Richard Kirkreit and his wife bought a Huntington Beach home contingent on the sale of their departing residence. After several weeks of no offers, they decided to take their home off the market.
“No offers and not in a position where I have to move, so no need to do something desperate and continue to lower our price,” Kirkreit told me. “It certainly seems like the inventory has changed the market to favor the buyer.”
March, which typically sees more than 20,000 closings a month in Southern California, was the third-slowest sales tally for that month in 20 years. The region saw just 13,883 homes change hands. Active listings rose to 46,000 in March, according to Redfin.
Also see: Home prices take 1st drop in 26 months, by this math
It’s been seven years (2018) since we’ve had any whiff of being a buyer’s market. Even though mortgage rates are still high, maybe now is the time for would-be buyers sitting on the sidelines to jump in.
To that end, I have cobbled together some buyer tips and best practices from local Realtors with the hope that they will benefit today’s home shoppers.
Full disclosure: I do business with some of these agents.
Also see: 29% fewer California homes sold. Is the Fed to blame?
Robyn Seymour, broker owner of Seasonz Real Estate
—When seeking an agent, ask them which city or area is their focus. For example, if you are looking in Riverside, a Pasadena agent might not be a good fit.
—Ask the agent if he or she offers any guarantees. If so, what are they?
—Ask the agent how many transactions he or she completed last year and this year. Experience is key.
Bram Klein, agent Keller Williams
—Find a proactive agent who doesn’t just focus on the multiple listing service. Find someone with investigative skills, who has a knack for being willing to dig and door knock in neighborhoods you desire in order to find willing off-market sellers.
—Have the agent carefully walk you through the entire purchase agreement, which reduces fear.
Phil Immel, broker associate, Pacific Sotheby’s
—Friends and family are great for many wonderful things. However, don’t rely on them as advisers for your real estate matters. Rely on a licensed professional.
Linda Battisti, agent, Remax
—Find out if the seller is open to seller financing. You might get a substantially lower rate than a commercially available mortgage.
—Make sure you understand the sellers’ motivation. Price may not be the primary motivation. Maybe it’s a shorter escrow or allowing for a contingency.
—Go to the neighborhood you are considering at different hours of the day to learn about any neighborhood noise and traffic patterns.
Janine Stratton, agent, Pacific Sotheby’s
—Get a second opinion from a different mortgage lender. Have a backup option.
—Consult with the lender ahead of making an offer in respect to what types of financing options are available for various condo complexes (FHA, VA, conventional, etc.).
Cara Ameer, agent, Coldwell Banker
—Be reasonable when it comes to turnkey properties. This means you don’t go for the jugular with low-ball offers.
—Have realistic expectations about properties in your price range. If you are buying for location, you might have to sacrifice condition. Lower your expectations to reality.
Brandi Brotherton, agent, Berkshire Hathaway
—Buyers need to know what they are going to pay for homeowners’ insurance as early as possible. In today’s market we are dealing with insurance sticker shock.
—If you are asking for the sale to be contingent on you selling your property, give the sellers what they want in terms of list price.
My suggestions are the following…
—Find the most knowledgeable property inspector possible. Interview with at least three inspectors before you pick one. Clients sometimes complain about X problem after the escrow closes. It tends to be matters the inspector missed and the seller did not disclose.
—Never waive your contingencies at the onset (mortgage approval, home inspector, appraiser, termite inspector, finding insurance). Only remove your contingencies once you are satisfied and you get the all-clear from your lender.
—Get recommendations from those close to you regarding real estate agents. Interview three agents. Pick the agent who is the best fit for your needs and your personality. Who are you most comfortable with?
Freddie Mac rate news
The 30-year fixed rate averaged 6.86%, 5 basis points higher than last week. The 15-year fixed rate averaged 6.01%, 9 basis points higher than last week.
The Mortgage Bankers Association reported a 5.1% mortgage application decrease compared with one week ago.
Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $806,500 loan, last year’s payment was $43 more than this week’s payment of $5,290.
What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 6.125%, a 15-year conventional at 5.75%, a 30-year conventional at 6.625%, a 15-year conventional high balance at 6.125% ($806,501 to $1,209,750 in LA and OC and $806,501 to $1,077,550 in San Diego), a 30-year high balance conventional at 6.99% and a jumbo 30-year-fixed at 6.75%.
Eye catcher loan program of the week: A 40-year fixed rate mortgage, interest-only for the first 10 years at 6.75% with 1 point cost.
Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@mortgagegrader.com.
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