurred in a very short period of time. I am also aware of the Insurance issues and increases that arose, particularly after Hurricane Wilma, and the changes in Lending criteria in early 2007.

Be that as it may, I REPEAT that each Real Estate purchase is very specific to your INDIVIDUAL needs, wants, and abilities and you should investigate first to determine if it's possible for YOU to buy right now.

I was driving North on I-95 a few days ago when traffic stopped almost completely. I wondered what was going on up ahead and then it crossed my mind that maybe nothing was going on at all on our side of the road. Almost right after thinking that, I saw Blue lights flashing ON THE OTHER SIDE OF THE ROAD. Turns out that a Pickup Truck lost his Trailer, which was carrying a Boat, and the Boat was positioned across almost all the Lanes. I think you see where I'm going with this. My point is that people on our side of the road were so busy Rubbernecking, paying attention to THE OTHER SIDE OF THE ROAD, that they couldn't even manage to mind their own business and keep driving. It was QUITE aggravating. Please don't be a Rubbernecker when it comes to purchasing your Home.

If you're thinking of buying a home now, here's a brief overview-a few preliminary steps to guide you. Please call or e-mail me for more detailed information about preparing to buy a Home and the Home search and purchase process.

Before you ASSUME that you CAN'T afford to buy anything or that you CAN afford to buy, but want to wait until later, you need to FIRST investigate what's available and THEN determine if there's something that would be a great fit for you. In our current Broward County market, there are over 17,000 Single Family Homes for Sale and over 23,000 Townhouses, Condos, and Coops for Buyers to choose from, so you have many choices (Inventory levels are similar in Palm Beach and Dade County). Since it is no longer a Seller's Market, since inventory is excessive and Interest Rates are low, there are more opportunities to negotiate a lower selling price or to find an Owner who is at least willing to assist you with payment of closing costs. CAUTION: THIS DOES NOT MEAN THAT HOMEOWNERS ARE "GIVING THEIR HOMES AWAY" or that they should be expected to do such. Would you "give your home away?" When you are ready to submit an Offer for a Home, I will assist you with determining a fair market price to offer for the home by researching recent Sales prices of comparable homes in that neighborhood. Keep in mind that many Sellers who purchased their homes recently, at peak market prices (~2004-early 2005), are often unable to be flexible with their prices because many comparable homes are now selling for LESS than what they were purchased for. Often, Sellers who have owned their homes for many years, who HAVE NOT Refinanced excessively, are in a much better position to be flexible with their selling prices, however, that factor alone DOES NOT determine a Seller's ability to negotiate their price. Many other factors relating to each Seller's personal circumstances determine whether a Seller is able and/or willing to negotiate their price.

This leads me to my next point.

But you heard that there are so many Foreclosures and that you can just snap them up left and right

Um, NOT! Well, yes and no. Yes, there are LOTS of Foreclosures and Pre-Foreclosures, but buying them isn't "a piece of Cake". I get these calls all the time and just had another call on Friday from someone calling me about a home that she was very interested in. She was so excited and felt that the Homeowners should be very flexible with their price since, after all, they had been "put out of the house" and should willing to take a very low price in order to sell their Home. By the time our conversation ended and I advised her about Foreclosure realities, she was disappointed. Now, I'm not going to write a book here, but I do want to highlight a few important points:

1. Once the Lender/Bank has repossessed the Home, it no longer belongs to the Homeowner, so the price that will be accepted in order to satisfy the terms of the existing Loan is decided by the Lender, not the previous Homeowner.
2. The Lenders have very specific criteria as to the qualification of the future Buyer, the amount of down payment, the minimum Credit Score, etc.
3. These purchases typically do not close quickly. Once you submit your Offer to the Lender, it often takes AT LEAST 4-6 weeks (and often longer than that), for the Lender to decide if they're even going to agree to accept your Offer or not and if you're a qualified Buyer or not. Until they sign your Offer, you do not have an Executed/Accepted Contract. In the meantime, you've placed your required Down payment at the time of the Offer and you're playing the waiting game.
4. Because many of the available Foreclosures are homes with existing Mortgages that are MORE than the price of comparable homes in today's market, the existing Loan is high. Lenders don't want to lose money and the amount that they agree to accept to satisfy the terms of the existing Mortgage could very well be MUCH MORE than you are willing to offer. If these Homes were so easy to buy and so cheap to buy, do you really think there would be so many of them still sitting on the Market?
5. Many of the best Foreclosure deals are never actively listed for sale...many of them are purchased "on the Courthouse steps" as 100% Cash purchases by EXPERIENCED Investors.
6. These Homes are not always in great condition. Some of them have been intentionally damaged by the previous Homeowner or are otherwise in various states of disrepair. Of course, the ones that are in great condition are often not the cheap ones.

And then, there's the matter of Pre-Foreclosures where the Bank/Lender hasn't repossessed the Home yet. There are also cases where the Bank/Lender hasn't even decided whether they will accept less than the amount owed on the existing Mortgage. They may or may not.

Really, it's entirely possible that you could be so much better off just placing an Offer on a non-Foreclosure listing. Each Foreclosure purchase is different and each Lender has different requirements. There's A LOT more to the whole "Buying a Foreclosure Home" than what I've written here, but I said I wasn't going to write a book, so I'll end here. Contact me for additional information.

Do You Have The Money? How much will you need?
How are you going to buy the house? Even if you're buying 6 months from now, you should complete Pre-qualification and Pre-Approval NOW through a Loan Officer in order to determine if you will qualify for a Loan and, if so, for what amount. If it's discovered that you do not qualify for a Loan right now, you will be advised as to what you need to do financially in order to prepare for future Home Ownership (examples: timely payment of all bills, saving for a down payment and closing costs, etc.)

Although your Pre-Approval Letter is not a final Loan Commitment, we will need it in order to present an Offer on a Home. This information is important to us, as well as to Homeowners.

If you don't know how much you can afford (not how much you THINK you can afford) and whether you qualify for a Loan or not (or a Loan in the desired amount), there's no way for us to know which houses to consider, so we can't proceed with your home search until this information is determined. Proceeding in any other manner is a waste of time and money.

The ongoing costs of home ownership
Maintenance, improvements, Taxes, and Insurance are all costs that you will be responsible for. If you buy a Condominium or Townhouse, a monthly or quarterly homeowner's association or maintenance fee will often be required. A number of Single Family Homes (particularly those in Gated Communities) are also located in areas that are governed by Homeowner's Associations that require Association Fees. Please note that some Associations require 6 months - 1 year of advance Association fees payable BEFORE you close on the purchase of your home.

Do You Know What You Want?
Whether you are a first-time homebuyer or a repeat buyer, you need to determine why you want to buy and what the features are of the Home you want to buy. Where do you want to buy? Do you need to be located in a certain School Zone? Do you need to be near your Job or is distance not very important to you? Let me know what your home preferences are and I will e-mail listings to you that fit your criteria. Reviewing listings online will assist you with narrowing your selections by comparing home features, prices, availability, etc. before we go out to view Homes.

WHEN Do you Want to Buy?
When you complete pre-qualification AND pre-approval AND have decided that you are ready to purchase a home in the immediate future, I will arrange showings and we will drive to view selected areas and homes that you're interested in purchasing and then place an Offer. Knowing WHEN you want to buy is very helpful as it helps to determine the pace of our home search activities.

Home Ownership offers a number of advantages including, but not limited to, the possibility for appreciation in value, tax deduction of Mortgage Interest and Property Taxes, fixed amount of monthly Mortgage when you have a fixed-rate Loan, ability to make property improvements according to YOUR TASTES, etc. Please remember that Real Estate is historically most profitable as a longterm investment, NOT a short term investment.

Copyright © 2007 By Vickie Arcuri, All Rights Reserved.