CA Mod Bee

Modesto Bee


As foreclosures mount and "for sale" signs proliferate among Northern San Joaquin Valley homes, Realtors continue a refrain: "Now is the time to buy."

But for someone who missed the frenzy a few years ago, the changed world of local home buying still requires some knowledge beforehand, according to experts.

And knowledge in this case really is power, because with so many houses on the market, the buyer holds all the cards.

"Buyers have an enormous ability to haggle over costs," said Ken Kohler, a Realtor with Century 21 M&M and Associates.

"But the bottom line is that the seller has to make some money off the deal, so you can't come in and lowball too much," he said.

Still, the market has given buyers the advantage: More inventory, more short-sell homes at reduced prices, mortgage rates at two-year lows, and more sellers desperate to escape a mortgage that boomeranged on them, Realtors said.

That means buyers can ask sellers to handle closing costs or offer other incentives.

That was the case for new homeowner Mickey Yates.

Sticker shock had kept him and his wife from buying a house, he said, because they couldn't afford a house that was more than $350,000.

But they found something different when they began shopping again this year.

Now they own a home in Keyes with $15,000 in rebates, $6,000 in blinds and free landscaping from the builder, he said. Total price with the rebates: $273,000.

"The owners now are caught between a rock and a hard place," Yates said, adding that he thinks new-home builders may make more concessions than existing-home sellers who are loathe to lose money.

A good credit score also helped, he said.

"It was a really good buying experience," said Yates, 37. "And it wouldn't have happened before."

Lana Dyer, an independent Modesto Realtor and appraiser, said she encourages clients tobe bold in the face of a high price.

"Don't be put off by the price people are asking," Dyer said. "Make an offer."

If a home has been on the market for 100 days or longer, she said, the seller may be motivated to take a reduced price.

Buyers also have time on their side. Fewer buyers and lots of desperate sellers mean home shoppers can be choosy about what they buy and what loan they'll use to buy it.

Mike Zagaris, president of PMZ Real Estate in Modesto, said buyers should search thoroughly because the inventory is so plentiful.

But the failure of so many loans, which helped create more inventory, comes with some caveats for those buyers, Zagaris and other experts said.

Banks are less likely to take a chance on a buyer with shaky credit. And the subprime loans popular during the height of the housing boom largely have faded.

Century 21 M&M agent Yolanda Esparza Winters said she's seen some neighborhoods with multiple bank-owned homes. She suspects that on those streets, the former owners may have had subprime loans with conditions that eventually caused defaults.

The buyers got the homes with low initial payments, but couldn't meet their obligations when the loans' interest rates soared a few months later and the payments increased.

"If a buyer who seeks a home has the financing all arranged, that makes the process go that much faster," she said. "Sellers look for that."

Winters, who works in Manteca, said she has encouraged sellers to be flexible.

The buyer who is pre-qualified for a loan before shopping, and has strong credit, has even more leverage, she and other Realtors said.

Dyer said she has seen two deals fall through in recent weeks because the buyers didn't know their own ability to pay.

When one couple realized the mortgage payment would be $2,400 a month, she said, weeks of negotiations stopped.

First-time buyers such as Yates should follow the same advice as other buyers, experts said: Establish good credit, and choose carefully.

They also should investigate special programs for first-time buyers that are offered by private lenders and the federal government.

There also still is a place for the buyer who looks at real estate mostly as an investment — but not in the short term.

Bob Nowak and Jan Carrico run a monthly meeting in Salida for people to discuss real estate investing.

"It's very hard to buy something now and expect it to be worth more in 30 days," Nowak said, describing a practice known as "flipping," where houses were bought and sold in rapid fashion.

The practice was common during the real estate boom but has declined as home appreciation has slowed or even disappeared. "So you have to buy smarter," Nowak said.

That means considering whether the house could be rented out, or determining when the right time to sell would be, he said.

For a prospective homeowner of any kind, experts agreed, the times of good buying opportunity may not last long.

Kohler, of Century 21, said many think interest rates will rise in the next few months, even if prices continue to fall.

And eventually the oversupply of houses will stop, and prices will head upward again, though no one's predicting when that will happen.

"It can't go down forever," Dyer said. "It wouldn't scare me, if I could, to make an offer and buy a house now."

Bee staff writer Ben van der Meer can be reached at bvandermeer@modbee.com or 578-2331.