by Sean Hess (www.SeanHess.com), broker and manager for St. Augustine Team Realty (www.StAugustineTeamRealty)
Last week we posted that one of the reasons we think the Buyer’s market is coming to an end is the sudden rise of amateur buyers coming into the market. We classify an amateur buyer as one who either cancels a good deal or fails to launch altogether for non-rational reasons. For example, making an offer on a beach home, then canceling it during the due dilgence phase when they realize it needs flood insurance (is there any other type of home that screams “flood insurance” more than a beach home?).
This may have a lot to do with the upcoming April 30 deadline for the first-time and repeat buyer tax credits: a lot of folks who have been on the fence or have never been in the St. Augustine housing market are starting to jump in.
But we’re also starting to see the income-less, asset-less and credit-less clamoring to be let back in.
It usually starts with a phone call with an individual on the other end of the line demanding to view a property, as if a Realtor is some type of public service.
“I am a serious buyer,” they say.
In the old days of the boom market we would have showed property to this person. The rationale was that pretty much anyone with a pulse could get a loan. With bill collectors calling for my dog Cecil all day long, I strongly suspect that even he, a cocker mix, was able to obtain a no-doc loan on his dog house back during the boom.
But the day of the no-income, no-asset, no-document (“no-doc”) loan are dead and gone, because of the massive foreclosures that followed in their wake.
Easy loans had a noble purpose. Historically, a person’s greatest investment was his home. He bought it, held it for 20-odd years, it increased in value steadily during that time, and it was a wonderful nest egg. So loan regulations relaxed to get more people into home ownership, in order to help increase wealth for all Americans.
But everyone abused the process: bankers, buyers, sellers, and Realtors.
The mortgage broker made a commission on the loan. The Realtor made a commission on the sale. The seller or builder made a killing. And the buyer kept his mouth shut, suddenly a Jed Clampitt moving to Beverly Hills.
But at least Jed and kin had oil to back their buy in California. A buyer that didn’t have the credit to buy a laptop at Best Buy could qualify for the no-doc loan, and suddenly found himself in a half-million dollar home without the means to pay for it.
But the market was going to keep rising, wasn’t it? In a year he could sell for double what he signed for, couldn’t he? And make a killing, wouldn’t he?
No that didn’t happen. The economy happened. And all that money that people made on the sales didn’t even stay in the United States. The profit all went to China in the form of giant plasma screen TV’s. I haven’t viewed a pre-foreclosure home yet that didn’t have at least one Plasma screen TV.
And so the rules have changed, and some folks haven’t got the news. The no-doc is dead.
“You want us to lend you how much?”
Let’s see your: income, assets, credit and down payment.
To my income-less, asset-less, credit-less friends there will be a time in the future that you will indeed have all three, plus a down payment, too. But until then, for the sake of all of us and our economy: LET THERE BE RENT!
Tags: homes for sale in st. augustine, no right to buy, St. Augustine Real Estate
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