What Placentia, Brea & Yorba Linda Buyers are Saying

Reflecting on an Open House this weekend (both Saturday and Sunday) on Tangerine Place in Olinda Ranch, I noted several “lookers” who came throught the door making the following comment:

“We sold our house, we’re renting and we have a down payment for our next purchase.” 

Although buyers today know that they are in the proverbial “driver’s seat,” they also know that they have a much stronger negoiating position when they submit a non-contingent offer.  In other words, they don’t have a home to sell before the deal can go through.  In real estate circles, we know that the purchase of a non-short sale / non bank-owned residential property is 90% of the time contingent on several items:  loan approval, home appraisal, inspections, etc.  However, when we’re talking about a “non-contingent offer,” we mean an offer that is not dependent on the buyers having to sell their home in order for escrow to open on the current transaction. 

 If you’re a buyer, here is the “pyramid of strength” in terms of negotiating power (BOTTOM BEING STRONGEST)

                                                    NEED TO SELL HOME, HOME NOT ON MARKET

                                              NEED TO SELL HOME, HOME IS CURRENTLY ON MARKET

                                      NEED TO SELL HOME, HOME IS CURRENTLY IN ESCROW WITH BUYER

                              HOME HAS BEEN SOLD, PROCEEDS ARE IN BANK AS DOWN PAYMENT ON PROPERTY

  In this market, to put in an offer “contingent upon the sale of buyers’ property” is a very weak position.  The sellers have no confidence that your home will EVER sell, and your offer ties up their home and can waste their time AND their money (should they lose equity as weeks and months go by).  It is advisable to, if possible, put the “horse before the cart” and have your home at least in escrow before you make that offer. 

Congress Bailing us Out???

One of the Big Items today flowing through the grapevine is the Economic Stimulus Package, a.k.a. H.R. 5140.  One of the tasty beni’s coming our way is a one-time check for anywhere from $600 to $1200 in the form of an income tax rebate, distributed to 130-million Americans and could be mailed as early as May or June.  The whole idea is for American consumers to spend the money to help jump-start our snail’s pace economy.  The bill was signed by President Bush this past week (White House Article).  Another exciting component of the H.R. 5140 is the raising of FHA conforming loan limits in “high-cost” areas.  The definition of “high-cost areas” has not been published, but the calculation for now is 125% of the median home price, not to exceed 175% of the median home price for a specific metropolitan area.  For example, in order to reach the proposed limit of $729,750 the median sales price in your metropolitan area has to be $583,800.  The new loan limits for FHA will not be immediately known, since the Secretary of Housing and Urban Development (HUD) has 30 days to post the results (so expect mid-March).

 For more information on H.R. 5140 click on one of the following links:

 1.  OpenCongress

2.  Library of Congress Definition

 3.  H.R. 5140 Bill Tracker

4.  Quicken Loans Info on H.R. 5140

ASK NIC!!!

Click on the ASK NIC!!! above…scroll down to Leave a Reply and type in your question.  Click on the “Submit Comment” button and I’ll do my best to give you a prompt answer.

 Sincerely,

 Nic W. Petrossi, Prudential