Buyer's Confidence Up But Not Enough

 

While buyer confidence has increased significantly during the recovery and caused home prices to significantly swing upward, we are not yet back to "normal" levels in the housing industry.   Granted, the real estate market, in general, has been brisk and there has been renewed hope and a lot of excitement.   Then things slowed down and perhaps you are wondering why.  

 

According to Fannie Mae's June 2014 National House Survey, consumer confidence in the housing market has increased significantly, but it is still not enough to bring the market back up to "normal" housing levels.

 

Chief economist and SVP of Fannie Mae commented this month that "the uptick in the share of consumers expecting mortgage rates to go up (55 percent) and the accompanying decline in home price expectations (the average 12-month home price change expectation fell to 2.4 percent) reflect the pause in activity in the housing market so far this year."

 

Before making any real estate decision, it is more important than ever to consult a local Realtor who is up to date on what is going on in your market.  If you have any questions concerning your own real estate needs, call or email me anytime.  I always enjoy hearing from you!

 

Nancy Puder is a real estate broker in Arroyo Grande, CA. with Nancy Puder & Associates. If you have any questions or concerns regarding your own property, contact Nancy at (805)710-2415 or email Nancy@NancyPuder.com.  You may also go to Facebook.com Nancy Puder Realtor and "like" her page to access other real estate related articles.

 

 

Negotiating the Sales Contract

 

Q. My husband and I made an offer on a house which we really like.  We were wondering, though, if we find another house that we like better, during the escrow period, can we cancel the contract?  My husband says that we can but it doesn't feel right to me.

 

A.  Buyers should understand that when an offer is made and accepted by all parties involved, that it is a contract and everyone involved is expected, whether legally or morally, to act in good faith. A well-written sales agreement will allow contingencies for the buyer to get a loan, have time to investigate the condition of the property or the area they are buying in and for the home to be formally appraised at the purchase price.  These are the most common contingencies, however, other issues can be agreed upon also.  

 

A well-written sales contract will have a specific time period written in that the buyer must adhere to. At the end of the time period, the buyer is required to remove their contingencies or cancel the contract, based upon their inability to obtain satisfaction  in the area of investigation, obtain the loan or if the property appraises lower than the contract price.  In most cases, if this occurs, negotiations are re-opened, buyer and seller come to an agreement and the property then moves to a successful closing.  This is the way most transaction go and is a fair way to do business.

 

At the time of submitting the offer, buyers should be fully committed, barring unforeseen circumstances.  From a legal standpoint, buyers need to understand that what they are signing is a legally binding contract. Your agent may tell you that there are ways they can get you out of a contract, but buyers should consider how their attitude when entering the contract and the decisions they make are affecting everyone.

 

Often, the buyer and seller do not actually meet during the escrow period for a couple of reasons.  Keeping the distance between the buyer and the seller allows the agent to objectively negotiate the needs of both parties.  This widely accepted process minimizes the emotional effect that many buyers and sellers experience during negotiation and escrow.   Another reason is that nowadays, so much business is conducted with the use of technology, there is no need to meet in person. Sometimes even the buyer and seller agent don't meet face-to-face during the entire escrow period.

 

Perhaps because of these reasons, buyers are becoming desensitized to the effect that "changing their mind" will have on a seller and their family.  Imagine receiving an acceptable offer which is due to close escrow in 30-45 days.  The loan is going well, the appraisal has come in (or at least everyone is confident it will come in at the right price) and the buyer is happy with their investigations.  You, the seller, have finally found another home to either buy or rent, made arrangements for a truck to help move the family in 2-3 weeks,  arranged for the kids' schooling, spoken to utility companies, the list goes on and on.  Then the buyer simply withdraws their offer at the end of their contingency period because they have found another home that they have decided they like better or just decided to wait.  How would you feel?  Now your life has been turned upside down and you need to start over. 

 

During the recession, making offers randomly and then backing out was a common occurrence. Many buyers felt no moral obligation because they weren't really dealing with "people" but just the banks through foreclosures and short sales.  Now the recession is over and most sales these days are regular saleswith regular people.   

 

Naturally, there will be some real circumstances where a buyer needs to withdraw an offer and this article is not intended for those situations.  My intention in writing this it is to simply encourage buyers to have the right attitude and level of commitment BEFORE signing the offer.  Remember the Golden Rule. Do unto others as you would have them do unto you!

 

Nancy Puder is a real estate broker in Arroyo Grande, CA. with Nancy Puder &Associates. If you have any questions or concerns regarding your own property, contact Nancy at (805)710-2415 or email Nancy@NancyPuder.com.  You may also go to Facebook.com/Nancy Puder Realtor and "like" her page to access other real estate related articles.