With a quick nod to Jay Thompson, who clued me in on some of what was said during Monday’s informational meeting about the City of Phoenix’s $15,000 loan available for those purchasing bank owned homes …
First, I’m done calling it an incentive because it really isn’t, at least not for most folks. Let’s call this what it is … a $15,000 loan that goes as a lien against the property and must be paid back when the home’s sold or refinanced.
The more I think about it, the more convinced I am that this program’s a lot like betting on the “hard ways” in craps (double numbers.) It might work for some people but the odds aren’t in your favor. Keep in mind banks often will pay some or all of buyers’ closing costs without requiring that money be paid back, and you’re already behind with this loan.
Teresa Boardman often says banks can’t sell real estate. After talking to Jay, it’s clear the City of Phoenix can’t do so either. The folks from the city at the meeting were convinced that real estate agents can work with appraisers to alter appraisals that aren’t sufficiently high to meet the program’s biggest hurdle – a sales price at or less than 85% of the home’s appraised value.
I can understand when someone not familiar with the market and listening to their friends at cocktail parties believe homes can be had for 60 cents on the dollar. But the people who are putting this program together ought to know better. Hell, simply read this blog once in a while and you’ll learn where the sales price on REOs ends up.
An appraiser isn’t going to adjust his or her final number to satisfy the requirements of a city loan program. It’s just not going to happen. Implying that it can be done easily is more than a little careless.
So is the assertion that banks will be willing to lower the sales price to accommodate buyers needing this program. Really? When there’s less than three months of bank owned inventory on the market and many bank owned homes sell in two weeks or less? Why exactly are the banks going to roll over?
Again, such foolishness would be excusable if it were coming from someplace other than the City of Phoenix’s housing division. But it’s not.
And that alone should be further proof that the best thing governmental entities can do in this current real estate market is to stay out of the way.
[tags]Phoenix real estate[/tags]