2009 has presented is challenges in the Real Estate Market in Sandpoint, and as we all know, where there is risk, there is reward and opportunity. Buyers know that the opportunities exist and are brutally gleaning over the MLS inventory to make sure that they are getting the best value for their investment. This is where Seasons has a distinct advantage to other properties. Experience shows that as buyers return to the market, they will gravitate towards the best properties first. Add to this the factors of a downtown waterfront location, quality of design and construction and the incredible views and Seasons is a clear leader as a rare and highly desired property that creates a great deal of interest.
In order to best serve my clients at Seasons, I open a Sales Desk in the Seasons Retreat in March of 2009. There will be Sotheby's Agents on-site 7 days a week most months out of the year with varying hours that best capture the natural traffic patterns - whether visiting a Season owner, visiting the Spa, or visiting as a guest of the property. The Sotheby's Agent working the Sales Desk has access to keys and a schedule of availability to show my listed properties at a moments notice to a prospective buyer, AFTER the appropriate buyer qualification has been established. All Agents working the Sales Desk have been fully trained on how to best represent Seasons, conduct property tours, and respond to the wide range of questions that prospective buyers present. As of this writing (May '09), we have most of the kinks worked out and have seen 2 sales as a direct result of the efforts of the Sales Desk!! So, we are optimistic about the coming busy summer and feel that we are prepared to handle the challenges that will certainly present themselves.
Links to recent sales:
10-08 Sale 11-08 Sale 4-09 Sale 5-09 Sale
Banking/Finance/Loans. The media is a chock full of stories about changes in the residential mortgage marketplace and many current and future property owners in Sandpoint are asking how this affects them. There are a few key things that are going on in the market right now that I will try my best to explain here and hopefully clear up some misinformation.
Condo financing was freely available to buyers, seemingly without regard to conventional lending practices. Given the fact that banks typically prefer to sell your loans, rather than hold them, having readily available buyers for these loans is an important function in the mortgage cycle. Many buyers of loans are now either gone or wrapped up in the bail out and the remaining buyers are extremely cautious about the types of loans that they buy. Fannie Mae is a major buyer of residential loans – certainly not the only remaining buyer, but clearly the largest (and has US government backing). Fannie Mae has been tightened it’s underwriting standards to make sure that they only buy loans that are very unlikely to default. As such, the major banks selling loans to Fannie Mae have effectively defaulted to simply adapting Fannie Mae’s underwriting standards.
On January 1, 2009 Fannie Mae released a update to its policy regarding underwriting condos. Then again on March 1, 2009 there was another update. Many of you may have seen articles in the Financial Times, WSJ ect. around the first week of March that connected the dots to say – “if the banks are adopting Fannie Mae underwriting guidelines and loaning only to approved condo projects, financing for condos has effectively been shut off in the US for the immediate future”. Again, where there is risk, there is reward and other buyers of loans will see this opportunity and fill this void. In the interim, many condo projects are pushing ahead for Fannie Mae approval – a process that can take months and thousands of dollars. BVG is doing this as a priority on behalf of Seasons.
The process of Fannie Mae approval, I describe as being similar to a pass/fail college course with a semester of lecture and a 500 question take home final exam. The questions however are all weighted differently by the professor with some questions worth just one point, others worth 50 points. To further complicate things, the weighting changes for each student. So the challenge is to work with a tutor that understands the student and knows how the professor weights questions and students in order prepare your answers to the exam to achieve a passing grade. The condos are the students, Fannie Mae is the professor and a national bank underwriter is the tutor. You can begin to see the complexity of this matrix and how there simply is no silver bullet that will gain approval.
So, while condo projects scurry for banking approvals in the short term, it is important to remember that the loans are between the owner and the bank, not the Condo/HOA and the bank. The HOA’s may permit or restrict certain activities that allow for broader financing options, but it is up to the individual owner to live up to the terms of their loan. Fannie Mae buys loans on properties that are being used as a primary residence or as a second home, not rental properties or other investment properties. Finally, please keep in mind that even with Fannie Mae approval, some banks simply won’t write loans in a certain project or will limit the number of loans they will write. Loss ratios, saturation levels, and the bank’s financial strength all come into consideration when you submit your application.
I will post again with an update soon - but trust that this is a very big priority for everyone.
Chris
Read more in this article from the WSJ WSJ Article May 09