Sean,
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I have to say that your site provides an amazing amount of information.? It has real value to those of us who are trying to buy in to this housing market but want to avoid making foolish mistakes as best we can.
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My question is this: I am a long term renter (not by choice) who would very much like to move into a house that I own.? I’m not an investor, am not looking to flip or make a bundle.? All I want is an affordable home to live in that is in a decent area.? I’ve read your responses to questions from folks about the difficulty associated with buying with buying REO’s if you are not an investor or have all cash and they make sense.
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However, in attempting to follow your advice to people like me I am finding that a couple of things are occuring that are making affordable prices hard to find.? First of all, there just don’t seem to be many REO’s showing up on the MLS, at least not in numbers that match up with how many REO’s .? Secondly, those that show up are not at prices that are in any way a good deal.? Plus price per sq. ft. is all over the place–from $250 to $500 per sq. ft.? Very difficult to guage what to offer (and frankly at these prices I still can’t afford much here in Los Angeles).? And lastly, I personally am finding it very difficult to find a knowledgeable agent who deals in REO’s.? I am finding guys who just want to set me up on the Internet & email me listings.?
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So advice, thoughts?
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Many thanks.
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Bill
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Hi Bill,
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First of all be patient. Second when it comes to buying a home your first concern should be finding a place you want to live. Too many people look at a home as an investment rather than a place to live. I don’t care what you pay, if you love the home and stay put 30 years and pay it off, it will all work out in the end. 
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That said, if you know what you want, there is no reason not to try to get the best deal possible. Again - I’d focus on finding the right house, then work to get it at the right price.
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As for what the right price is, compare payments to rents. It is reasonable to pay a premium to own, but it should be a reasonable premium. For example 25% of income to rent, and maybe 30% of income to own. If your income is inline with others in the area and you use 30 year fixed financing you’ll find that even if prices move further down near term, they’ll come back to those levels pretty quick (barring something like mortgage rates going to 18%).
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And, I’d absolutely recommend hunting for a great Realtor. One that listens to your needs and isn’t desparate for you to buy so they can get paid. They are out there. Hope that helps.
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Bill -
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In addition to what Sean says about finding a Great Realtor, you should get a full loan approval up front- not a pre-qual, but a full loan approval subject to you finding a home. Please note, if the bank didnt ask you for pay stubs, bank statements, tax returns, etc then you dont have a underwriter approval. There are several factors why this is important:
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- you will be educated on exactly how much your down payment is and what your monthly payments will be.
? - you can proactively work on any issues regarding your loan - increasing your credit score, seasoning your cash, finding a co-borrower - whatever the issues are they are easier to deal with with time and not having the pressure of 30 days to close.
? - you will be a more attractive borrower - Last week, I presented an offer in a multiple offer situation and our offer was selected without a counter because we had proof of down payment, credit score, loan approval, etc - we were prepared and had the certainty that we’d be able to close. We showed our hand and the Seller picked us.
? - you can close quicker which sometimes will make a difference - Last year, we closed 2 purchases in 5 days - we could only have done that with a full approval - There are two parts to a negotiation - Price and Terms – lets just say we got our price and they got their terms.
? - Smoother process flow - I am a Realtor and Lender and know our buyers have a smooth process flow because we always get the loan approval up front!
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Best of luck - feel free to send me e-mail questions.
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Bob
bob@inspiragroup.com
Bill,
If you need help with finding a foreclosure I am a Broker in the LA area, and Ventura County. I deal with a lot of foreclosures. Get a lot of great leads and deals right here on foreclosure Radar. Which by the way was highly recommended by our board of Realtors. They know what they’re talking about, they don’t recommend without doing their research. If you want help I can help you. Thankfully not hungry for money, we can take our time and get you the right deal for you. Feel free to contact me if you wish. Best to you, Brandi brandilee76@sbcglobal.net