It's a Bank Market

I’m often asked about the current real estate market, and is it a buyer’s or a seller’s market? You might think it’s a buyer’s market, but have you tried to buy a short sale or a well-priced REO lately? If you know someone who is frustrated trying to buy a foreclosure, you know that it sure doesn’t feel like a buyer’s market to them. The fact is, it’s not a buyer’s or a seller’s market, it’s a bank market.

The banks are calling the shots in this market. In most sales today, the bank is either the seller, or we have to negotiate with a bank for a short sale. And we have to deal with new government intrusions into the real estate market in an attempt to stem the tide of foreclosures such as SB1137 in California. Whenever you hear the government is working on a bill to “assist troubled homeowners”, remember that “homeowners” does not mean Mr. & Mrs. Jones down the street, but the banks that hold your mortgages.

Do you remember the Lending Tree slogan, “When banks compete, you win”? That’s a picture of the market today, banks competing with banks to sell their inventories of homes, but when banks compete in this way, you lose. Each sale is lower than the last, and that’s driving prices down. Many private party sellers are deciding not to fight against the banks and are staying put. That leaves the banks as the only game in town.

A New World Every Day

So what’s new? Just everything. In the past few months we watched the government take over Fannie Mae, and Freddie Mac, which together own or guarantee about half of all U.S. home loans. Banks are getting handouts for making bad investments. FHA is now the best way to get a loan, when I haven’t seen an FHA loan in decades. Home prices in some areas have fallen 25% in months, not years. The stock market has fallen 40%. Lehman Brothers, who has been around since 1850 is bankrupt. The price of silver has been cut in half. It now costs more to build a house that it’s worth when you’re finished. And we have a new president who promises change.

It’s definitely not business as usual. In my business, we’ve had to go after bank-owned properties and short sales to get listings. And buyers only want to buy something that’s irresistible. I’m also become a trained Home Retention Counselor, meaning I’m the guy who talks with people behind in their payments to see if I can keep them in their home and avoid foreclosure. The old ways of finding business have dried up, and so we move with the cheese. (Read “Who Moved My Cheese” by Spencer Johnson.)

Every day we wake up and see what kind of world we’re in today. Things really are changing that fast. I have a business coach, and every two weeks we have to look at what has changed, and refine what we do to keep up. I say this to let you know that we are active real estate agents who are very definitely current with this market. We are not asleep as many agents are, and we’re not going out of business either. We know how to handle this market. And so I want to extend to you again the offer to talk with you or anyone you know who has a real estate situation that needs some “from the streets” advice. I promise no B.S. or sugar-coated useless platitudes, but real options that they can choose from. So please, take advantage and call.