BILL CHERRY'S GREATEST DALLAS PARK CITIES REAL ESTATE BLOG: March 2009

The most evil thing has infected the million dollar + market of Dallas.  Commercial lenders have gotten into the act.

1.  They quote "hard money" rates if they'll even entertain a mortgage for in excess of, say, $750,000.  So we're talking about an interest rate of more than 12% in an otherwise 5.5% market.  And the loan to value requires at least a 30% cash investment by the borrower.

2.  They are forcing mansion builders to take huge discounts on their inventory, less they will see their property posted for foreclosure.  The huge discount compensates for the buyer having to finance at hard money rates.

I have found a bit of loan money at reasonably conventional terms and rates, and my plan is to reserve its where abouts for my own clients.

But this foolishness by lenders has got to stop.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

214 503-8563

For a few weeks, maybe two months, I've been showing for-sale homes to a young client of mine.  She's an advanced-degreed professional, single, and this will be the first home she'll own.

The criteria is this:  2 to 3 bedrooms, 2 baths, not too far from Parkland Hospital, a nice backyard where she and her friends can barbecue and visit under the stars.  The price shouldn't exceed $170,000.

I thought this would be an easy adventure since there is so much product on the market, and there aren't a lot of buyers.  Prices should be more reasonable and sellers would have their homes spit-polished so they would standout among the crowd.

For the most part, that hasn't been the case.  Worse than the error of overpricing is the lack of understanding the rules of presentation.  We've seen home after home -- even those that are vacant -- that are full of debris, roof damage, serious foundation settling, exposed electrical wires, poor handyman work, attempts to cover wood rot with Bondo rather than fix the cause and repair the results.

One looked promising, although it would require some heavy-duty upgrading just to be satisfactory.  We did our value research, and determined that the asking price was $20,000 too high.  Without revealing our evaluation, I asked a lender friend to see what his appraiser thought.  Yep, he agreed with us that it was about $20,000 over-priced.

We turned in our contract.  We gave the seller four days to respond.  We didn't hear anything by our deadline.  Three days after that came an email.  "My client's not ready to give the house away."  Three days later, we got a notice that had been sent to all who had shown the home, that the price had been lowered by $10,000.  Still not enough, so we're not interested.

But then last Sunday, we toured a home that was in good repair, clean and neat, had been staged by the sellers and the agent had priced it correctly.  It had been on the market for four days.  There were two other parties waiting to see the home as we were leaving.   By nightfall, the home had been optioned.

BILL CHERRY, REALTORS

DALLAS - HIGHLAND PARK

214 503-8563