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The Market's Spring Thaw?

Based on the chatter I'm hearing and the results of this blog's latest, highly unscientific Weekend Poll there are a lot of people suddenly warming to the idea of launching a house hunt. Suze Orman even said on NBC's Today Show that she's starting to think it's now the right time for people to start looking at real estate. (The comments came at the end of a segment about stock investing. However, I think Orman is highly unrealistic in advising first-timers to wait until they have saved enough to make a 20 percent down payment. Most first-timers simply don't have that kind of dough.)

Here's a bit of advice for people who find themselves warming to the idea of launching a house hunt:

Don't be rushed. Low interest rates are probably going to be around a while, so there's no reason not to think through a deal carefully.

Sell first, buy second. That's always the less stressful way for current owners to structure a deal, and it's really critical now. You do not want to get stuck paying mortgages on two homes. I've been there, and it's not fun.

Be careful with condos. Fannie Mae and Freddie Mac are tightening their rules for condo loans (more on that later this week). And some condos are running into real financial difficulty thanks to dues going unpaid by owners headed into foreclosure. Examine the condo documents carefully. Pay an accountant or lawyer to help if you're not familiar with financial statements. Just make sure to review that condo's financial documents before your purchase offer becomes final.

Don't blow all your savings on a down payment. This may be the most important point, especially with unemployment rates still rising. Even after closing day, you still have to have at least three months worth of expenses in an emergency fund, in something easily accessible such as a bank's money market account. (Six months is better, of course.) You never know when a layoff, a leaky roof, or some other serious setback will force you to tap that cash. Orman--and all financial advisors--stress this as well. I think it's much more important than putting all you cash into the down payment.

Add to the discussion with your own Report From the Field! Are there really more buyers out there, or is it just talk?

By Elizabeth Razzi  |  March 23, 2009; 6:00 AM ET
Categories:  Buying  
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Next: Layoff Worries vs. Buyer Incentives

Comments

In the Mantua Elementary School district in central Fairfax, a number of houses that had been on the market suddenly now have contracts. I think sellers are getting motivated finally, and buyers have cheaper money and more incentives to make a deal.

Posted by: Anondale | March 23, 2009 9:50 AM | Report abuse

Hi Elizabeth:
I'm a Realtor in Virginia and just want to point out that buyers have three days to review condo docs after they received the documents. This is not something that can be waived. Most buyers don't get condo docs until after they've signed a contract. If they are unhappy with the documents, they can walk. Also, it is a good idea for buyers to have their condo association fill out a form for lenders, ideally very early in the contract process.
And yes. The market is picking up. We are seeing a lot more real buyers at Open Houses.

Posted by: MaryTClark | March 23, 2009 7:03 PM | Report abuse

Elizabeth,
Here at www.FindBuyers.com we've seen the number of home buyer registrations increase on our site over the past few weeks. Certainly not a highly scientific observation either but it's one more data point. Hope that helps.

Posted by: EMoraru | March 26, 2009 4:21 PM | Report abuse

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