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 bob@realasave.com 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;-)

So far, Real-a-Save has been providing services in the Denver and Boulder real estate markets, with the occasional deal in Colorado Springs, Summit County, and Fort Collins. But we have received some interest from agents in other states who would like to bring this concept to consumers in their area.

It seems inevitable that the real estate industry will undergo some serious changes over the coming years. I believe that the economic crisis will have a lasting effect on consumers in this country. People seem much more focused on saving money wherever possible. From groceries to gasoline to real estate fees. Our business seems poised to grow in this new economy.

When consumers are given the choice of two relatively similar products where one of those products offers significant savings, which one will they choose? There really is no difference between the services offered by a traditional Realtor and the services offered by Real-a-Save. Sure, we don’t hold open houses for our sellers. And yes, we ask our buyers to do some of the initial searching on their own. But that’s it. We offer an incredible level of service while simultaneously saving consumers thousands of dollars.

Let us know if you’d like to see Real-a-Save in your city or state. Email bob@realasave.com with requests or questions.

Seller’s program is discussed.