Turn on the TV or open a news paper and you will find lots of news about foreclosures and sellers not being able to pay their mortgages and how difficult it is to sell a home right now. Compare that to 2005 when the shoe was on the other foot and it was the sellers who had the upper hand, being able to sell their homes in under 30 days with multiple offers and more often than not receiving over asking price for the property with buyers often waiving their appraisal contingencies. Oh how times have changed. back in 2005 there were very few homes available for sale and droves of buyers. Being a buyer back then was stressful in the fact that the longer you waited, the more expensive the homes became.
Jumping 4 years ahead to 2009 and the pendulum has swung from a sellers market to a buyers market nationwide and particularly here in the Phoenix valley. One example of this is a buyer I am representing at the moment. My client is a first time home buyer who back in 2005 couldn't of ever dreamed of qualifying for the loan amount required to buy the home she is under contract on now. The subject home was built in 2005 and is almost 1600 sq.ft with 4 bedrooms. It sold back then from the builder for $191,500. The home is a single level residence in great condition which was verified by the home inspection. My client is under contract on the home for $110,000. A 42.5% reduction in value, but that is not the best part. We negotiated for the seller to pay $6,300 of the buyers closing costs, plus buy a 12 month home warranty on the place. The buyer has been approved for an FHA loan which requires 3.5% of the purchase price to be paid buy the buyer and the remaining 96.5% is financed. In this case my buyer had to come up with $3,850 for the down payment plus paid $225 for the home inspection and $68 for a termite pest inspection totaling $4143. Because my client has not owned a home in the past 3 years she qualifies for the First Time Home Buyer Tax Credit for which she will receive $8000 back when she files her taxes.
To sum up what my client is experiencing:
She has bought a home that only a few years ago thought she would never be able to afford.
The total payment for Principle, Interest, Taxes, Insurance and HOA dues are under $900 which is only $50 more a month than what she is currently paying in rent.
She has an FHA loan that is fixed for 30 years at 5.5% and will never adjust.
The Seller paid for all her closing costs and bought a 12 month home warranty on the home.
She had to come up with $4,143 to close the transaction which she could have borrowed from a family member if she had to.
Because she is a first time buyer she will receive $8,000 back as a tax credit so she has bought a home and will pocket $3,857 for doing so.
She is a very happy and proud of her new home.
There are a lot of people out there right now who are thinking of buying a home but are nervous to do so with everything that they are reading and hearing about. If you can be bold enough to put those points of view to one side for a moment and take a look at the positive side to this equation then you may find that it's in your best interest to look into buying now while the opportunity is here. It's called a buyers market for a reason.
For more information on buying your first home contact Phil Robinson on 602-743-2120.