What are Investors Doing In Today's Market?
Investors are just like other people. They look for investments, opportunities, and they sometimes make mistakes. They have spouses, kids, mortgages, baseball games. But, one thing is for sure, they are always looking and watching what is going on in the marketplace. And, what's going on today will shock you. We have had a market meltdown in this country's financial playground. All of the subprime lenders are gone. Almost the only game in town today is FHA and VA for home mortgages. What used to be 6-8% of the mortgage market, is around 75% today. For many price ranges, there are no loan programs available.
So, what are they doing? The market has a way of adapting when things go crazy. We have very limited loan programs available to average home buyers. But, we have a skewed market that is now requiring more cash, higher credit scores, and more srutiny than ever before. Did I mention the meltdown? SO, why are the lenders cracking down instead of lightening up? Who knows?
What we have now are fewer and fewer buyers who can qualify than ever before. This does not help the economy. To make matters worse, we also have seen prices in most ares of the country drop. Some ares have sagged more than others, but the result is the same. The newer homes that were built or sold recently have not appreciated. There are always people who need to move, sell, relocate, or who get laid off their jobs. But, these homes are not selling through traditional means. The sellers don't have the money to pay buyers to buy their homes.
It's like a stand off. We have sellers who have no equity, trying to sell to buyers who can't qualify for a mortgage. How is this healthy? How has the market adapted? Here's the reality of the housing climate. We have unsellable houses and unloanable buyers. We can't sell on a lease purchase, contract for deed, or rent to own anymore because those methods are illegal. So, sellers are doing the next best thing, they are owner financing their homes. Fact is, most homes in the last 5-7 years were sold with zero down, no closing cost mortgages. Add to that extremely low interest rates, and you have a whole new animal out there.
Investors typically buy investment property by putting down 15-20% downpayment, and getting a new loan on the property. However, as an investor, why would I do that if I could buy an investment for 5-10% down, and take over the existing low interest rate? I could literally get 2 for the price of 1. This is what they are doing. They can buy in as little as a few days, escape all the hassle, all the scrutiny, and the 4-8 weeks it takes to get another loan. Is this good for the seller? Well, the seller has to remain on the note if they sell this way. But, look at his other options. A cash buyer only pays $.70 on the dollar, a Realtor will ask the seller to bring money to closing, typically 6-10% in cash. Sellers don't have that kind of money. The alternative is to enter a short sale program or walk away. None of these options are good for the seller.
This method is called "mortgage assignment".
So, what are they doing? The market has a way of adapting when things go crazy. We have very limited loan programs available to average home buyers. But, we have a skewed market that is now requiring more cash, higher credit scores, and more srutiny than ever before. Did I mention the meltdown? SO, why are the lenders cracking down instead of lightening up? Who knows?
What we have now are fewer and fewer buyers who can qualify than ever before. This does not help the economy. To make matters worse, we also have seen prices in most ares of the country drop. Some ares have sagged more than others, but the result is the same. The newer homes that were built or sold recently have not appreciated. There are always people who need to move, sell, relocate, or who get laid off their jobs. But, these homes are not selling through traditional means. The sellers don't have the money to pay buyers to buy their homes.
It's like a stand off. We have sellers who have no equity, trying to sell to buyers who can't qualify for a mortgage. How is this healthy? How has the market adapted? Here's the reality of the housing climate. We have unsellable houses and unloanable buyers. We can't sell on a lease purchase, contract for deed, or rent to own anymore because those methods are illegal. So, sellers are doing the next best thing, they are owner financing their homes. Fact is, most homes in the last 5-7 years were sold with zero down, no closing cost mortgages. Add to that extremely low interest rates, and you have a whole new animal out there.
Investors typically buy investment property by putting down 15-20% downpayment, and getting a new loan on the property. However, as an investor, why would I do that if I could buy an investment for 5-10% down, and take over the existing low interest rate? I could literally get 2 for the price of 1. This is what they are doing. They can buy in as little as a few days, escape all the hassle, all the scrutiny, and the 4-8 weeks it takes to get another loan. Is this good for the seller? Well, the seller has to remain on the note if they sell this way. But, look at his other options. A cash buyer only pays $.70 on the dollar, a Realtor will ask the seller to bring money to closing, typically 6-10% in cash. Sellers don't have that kind of money. The alternative is to enter a short sale program or walk away. None of these options are good for the seller.
This method is called "mortgage assignment".
