Flagstaff Blog - Real Estate and All Things Flagstaff: June 2009

In some of my previous market reports I gave tips to sellers as to how to gain a competitive edge in this challenging market; one of the tips was: Do not take offense if a buyer makes a low-ball offer.

The present real estate market in the Dutchess County area is what is called a buyer's market. Properties are on the market longer, the inventory is large and there are fewer buyers.

You can imagine how surprised I was when one of my buyers placed an offer and the seller was so offended that the consideration of a counter offer was out of the question.  This offer was by no means out of the realm of the type of offers I have been seeing this year, and with good negotiation a meeting of the minds would have been possible.

In this particular incident it was especially surprising because this property was in the price range that would have required a jumbo loan, a category in which there are even fewer buyers, but my buyer was paying cash.

I make a point to tell my sellers that a buyer will probably make a low offer but don't get offended by this, instead view it as the beginning point of a negotiation process instead of the end.

So what should a seller do next when facing this situation?

• Review the offer with your agent
• Take a look at the most recent sale of similar properties
• Make a counter offer.

Your counter offer will give the potential buyer a clear indication as to whether you are willing to budge on the price. or not.  At this stage your counter offer might be accepted or you might have to do this back and forth a few times.  The key is this, don't get offended and you might find that you can arrive at an agreement.

In the case I mentioned above, because of high inventory and cash in hand the buyer moved on to another property, and did not see any reason to waste time on a seller who took offense to an offer.

Several newspapers thought that a decline in May foreclosures from April's record high was good news, but a decline off a record is not necessarily healthy.  Here's an article from the WSJ that I thought was a little more appropriate.  

Here's a bleak milestone: there's been more the 1 million foreclosures filed in the U.S. so far this year, according to a count by the Center for Responsible Lending.

Not all of those foreclosures will result in evictions, but the statistic offers a sobering illustration of the magnitude of the problems that still face the housing market.

Some worry that the sheer volume of foreclosures could swamp the government's efforts to help underwater borrowers refinance and to modify loans of distressed homeowners. Three weeks ago, Treasury department officials estimated that more than 55,000 homeowners had been helped so far by the Obama administration's loan modification plans, including some 15,000 borrowers who were in trial modifications with Chase Home Mortgage, and 3,000 who were in a trial with Wells Fargo.

The CRL, a nonprofit research and lobbying group that favors aggressive policies to help troubled homeowners, estimates that there are 6,500 new foreclosures filed every day. The center estimates that there will be 2.4 million foreclosure starts in 2009, based off of figures from the Mortgage Bankers Association that are adjusted to reflect the entire mortgage market.

The CRL supports the Obama administration's efforts to set standards for banks to modify loans, where the government will match in part the costs to the servicer to lower mortgage payments to 31% of a borrower's income. The CRL warns that "loan modifications are not likely to succeed with superficial fixes that fail to lower a homeowner's monthly payment."

See the original post By Nick Timiraos, Associated Press

With an estimated 2.4 million foreclosure starting this year and a paltry 55,000 loan mods, the REO business should continue to grow in all areas including Prescott, Prescott Valley, Chino Valley, and Dewey-Humboldt.