If you are like most residents of the United States, you are probably spending much more time at home—working, baking bread, and watching television. You are probably already aware that the extra $600 in unemployment benefits being paid out to the unemployed across the nation has just expired, and it may be several weeks before the government sorts out what to do next.
There are lots of news articles reporting that people are reeling from the quick and abrupt change of circumstances—one day you are a restaurant manager, a fitness trainer, or the manager or a clothing chain and the next day you are furloughed until dates unknown. Then, your only lifeline to be able to make ends meet (more or less) is through government stimulus funds, which abruptly disappear.
But, how will all of this impact the real estate market?
Without a crystal ball but with some experience in the pre-foreclosure market helping folks out of tough situations with their mortgage lenders, I can tell you that whatever happens with the government’s decisions on future stimulus funds (particularly unemployment) is going to have a very strong impact on the pre-foreclosure market, and ultimately your job as a real estate sales professional.
On whatever date that the additional unemployment funds are cut off (whether it is July 31 or December 31), approximately 6-9 months later, we will see a significant rise in homes on the market, property values decreasing, and the beginning of short sales and foreclosures.
Remember that the foreclosure process for most mortgages in California begins with a Notice of Default that can be filed after the third missed mortgage payment. Then, there is another three months or so where the borrower has the opportunity to pay back what is owed or make other arrangements. After that six month period, a Notice of Trustee’s Sale can be filed and the property is sold at the courthouse steps or is returned to the lender and becomes an REO.
What should real estate professionals do?
If you are an agent working right now, one thing you might want to do is contact any homeowner who is considering selling but told you that he or she was waiting. I’d say that now is a great time to tell. In most parts of California, there are not many homes on the market; it’s a seller’s market and multiple offers cause sales prices to increase. On the other hand, if a prospective seller waits, values may go down…. A LOT.
If you can take advantage of this unique opportunity to represent some sellers, you will be seeing some nice income during these unique and challenging times.
Working with Buyers?
It is a tough time to be working with buyers since most homes are seeing multiple offers. I spoke with an agent yesterday who had to write 12 offers for one buyer before receiving an acceptance. In order to avoid this, have a long and hard conversation with your buyers and set expectations accordingly. Now is not the time to “get a deal”, ask for closing costs, or try to get the upper hand in a negotiation. If that is the type of buyer you are working with, check out homes that have been on the market for a long time that may have deferred maintenance and where the seller may be eager to make a deal.
At Transaction 911, we can help you to prepare the paperwork necessary for your sale; we offer a fully compliant office file and we are here to help. And, our team also processes short sales. So if you or anyone you know needs a transaction coordinator, please feel free to contact our office.