It's that time.

I guess it’s the Mom in me; I don’t like to see my clients put all their investment eggs in one basket. Everyone should have a diversified portfolio, but in light of the recent changes in the mortgage lending market, a retirement plan is a must. I’m not talking about pulling out money from your IRA, Keogh, or 401k to use as a down payment; I’m talking about reserves. With the implosion of the sub-prime market, lenders are going back to their old ways. They are more nervous than ever and would like to lend money to only those who don’t need it, like in the old days. So, today’s borrower needs to show reserves, up to 4 months worth of mortgage payments (Principle, Interest, Taxes, and Insurance). Reserves are monies or liquid assets, such as a retirement plan, that will NOT be used to purchase the house. As I said, they prefer to lend money to those who don’t need it.

Opportunity Time

I think we would all agree that, at least in Southern California, this is not a hot market.  It is not a bad market; however; it’s a changing market.  Buy low, sell high – the standard investment strategy.  But most investors will tell you that they make the most money in a changing market, be it real estate, stock, bonds, or commodities.  A changing market is Opportunity Time for investors.  This is often the time when they find the real bargains.  Since most of us are not really investors of Real Estate, but home owners, we would just like to sit out a changing market.  But even if you’re not an investor, while you’re sitting on the sidelines, this is an Opportunity Time.

While on those sidelines are you sleeping?  Or are you preparing for the next hot market?  Will you be ready?

Have you pulled your credit score lately to check for errors?  Have you looked at your current mortgage and determined whether or not to refinance?  Perhaps now is the time to make some extra payments or do some remodeling?  Have you had an agent out to your property to discuss curb appeal?  Yes, there are quick fixes to make a property more appealing at the last minute, but it is more cost effective to take the time to do it yourself now.  To make your yard look better you can either pay an enormous amount to a landscaper just prior to listing the property or you can start the project now to remove debris, add a few perennials, and fertilize the lawn so that in 6 months you have a great looking yard.  Time for new carpet or flooring?  Should you replace or refinish cabinets?  And what walls are crying out for paint?  Should you invest in energy efficient heating and cooling?  Or new windows that will keep out the noise and the inclement weather?

As a buyer are you studying the markets?  Are you getting regular information sent to you about listings in a neighborhood?  The neighborhood you are currently in and the neighborhood you would like to be in?  Are you shopping for a lender?  Is there anything you can do to improve your credit score?

This doesn’t mean you can’t find a great deal during a changing market.  Often this is when the best deals appear.  But you won’t see those deals sleeping on the sidelines.  We are not moving at a rapid, insane pace.  This is the time for the turtle, not the hare.  There is breathing time right now: time to assess the market and your position in it.  This is your Opportunity Time.