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Lawyers Are Not Cheerleaders

A semi-spirited discussion took place among some real estate attorneys yesterday (none of us really have a lot of spirit left).  One of the group though that for the sake of our own self-preservation we need to advise clients that “there’s never been a better time to buy.”  I remarked that A. that’s sloganeering worthy of the National Association of Realtors, and B. we cannot advocate in generalities--we need to focus on the individual before us, who might not be a good candidate to buy.  Most of the group agreed, though one said the reality is that some of our colleagues will always take the clients and push the deals.

There are plenty of reasons why, after I discussed the particulars of his or her circumstances, I’d tell a client to sit pat and not buy now.  I’ve listed a few but as we all know, individual mileage may vary:

  • Those that want to be assured that prices have bottomed out can’t get that from me.  But I can share with them my intuition that our region has not yet reached the bottom.
  •  Those who have been urged to jump in now as things could change quickly and interest rates and prices will jump up dramatically.  Real estate agents relate that recoveries all happen in a “V”, where once a market hits bottom it immediately bounces up.  But they neglect to mention that an “L” is more likely to happen once the bottom is reached, as appraisers won’t value a house for more than the last one sold for, and the writing of mortgages again won’t be a trigger to raise rates and quell the renewed activity.  My intuition again is that things will flatten out and stay stagnant for a while.  Too many have gotten burned and there’s too much inventory for a Spalding-type bounce.
  • Those whose jobs are not stable should not lay out cash or commit to a mortgage.  Plus a new job search will be geographically limited because it will be difficult to resell your house.  And really, whose job is stable and who still has at least six months of living expenses in reserve plus enough for 20% down and closing costs? 
If you meet the criteria, rest assured I’ll help you buy a house!

Comments

( 2 comments — Leave a comment )
(Anonymous)
Feb. 16th, 2009 02:13 am (UTC)
Funny how I keep hearing that conditions are favorable for buyers. Most buyers should be renters, holding onto their cash and waiting for unemployment numbers to head down. Then, even if prices and interest rates start to creep back up it will really be the right time to buy. Cheap prices, cheap borrowing are not great incentives if you have no real certainty of paying for your purchase. Get a 3 1/2 % 11 month CD for your money, then see how things shape up in the spring of 2010.
real_lawyer
Feb. 16th, 2009 01:49 pm (UTC)
There are a lot of people who would benefit from your advice.
( 2 comments — Leave a comment )

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