In the past month Brentwood and Eastern Contra Costa county has seen a surge in buyer activity. This surge seems to be focused on homes priced at or below $350,000 with both investors and first time buyers competing for these properties. Why?
1. Rents are increasing as former homeowners that have lost their homes to foreclosure are becoming renters. Rental properties below $2000/month are rare and vacant properties don't sit for more than a few weeks. Investors looking to seize opportunities are now buying these lower priced homes and showing even or positive cash flow.
2. Renters with good credit are tired of paying rent when they can own their own home for nearly identical monthly payments and get the benefit of tax dedectible mortgage interest and property tax costs. FHA programs allow buyers to purchase property with as little as 3 percent down. Most closing costs can be negotiated as "seller pay"
3. Veterans are able to purchase properties with zero down.
4. Interest rates are still low (6% - 6.5%) for buyers with good to excellent credit.
5. High inventories of Bank Owned (Foreclosure) Properties (also known as REO "Real Estate Owened") have banks agressively marketing their properties. Progressive thinking banks like Wachovia (and World Savings) are proactively improving their properties prior to listing by making repairs, painting, cleaning or replacing carpets or flooring. They also price these properties to sell quickly
As a result, we are seeing strong activity at open houses very weekend, multiple offers on properties that show well and are priced well. It is not unusual for the final selling price to be higher than the listing price. This week, I wrote offers for 3 buyers on recently listed bank owned properties. In one case, one extremely motivated buyer offered 10% over the listing price when we were advised that we were competing with 6 other Antioch home buyers. Our offer was rejected for one that was more than $100,000 over the listing price! One offer wasplaced at asking price but asked for 5% sellers assitance in closing costs and was accepted after a counter offer. The third offer, was accepted at nearly 10 percent below asking price. Buyers must work closely with their agents and make sure that their agent knows how to time, negotiate and buy foreclosed orbank owned properties.