Last Thursday, The Peloton in Boulder announced they’d be matching the $8,000 tax credit from Uncle Sam, effectively dropping their prices by $8,000. Good deal if you’re in the market for a cool Boulder condominium.
Search the available Peloton listings here, and feel free to call or email email@example.com if you’d like more information, or to schedule a showing.
Uncle Sam is indicating that he’d like to use a few of our tax dollars to finance billions in loans. Great. Now, I’m all for the current $8,000.00 tax credit as I’ve seen first hand benefits for buyers I’ve been working with in the Denver and Boulder markets. But this is a much different creature.
The program I’m referring to is the one announced today by the Obama Administration whereby the Federal Government will become the new buyer in the previously evaporated mortgage-backed security market, thus allowing state agencies to fund millions of mortgages. What? Basically, when the economy and housing market imploded last year the bond market for mortgage backed securities disappeared. This caused various HFA’s (housing finance agencies) to cease giving loans or raise rates considerably. So now Uncle Sam is Subprime Sammy!, your mortgage backed security expert and buyer extraordinaire.
All kidding aside- how is the potential of this program any different than what subprime lenders did over the last decade or so to “encourage” first time buyers to jump into the market? Aren’t we currently living through the aftermath of the collapse of just such a program?
Part of this program would allow first-time buyers to use the future $8,000 tax credit as part of their down payment. Another bad idea. This means that this new round of buyers will have the same amount of skin in the game as the subprime borrowers who got 100% financing in 2003. None. So there is no incentive to stay in the game, and we might as well look forward to another massive wave of foreclosures 3-5 years from now when some of these new homeowners realize that this is not their cup of tea.
I’m all for helping first-time buyers…we do it all the time at Real-a-Save. But if a potential buyer has ZERO dollars, then maybe, just maybe, they’re NOT a potential buyer after all. FHA loans require 3.5% down right now. That’s a pretty darn good deal. Why are we looking for ways to require zero down? Isn’t that exactly what got us here in the first place?
Email firstname.lastname@example.org if you have any real estate questions, or if you would like to know about our Colorado commission rebate program. And no, you cannot use a commission rebate towards your down payment;-)
Your 7-year-old kid could come up with a better short sale process than the ones currently being implemented by some of the largest banks in the country. Any kid who ever traded baseball cards knows what it’s like to have a hot commodity. Ask your kid which of these strategies he’d use if he had a baseball card that 4 of his friends wanted: would he a) ask one friend at a time what they’d trade him for without checking what the other friends would be willing to trade, or would he b) ask all of his friends what they’d like to pay/trade, gather all the bids and THEN make his decision.
The answer is obvious. What good does it do to have a hot commodity if you don’t allow the bidders to feel the heat? But banks are currently employing strategy “a” from the stupid example above. No kidding. I was dealing with a bank today, let’s call them Schmank of Unmerica, and the short sale property in Denver had 3 interested parties. But the bank would only CONSIDER one offer at a time. And they go all the way with that offer. Meaning, it takes weeks/months for that single offer to make it through to someone in negotiations/review and then they make a decision on that single offer without considering any of the waiting offers. And if that offer does not work, well, then our genius bank moves on to offer #2…and ONLY offer #2. And maybe that one works out.
Why wouldn’t a bank simply go back to all 4 interested bidders and ask for their best and highest by 4pm tomorrow? And then go with the best offer? Isn’t that the best thing for their bottom line?
Short sales are the monster just below the surface of our economy. These monsters are having an awful impact on property values, and are accounting for substantial losses at banks. Losses that our government has shown it’s willing to use our tax dollars to rectify.
Email email@example.com if you have any short sale questions, or if you just want to discuss Denver/Boulder real estate.