Importance of a good, LOCAL lender (and appraiser!)

There are so many factors and services that go into the home-buying process that can have a direct effect on the outcome of the transaction, or how easy/hard the deal is for all parties involved. Today I'd like to stress the importance of having a reputable, local lender. Partially because it is something that is affecting a sale right now and partially because it is just that important.

First off, not all lenders are the same. Just as not all Realtors are the same. Some are ethical, some are not; some are good, some are not good. Be like Indiana and choose wisely. If you do not have a good rapport with your banker (many people like to "keep it in the family" and if they have banked with Bank of America, Hometown Bank, Chase Bank, or Prosperity in the past, they'll often choose to get funding from one of these institutions), ask your Realtor. We are not allowed to just recommend any lender to our clients, but we can give you the names of the ones we've had positive experiences with (aka, they have done a good job and we'd feel comfortable if you used them!).

The importance of your lender's location is this: the appraisal process. Once you have been pre-approved for your loan, have found your dream property with your Realtor, and have an executed earnest money contract, there are still requirements that must be met (unless perhaps you are lucky enough to be paying cash for your property) to ensure that the price you have agreed to pay is representative of the current market. In English, the bank wants to make sure you aren't overpaying for this property so in case you can't pay and they have to foreclose, they won't be stuck trying to resell a money pit that you paid too much for in the first place.

Appraisers are independent of the lender. The lender orders an "unbiased" licensed appraiser to assess the value of the property in question and then report back to the lender so they know they are lending a reasonable amount of money to you based on the home's worth. This appraiser can kill a deal if he/she is not knowledgeable of the market in which you are buying. In areas where you have a master planned community and all houses are very similar in size, style, and amenities, appraisals are not a huge issue. In Galveston, though, appraisals are huge. Location is a big factor, and value in location can vary by as much as 3 blocks or 3 houses.

Bottom line, pick a good lender who has a good reputation. And returns phone calls. And shares their cell phone number with you. Make sure that if they do not live in the area you are buying, that they understand the importance of hiring an appraiser that is familiar with that area, and maybe even make sure that they are members of that local Board of Realtors.

Galveston is still a great investment

It is sometimes difficult to not believe all the recent hype that seems to doom our real estate market to a never ending downward spiral with no end in sight. Not all is lost. Truly.

Galveston, Texas is not only a unique place geographically and demographically, but also when you're talking real estate. As current Galveston Association of Realtors (GAR) President, Sue Ellen Johnson noted in September 30th's editorial of the Galveston Daily News, Galveston sales in August were up 8% from the same time last year. The total sales for August 2007 were $29.9 million - up from $27.7 million in August of 2006.

The nation experienced a drop in sales for a number of reasons - overbuilding, the "tightening up" of lenders' requirements for loan programs, and "standing inventory". But, (here's the good news) interest rates are still low. Prospective buyers in Galveston find themselves in a "buyer's market" where there is more inventory (homes) on the market than there are buyers to buy that inventory - a great time to buy because savvy buyers, with the help of their buyer's rep, can often more effectively negotiate sale prices from sellers who are eager to sell.

Bottom line, it is still a great time to buy. Property this close to any body of water is a commodity that is not in unlimited supply. That means we have something desirable here in this community. There will always be value in land close to water - after all, what good do our fishing poles, water skis, wave runners and inner tubes do us if we're in the middle of the Mojave desert? Not much but make us look downright silly. Almost as silly as those nay-saying real estate downers. Almost.

(want some numbers on the Galveston market? email me at Adrienne@TheHouseCompany.com for a market update or just to ask a question!)