By Jonathan Osman
Step 1: Find a buyer. In my market, the unemployment rate is 11.1 percent and the under-employment rate is around 16-20 percent. While a few years ago, one could conceivably purchase a house without a job; today, employment is essential.
Step 2: Find the buyer a loan. As long as the buyer has a job, modest credit scores, and reasonable debt load, this can be accomplished with relative ease. However, only 75 percent of buyers ever make it past Step 2.
Step 3: Find the house. SO VERY EASY especially with only 24,000 homes in the market to choose from; 5 percent being REO, and the buyer wants “a deal.” The buyer then proceeds to view all 24,000 homes, making offers at fifty cents on the dollar, with only a $10 earnest money check.
Step 4: Under contract: Oh yeah baby. I can count the dollars now. Just sit back and wait for the closing day. If that were only so true…
Once the home is under contract, now there stands a nearly insurmountable set of obstacles that will kill any transaction such as (All of the following actually happened at some point in the last 3 years):
- Did the inspection reveal needed repairs? Yes. Will the seller repair? No! Deal dead.
- Does the inspector freak the buyer out over unnecessary repairs? Yes! Deal dead.
- Does the house have mold? Yes every house has mold? Buyer freaked? Yes! Muerto.
- Did the house burn down before closing? Yes! Does the buyer still want it? No! Done.
- Did the lender actually approve the buyer? No! Deal dead.
- Is the buyer still employed? No! Deal dead.
- Does the buyer live too far away from work (FHA requirement)? Yes! Hit the showers.
- Did the home appraise? No! Seller willing to pay the difference? No! Next stop: the local bar.
- Did the buyer go to Rooms-To-Go, purchase furniture on a No Payments until 2050 promotion? Yes! Catastrophic.
- Does the HOA not have enough insurance to meet lender guidelines? No! Will they buy more? No! Hope no one has a slip and fall at the pool HOA geniuses.
- Does the underwriter, who have never seen the house or even live in the same state, believe that the home is worth less than the appraised value? Yes! WHY ME????
- Did the buyer decide to get a divorce mid-contract? Yes! Can the buyer afford the home alone? No! Welcome to rentsville, sweetheart.
- Is the condo Fannie Mae or FHA approved? No! Death may come sooner.
- Is the homeowner selling the home for less than what’s owed? Yes! Can they pay the difference? No! You’ve just been put on ice, bucko.
- Did the short sale get approved by the lender? No! Dead.
- Is the seller really the seller and not a spouse by a similar name as the seller on record? No! Yikes.
- Did the seller declare bankruptcy mid-contract? Yes! Today’s not your day.
- Did the HOA foreclose on the home a week before closing? Yes! I’m applying for a greeter position at Walmart.
So if all of that and much more doesn’t get in the way, a closing occurs and we get to collect that easy money…which usually averages out to 32 cents an hour. Real Estate is easy money.
Jonathan Osman is a broker and team leader of the Charlotte House Hunter Group with Keller Williams Realty in Charlotte, N.C. Connect with Jonathan via Facebook, Linkedin, Twitter or his Web site CharlotteHouseHunter.com.