Profile picture for JCC158

How can a 1st time home buyer compete w/ shark invetors? frustrated!

I'm a 1st time homebuyer, wife, kids, hardworking etc.  I'm approved for a FHA loan for up to $200K and looking in Tracy. Will be commuting to east bay everyday for my job.

How can I win and compete with thses shark type investors buying up all the decent property's?  It seems like everytime we are interested in a house, an investor or someone buying for an investor gets the house.  They turn around a re-list it for 50 to 100 grand more.

Was'nt this whole Obama stimulus package made for people like me to finally get into the housing market? 

What can I do? and my agent do?  to beat these shark type investors throwing down major cash.  I'm ready to throw in the towel. Will the little guy ever win?

JC... frustrated!
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June 16 2009 - Tracy
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Answers (18)

June 2009,


Tracy is in CA and inland by quite some way...The commute into east-bay...long and often unpleasant.
Hindsight being 20/20 and all if Carlos decided to wait he is most likely better off than if he bought...those "investors"? Hopefully the properties cash-flow otherwise they may find themselves negative in equity.

Buying your first home without all the market instability is a challenge purchasing in this climate can certainly take the joy right out of it.


Carlos, It's been over a year since you made this post, hopefully all turned out well for you.
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September 18 2010
You price range is very competitive.  My strategy in a situation like would be to look for short sales, especially focusing on those that "pop out" of contingent status.

Most investors ignore short sales as they don't have the patience to wait out the process.

Short sale listings are the largest share of listings available in the Tracy market $150-200K.


Good Luck
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September 18 2010
Freddie Mac is rolling out a new program called "First Look" which gives owner occupied buyers first option to buy their properties before they are open to investors. If I'm not mistaken "Fannie Mae" is also offering their listings to first time buyers for first 15 days of listing.
 

Good luck. 

Trinidad Gaeta

Remax Realty 100 
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September 15 2010

How's the search going? Did you finally get a home?

Curious minds want to know.

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September 12 2010
We all have our own perspectives on things, as evidenced by the replies here, and so I'll share  mine.

First, I have 15 years experience as a Realtor and have transacted about 200 REO properties from various sellers.

1. Nearly without variation, every one of those 200 properties were listed at fair market value.  This is important to note: REOs are rarely listed below market value.  Why?  The seller must protect the stockholder, taxpayer, or both.  They must avoid fraud and so a) employ management companies (plural) to manage and price the REO property, b) have a listing agent do a BPO and have at least one other price opinion, and c) list at market value.

2. Sellers then test the market at market value for a few weeks, then enter a formulamatic series of price reductions until the property is sold.

3. In my area, which has a moderately strong market and balanced inventory/demand, a private buyer has it all over investor buyers since the private buyer does not need to resell in a short turnaround.  Investors need to buy, refurbish is needed, and resell with associated costs and so must buy things cheaply.

4. No Realtor truly knows if properties are receiving many bids or no bids; that data is simply not collected and so is unknown.  As individuals we may be knowledgeable on onesey-twosey properties, but that a statistic does not make. (Yoda)

5. Take all you've heard about foreclosures, REOs and all that stuff, take it out back and burn it.  It is all worthless kindling at best.

6.  A buyer will more likely get a far better buy, if that is what you're chasing, by finding a motivated seller, not an REO seller.

7.  The "new economy" has changed the face of real estate for now and that is buy a house you want to live in, enjoy, raise your kids in, and put less stock in the investment face of home ownership.

8.  By all means, strike your best deal on the house and the mortgage, but do it as a highly educated buyer  rather than some schmuck being led around by another schmuck who doesn't know the business.  Do not be fooled by non-Realtors, who make some claim they have a smarter way to get bargains in real estate.

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September 09 2010
I have had many clients that made 6 offers before landing a property...but they all did and you will too.

Have your agent set you up on an auto-mailer to receive properties by e-mail and be the first one in the door....Get pre-approved with all your financing in order.

If you loose out on one, have your agent keep in touch with that listing agent to see if the deal flys or not....sometimes contracts fall apart and you may be next in line.

Good luck,
Eve
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September 09 2010

How's the search going? Did you finally get a home?

Curious minds want to know.

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September 09 2010
Profile picture for juanbannister

Some people don't want an old house because they don't want to inherit a worn out carpet or some kid's handwriting on the wall. If a home is new, then it's fresh and clean inside and out. So if you are looking for new homes, here are some tips where to find one.

Get Third Party Advice

You can find new homes for sale by talking to builder's agents. But regardless of what they say, sales agents are paid because they represent the builder. In fact, many of them may really persuade you and influence you to buy the property. Therefore, you need to hire a buyer's agent that will represent you. Even if you need to pay your agent directly, it would be worth it because they can actually save you thousands too. Your agent should represent you well. They are required to disclose both the positives and negatives in the transaction not unlike the agents of the builders who don't discuss drawbacks.

Another tip is to consider alternate lender sources. Builders would often prefer their own lender but they might not give you the best deal. So shop round and find a mortgage broker or banker you can trust. Furthermore, a real estate lawyer can be really helpful to consult. Let them review your standard purchase agreements before you sign the contract. You can also ask questions to clarify your commitments and liabilities.


Full Article:http://www.openmarketrealty.com/blog/tips-on-finding-new-homes-for-sale/

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August 26 2010
Well, it you can't beat them, join them.  Last night my clients made an offer on a property, contract accepted signed and sealed.  The seller is a (shark) investor (Actually it was a team of investors and they have been great to work with).

After two months of working with a realtor and making offers on properties owned by FanieMae and Wells Fargo, my clients were fustrated with the "game", and started calling on listings.  One of the listings was owned by an investor who answered the phone and got an earfull about the situation.  He offered to show properties that had not even been listed yet (he had purchased them to repair and resell).  One day later we are under contract and at fair market value.  We have a lot of activity in this market that was very depressed 6 months ago, and prices are actually increasing. 

If you want to attempt this yourself, inlist the help of a seasoned mortgage professional who is doing a lot of purchase money business in this market.  My clients have the luxury of being able to come up with some cash if the apraisal comes in a little low.  Appraisers and lenders are slow to recognize improving property values.  Lenders are cautious about property flips and potential inflated values and fraud.
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June 21 2009
JC
I understand your frustration.
I imagine most of the properties you are trying to buy are bank-owned REOs.
Generally, many REOs have multiple offers and the bank will look at the price but also the strenght of the buyer. So if you are up against an investor who can pay cash for the property and you are buying with minimal down, you are in a tough situation.
I recently sold an REO to a first-time young couple who were tenants of mine. I got my buyers pre-approved with one of my favorite mortgage brokers for an FHA 3.5% down loan. 
We found an REO property they liked. There were 3 offers on the property. The listing agent told me the bank generally will not accept FHA offers. However my loan agent just closed another deal on another one of this agent's listings and so the listing agent felt more comfortable that the loan would be approved. My client's offer was the highest and was accepted depsite the bank's reluctance to accept an FHA offer.
Applying these lessons to your situation.
1. Find an excellent loan agent with a good reputation within the real estate community and get FULLY pre-approved - all Ts crossed and Is dotted.
2. Work with a real estate who is experienced and well-respected in you rlocal community.

With the above in place, find another property you like - make a very strong offer with a short contingency period. You might have to pay an extra $10,000 to have the bank give you a chance.

Let me know if you have further questions.
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June 21 2009
Profile picture for space_acer
Let them relist over 100K more... you will find they too will go into 
foreclosure. There is so much inventory they will sustain losses
down the road.   

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June 16 2009
Profile picture for JCC158
Thank You all for your feedback.  You give me new motivation and hope! 

After reading this I see things through a new window.  I welcome more tips.

Carlos
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June 16 2009
I agree, I fought with the sharks since January and finally landed a nice REO at a good price in May, set to close at the end of this week. Here's some tips that I have learned from my own experience.

1) If you are FHA look for move in ready houses less than 30 years old. If the house is in marginal condition the banks will trash an FHA offer without looking at it and wait for cash/conventional.

2) Make sure that you have a REA that will move fast. Get on a release list of REOs and if one comes up drop everything and go see it. If your REA won't move fast enough than find one that will. On two of my offers, they hit the MLS on Friday, I saw them on a Sat and a Sun and my REA walked the offer in on Mon. at 8am. I won them both, but the first one fell out on inspection. Study the MLS for new releases twice a day. Although I'm not sure how much impact that has on the listing agent, swift action is one element you can control, so you need to show energy.

3) Get qual'd with multiple major lenders. If the bank you hold your qual with also holds the property, you will get their attention right away. I believe that this is a HUGE advantage because the bank is getting both sides of the business. It will be hard to find out who's holding the property so submit all quals.

4) Bid realistically. Don't think down from the asking price since the banks are just throwing prices out there. Create your pricing formula before hand based on your local conditions and then do some research. My formula: 1995-1998 value + 3%/year or less. Don't even think about offers below 85% of the asking, although in some cases that might work I tried it twice and all I got was silence. Actually most of my bids were over the asking and my last bid had 6 other competing bids immediately. It was $4,100 over the asking. Bid in wierd increments like $5,600 in the hope the competitor is sticking to even increments. Most REOs in Reno are getting 10-15 bids, per my REA.

5) If you get an "Final and Best" invitation, don't rebid. Don't waste your time -- throw it away and find another property. This is a game.

6) Take it easy. Make no unusual contigencies. If you have a contigency on sale of your current home -- forget it. I had only two contingencies: inspection and financing. You can make requests but be prepared to backoff from them if the price remains right.

7) The sharks are getting worse. There are now buying consortiums that are snapping up the REOs before they hit the MLS. Conditions are going to get tougher so act now and act fast. You may have to be flexible and not be so choosy.
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June 16 2009
Profile picture for workabee
In Tracy, you have the luxury of time. Keep plugging, don't settle and you will get one. Don't give up if that's what you want, but don't overpay either.
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June 16 2009
I understand your frustration. However, it is unfair to call the investors sharks when in fact they are not getting tax breaks nor do they qualify for FHA or other funding assistance. They are simply investing just as more people would do if they had the means. Many investors lost their shirts and are still losing badly. Where was the government.

Be patient, keep looking and do not, repeat, do not overpay or settle for less just to own a home. There will be more on the market tomorrow.
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June 16 2009
H.U.D. may have properties in your area to consider. They hold investors off until regular home buyers get a shot at them. I have bid for investors on these and they will sometimes take the lower bid of a potential homeowner versus an investor. You can probably get a good deal on a non foreclosure house but haven't tried? Remember asking prices are just that and if you spot one you might like for around your price range don't be afraid to offer what you can afford; you might be pleasantly surprised.
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June 16 2009
Where city and stateare you looking for housing?  There may be grant and down payment assistance money you can qualify for that will boost your purchasing power. 
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June 16 2009
Profile picture for wetdawgs
Sorry to hear how you are frustrated.   What can you do?   Make an offer that will make the bank look twice or look at properties that don't attract the sharks.
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June 16 2009
 
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