insideyournwa.com

Everyone has something to say about real estate anywhere you go. It is actually quite enjoyable for me because I can stop and talk to anyone at any time and always have something to say. The buzz however is all doom and gloom while the market is not.

I would like to point out that we are in a correction across Northwest Arkansas real estate market. If you have been reading our articles you will see how we have followed it throughout the years. Now during a correction there are going to be losses somewhere and as long as we are able to keep them at a minimum nobody gets hurt too bad.

The problem is that some people are in farther than others. For this article I am going to talk on a larger scale than buyers/sellers and even builders. The people that stand to be hurt in my eyes are the banks. This article does a good job of outlining where we are with our local banks.

How can a bank be who is hurt? After all the worst that could happen is they take the property back and then sell it and *poof* everyone is golden again right? Sort of. The problem lies in that the bank has to spend tens of thousands of dollars just to foreclose in many cases and then they are foreclosing on property that wouldn’t sell at bottom dollar bargain prices. By the time you ad up all the money that it costs a bank to foreclose, sell, repair, etc. a property, they are loosing a significant portion of the amount they originally paid for that property (i.e. the loan).

Under normal circumstances I would chalk this up as a cost of doing business. The bank, in many cases, had all the info they needed to make a wise decision when making the loan. In all cases the bank has the ability to get more info (with the exception of the future to a certain degree) before they make the loan. So why am I still saying the bank is hurt? When you have such a large number of the top borrowers all having trouble at the same time, in a market saturated with empty lots and subdivided land, you have a huge problem.

So now I can’t get a mortgage at my local bank due to these problems so I should probably just wait to buy that house I want right? Actually the answer may surprise you. Banks make their money in primarily two ways - loaning money and investing deposits. When you couple that with the fact it is a great buyer’s market and you have a recipe for a great time to buy.

Just make sure you don’t go it alone - get a great Realtor you don’t have to pay them and they will save you a ton in the end.