Consumers who bought homes even two or three years ago would hardly recognize the residential real estate market these days, and realty professionals find they're spending lots of time educating consumers about the new face of the market.
The seller these days is likely to be a bank, rather than an individual buyer. If the seller is a family, it's possible they'll be trying to structure a short sale one in which the lender agrees to accept less than the loan amount to avoid a foreclosure later.
And buyers probably will finance their purchases these days through a federal program a VA or FHA loan, for instance rather than a private mortgage that will be sold into the securities markets.
"Consumers need to be educated from Day One," says Vince Rossi, a co-owner of Ferrari-Lund Real Estate in Reno. "They need to know what they're getting into."
That, he says, creates a growing need for seminars such as one sponsored by Lakeside Home Mortgage, First Centennial Title Co. and Ferrari-Lund on Sept. 6. Panelists, including appraiser David Corthell, will walk consumers through the process of buying a home in a market that's dominated by foreclosures, bank-owned real estate and short sales.
(The seminar at Lakeside Home Mortgage, 5525 Kietzke Lane, is free, but reservations are requested to Cheryl.parino@lakesidehomemortgage.com.)
As much as 70 percent of recent residential sales activity in the region involves homes that have been involved in foreclosure actions, Rossi says, and more than 10 percent of recent transactions that ran through the
Multiple Listing Service were short sales.
A short sale, he notes, easily can take six months to close and about two-thirds of those deals fall apart before they make it to closing.
That means that transactions involving short sales often aren't a good idea for families who are looking to get into a home before the start of a school year or have other pressing reasons to nail down a purchase.
For sellers, short sales often require the advice of an attorney or certified public accountant who can help sort out the tax and legal implications.
The shift back to government loan programs from private mortgages also creates questions, says Parino.
"People call me every week and want to know how it works," she says.
Other questions come from consumers who want to learn about the federal tax credit of up to $7,500 that's available for first-time homebuyers until July 1, 2009.
Even the emotions of residential transactions have changed, says Marlene Kelly, a vice president with First Centennial Title in Reno.
Bankers don't have the same emotions about homes as traditional sellers often, they just want to get their money out of a deal while an individual seller who faces foreclosure may be so emotionally distant that he's uninterested in finishing the paperwork that's needed to close the sale.
It's not just buyers and sellers who need to learn about the new realities of the marketplace.
Kelly says First Centennial Title is running a steady schedule of classes to help real estate agents understand short sales, the foreclosure process and the process banks use to sell properties they now own.
While the media is filled with gloom about the housing market, Rossi notes that some segments in Reno and Sparks are booming almost like it's 2004 all over again.
Homes in the affordable category $250,000 or less that are priced right have been drawing multiple bids and sometimes selling for more than the list price, he says.
And investors are beginning to edge back into the residential market, Rossi says, as lower sales prices mean that their purchases will pencil out profitably. That's especially true, he says, with rates for a 30-year mortgage at 6.25 percent.
Even a one-point increase in the interstate rate to 7.25 percent, Parino notes, would add about $150 a month to the payment on a $225,000 mortgage.
