San Jose Real Estate * Santa Clara County * Richard Gonzalez * Real Estate Broker * Realty World Powerhouse Brokers

Newlywed Couple's Journey to Home Ownership

I recently posted a story of the challenges some of our first time home buyers are experiencing and wanted to give you an update on a young newlywed couples journey to home ownership.

“19 offers and counting” was the comment one of my agents made as her client rushed in to our office, signed several documents and ran out all in less than 5 minutes.

Normally we take the time to cover the terms of the contract but no need at this juncture in the process because the terms haven’t changed, only the names of the sellers and the property address.

The general criteria is the same,

• Homes listed between $250,000 and $300,000
• FHA loan product with 3.5% down payment
• 3 bedroom 2 bath in good condition
• Anything in San Jose

The challenge is the lack of available loan products and as such FHA, USDA, and Conventional loans are the name of the game. With that comes the bottle neck of underwriting guidelines choking the loan approval system to the point that it can take anywhere from 45 to 60 days in most cases to close a transaction.

Far too long of a wait for some sellers and riskier for some bank owned properties (REO) who have sustained multiple levels of losses in the process of recovering their investment and who can blame them?

Perseverance, expectation, and faith are the driving forces that will eventually get this couple into their home. A dream of homeownership that will be rewarded to those willing to keep their feet grounded and emotions in check in an ever changing market environment such as the one we are experiencing now.

To complicate the situation investor buyers are dropping cash as a means of wiping out the competition and further complicating the process of finding a home.

More to come in future posts about this newlywed couple’s journey to home ownership.

One of my agents came to me who has buyers looking for an affordable home in the San Jose area only to find that they are competing with multiple offers and dealing with frustration. The price range tends to be between $250,000 and $300,000.

Our buyers are making a competitive bid in some cases $40,000 over asking price only to be blown out of the water by a competing bid with an all cash offer. Apparently there are buyers and investors with access to large quantities of cash.

My suggestion to any buyer would be to be persistent and vigilant when looking for a home. Rumor has it that by the middle of the year we should experience a flood of bank owned properties (REO) in these affordable areas and as such may end up either stabilizing the need for affordable homes or continue to impact the values in these affordable areas.

One last thought is that there will be a deliberate low ball listing price to generate the multiple offer frenzy we experienced in 2005 at the height of the market. This is a listing technique that is frowned upon by the real estate community but ultimately difficult to control let alone police.