Rep. Joe Baca
Professionals question impact
James Rufus Koren, Staff Writer
Posted: 02/14/2010 09:04:36 PM PST
Many area real estate agents and anxious home buyers say it’s often difficult for average families to buy property because investors are snatching up houses with cash instead of a mortgage.
A new bill by Rep. Joe Baca, D-San Bernardino, would try to give regular home buyers a leg up. The bill would prevent investors – anyone who doesn’t plan to live in a home – from bidding on certain newly listed properties for 15 days.
“It is critical we give a helping hand to those individuals and families who are committed to rebuilding our communities,” Baca said. “This legislation gives these responsible buyers a small window of time to have first preference on properties, before investors and speculators can swoop in and outbid them.”
The bill would apply to all foreclosed homes that had loans through government- controlled agencies, such as Fannie Mae and Freddie Mac.
Real estate agents say those homes make up a significant chunk of the Inland Empire’s home market.
But it’s not clear if the bill – called the First Look at Primary Residence Act – would help home buyers. Some real estate agents said it could give average buyers slightly better odds, while others said the bill would have “less than zero impact.”
With cheap, foreclosed properties on the market, it’s not uncommon to see a dozen or more bids on a property, said Ken Scott, sales manager for Spellacy and Associates Realty in San Bernardino.
Often, as many as half of the offers will be from investors willing to pay in cash, Scott said.
“Banks are really leaning toward those,” he said. “If I put a property on the market, and I get 10 offers in 24 hours, all things being equal, the bank is going to take a cash offer.”
To a bank, a cash buyer represents not only a sure thing – the buyer doesn’t have to wait for another bank’s approval – but also a quick resolution, Scott said.
“A cash offer is an immediate sale,” said Danny Cabrera, an agent with Bona Real Estate in Fontana. “It can close in a week or two. When you finance an FHA home loan, it’s a minimum 45 days.”
Making investors wait an additional 15 days, Scott and Cabrera said, might take away some of the advantage investors now hold.
“I think it would allow a lot of owner-occupants to have a better shot,” Scott said.
But investors and regular home buyers aren’t going after the same properties, said Mike Nu ez of The Nu ez Team Real Estate in Ontario. He said investors tend to go after “abused” properties – that is, homes that will need to be repaired before being inhabitable.
First-time home buyers “don’t have the money for those repairs,” Nu ez said. “It’s interesting how the investor has been looked at as the bad guy here, but the first-time home buyer would benefit a lot more from someone coming in and fixing a place up.”
Many of the more affordable foreclosed homes on the market, Nu ez said, are in need of repair and banks aren’t likely to fix them up before trying to sell.
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