The Fisherman

A fisherman stands in a shallows of the lake.  The water is still, and on such a beautiful day, it reflects its surroundings like a mirror.  He examines his tackle box for the perfect lure...  Ah, but this time he decides to use live bait!  He baits the hook then slowly reaches back, and with a whipping motion he casts it into the water.

Meanwhile, fish beneath the surface take notice of the tender morsel on the hook.  They know it could be dangerous to act, but curiosity gets the best of them; and they reason "We don't know when will see another opportunity like this one!"  Unable to hold himself back, one fish makes his move.  Two onlookers realize that the first fish has gone for it, and they go after it as well.  After a furious struggle, the fish who was the strongest swimmer, snapped up the bait.  For a moment he gloated because three of them darted after it, but he got it...

Well, it's easy to imagine what happens next...  The fish is pulled from the water, and ensnared in the fisherman's net.  There's nothing the fish can do...  It's over for him.

The story above describes what's happening right now to some buyers.  They see what they believe is a once in a life time deal in the current market, perhaps a lender owned home, and make an offer.  Other buyers catch wind of the deal and make offers as well.   In the end, the most qualified buyer, the one with the highest credit score and the most cash, gets the home.  But here's the rub, after a few months the buyer discovers that their good deal is not so good anymore, and it may only be a matter of time before homes are selling for less then they paid.

Here's an example:

A REO is listed for $439K in an area where some homes have sold for as high as $499K.  Buyers pounce on it because it's an additional $60K under market.   The lender receives 5 offers, with the highest offer being $479K.  The buyer reasons, he got a steal because it's still under the $499K that some have sold for.   And this is true, today he did get a deal.  However, 6 months roll by, and homes in the same neighborhood are regularly being listed for $439K.  Do you still think the buyer got a good deal?

The fact is in most areas across the nation home prices are continuing to decline, and most experts seem to agree that this is set to continue for perhaps the next couple of years.  No one can tell you exactly what will happen, thus it's up to you to research and determine when it may be in your best interest to buy.

Just some food for thought...