Every day we hear stories about a “great deal” someone got on a house purchase. A house that used to sell for $600,000 that “someone at work whose cousin’s hairdresser’s best friend” says they paid just a couple hundred thousand for. It’s not surprising, then, that buyers come to me with expectations of paying pennies on the dollar for that perfect home. And yes, there are those situations where a motivated seller will accept an offer for tens of thousands of dollars less than you would expect.

Now for the reality check: the “entry level” price ranges are still dominated by bank-owned and short-sale properties (where the seller owes more on the loan than the house is currently worth, and the sale of which requires the lender’s approval). This oversupply of distressed properties is resulting in the lowering of prices. First time buyers now see that their mortgage payment isn’t so much more than paying rent, and investors see that they can in many cases break even on their monthly payments. We’re seeing more sales, which is helping to decrease inventory. There are often several buyers competing for the same homes, resulting in several offers. These buyers are still getting a home for far less than they would have three years ago, while getting the full benefit of the current first-time-buyer tax credits, mortgage interest tax deductions and the opportunity to build equity.

Posted By: Deborah Byrne