Golden Opportunities

Ohio's weather is not tropical. Yet, this year we did experience a sea change in the real estate market. Sellers could no longer surf the waves of rising home prices, and we had a tsunami of home foreclosures. What's next? Will we be frozen out of the housing market? Here to bring us the cold facts on "weather" we should buy or sell is our own "Al Roker of Real Estate," Rachel Torchia from Gateway Title Agency.

Question: Would it be an understatement to say that the 2007 real estate market's been a challenge?

Answer: I've never been one to buy into "doom and gloom," so I have a hard time answering this candidly. The truth is that the "bubble" did break in 2006 about this time. But I felt it was nothing we couldn't handle and was confident that it would return to a new normal this summer.
But just as we started to see the market move in the spring, the horrific mortgage scams started to infect our market like an ugly virus.

Question: How have buyers, sellers, lenders and others reacted?

Answer: Some reacted well. For example, the legislature has passed a tough predatory lending bill, and Attorney General Mark Dann has already brought a number of prosecutions.
Many of the sub prime lenders have toughened their lending standards, which is good and bad. It's good, because many buyers got in over their heads with overly easy credit. Lenders came up with all kinds of products that were outright dangerous, like low interest loans that came due in a few years, often leaving buyers unable to handle the much higher rates at that later time. So tighter lending standards is good. But it will also make it harder for people to buy homes.
Some sellers have under-reacted, setting their sale prices too high, leaving them unable to sell. Other sellers have over-reacted, setting sale prices way too low, causing them to lose money they should have made on the sale.

Question: What should home buyers expect in the coming year?

Answer: If you have good credit and a down payment, you should be able to get a home without a problem, at a very good price. Sellers will be able to sell. But proper pricing is key.

Question: Are the predatory scams behind us?

Answer: I wish they were, but they're not. Unethical lenders, mortgage brokers and appraisers will still conspire to try to steal your home. And the scams will be changing. Investors will also be coming out of the woodwork to buy foreclosures. Some of these "rescuers" will be legitimate. But new and old real estate schemes involving these investors will be another big challenge for the consumer.
For example, we're already seeing fraudulent schemes in which companies offer to help you avoid foreclosure, and in fact they just take your money and disappear.

Question: What can we do to educate ourselves against such schemes if buying or selling?

Answer: Find a title company to talk to who is consumer friendly. Realtors write up contracts, but won't be as privy to these scams. Neither are most attorneys, unless they really specialize in real estate, and lenders really hope you get a mortgage. The title company tends to see the scams most often. If it sounds too good to be true-it probably is!

Question: When will things get back to "normal"?

Answer: Experts say that it will take about another year until "normalcy" returns. And by "normal," I don't mean the boom years that we recently experienced. However, we will see a healthier climate as the real estate virus we've experienced is conquered.

Can you weather the housing storm? Arm yourself by getting educated. To learn more, or for a free newsletter, give Gateway Title Agency a call. My thanks to Rachel Torchia.