Challenges and Incentives in a Buyer's Market

As everyone knows, the housing market took a sharp dive in 2007 and crashed in ‘08.  We may not have hit bottom yet.  While that means bad news for sellers, things are much more optimistic for buyers.  

The cheapest home on the market in Snellville is currently $22,500, in the Norris Lake area.  All in all, there are 94 houses under $50,000, and 96 more in the $50-75K price range. (Numbers include unincorporated areas of Snellville.)  One home in the Countryside Manor subdivision has a sale price of $74,900, while others sell in the same neighborhood for around $125,000.   That’s great news for buyers and investors, but a depressing fact for sellers trying to sell their home in the higher price brackets.  

Monthly payments on a house that costs $75,000 would be $450, not including mortgage insurance or property tax.  That’s a great incentive for buyers, but closing the deal is not always simple.

Closing the Deal
According to John Rutledge, realtor with Snellville's Prudential Georgia Realty, the most difficult thing for buyers is getting all the way to the closing table.  It often can seem as if the buyer has to jump through a series of hoops.  

“[Mortgage brokers] can be slow to respond and are not helping the process,” Rutledge stated.  “They don’t have a sense of urgency.  If something looks odd on your application, you may have to get something extra signed,” often days before closing.  

At times, the paperwork does not go through on time, and closings have to be postponed.  Buyers can their lose earnest money and sometimes even walk away.  

“The underwriters, appraisers and officers are all under extremely high scrutiny,” Rutledge added.  “They have a glut of foreclosed properties. Nobody wants to make a decision because they are afraid they will lose their jobs.” 

This is all a response to the sub-prime lending practices that caused the crash of the housing market, when mortgage brokers were handing out loans left and right to people who really could not afford them.

Creative Financing 
Jane Trueblood, of Trueway Properties, says that having a credit score of 600 or more makes things easier.  

According to Trueblood, even if you have poor credit, you don’t have to pay someone to help you get it repaired.  Often, real estate agents and lenders can help you for free, especially if they know you will work with them once your score is up.  

“The lenders can pull your score and look at your history, and tell you what you need to work on,” Trueblood said.  

Many sellers will sign a lease-purchase if you are working on your credit.  You sign a three- to six-month lease, with an agreement that you will purchase the property at the end of your lease.  If you do not sign at the end of the term, you will lose your deposit, or earnest money.  

Lease-purchases are also beneficial to sellers, since it may secure a deal quicker. You have the benefit of someone else making your payments for you, and ideally a sale at the end of the contract.  

Gwinnett County also participates in a program called HomeStretch, a downpayment assistance program. 

“Because people who are purchasing homes for the first time don’t have the equity to put down, it’s hard to come up with a lump sum,” Trueblood said.  FHA loans require a 3.5% downpayment.  

The program is funded by HUD’s Home Investment Partnership Program and includes funds from the American Dream Downpayment Initiative.  It provides $7,500 in loan assistance with 0% interest. The loan can also be used for pre-paid items or closing costs.  No payments are required for five years. 

The best part: if you live in the house as your primary residence for five years, you do not have to repay the loan.  

Homeowners who have not owned a home in the past three years are eligible.  There are also income guidelines. For a family of four, the maximum income in $57,350.  The maximum purchase price is $200,000, and the home must be in Gwinnett County.

If you are selling a home, consult a home staging service. These experts at design can advise you on how to arrange your furniture to maximize space, what wall colors are most attractive to home buyers, and things to change in your home that you may not have noticed  before.  In this glutted market, first impressions are the most important.