Laurel Bane, 28, is a working professional with a down payment in hand. Hunting for her first home in Natomas, she's made six offers since March. And she's lost every house.
"It's been a bidding-war hell," Bane said. "I increased my offer by $12,000 on one, and I still lost out. I was $13,000 over asking price on another and still didn't get it."
Welcome to the punishment being inflicted this summer on first-time buyers. Considered saviors of the region's real estate economy, thousands like Bane are trudging through minefields where their homebuying dreams are repeatedly blown up.
That's because at the lower end of the price scale there are far more potential buyers than homes for sale.
"You make an offer and there's already 30 (ahead of you). And four are cash. I've had clients cry," said Larry Henderson, an agent with Prudential Norcal Realty in Carmichael. "It's a great time to buy a house because of the interest rates and the pricing. The problem is getting an offer accepted," he said.
Horror stories increasingly abound across a Sacramento housing market dominated by repos and short sales.
Home Front is hearing from buyers who expected it to be easy but are being outbid by investors. When they do offer more than investors, the bank often takes the lower bid because it's cash.
Others say offers are made without getting any response.
The only way to compete is to bid well above the listing price. But when appraisals come in below the offer, the deal is killed.
The alternative is short sales, in which banks take less than owed to avoid the higher costs of foreclosures, but they can take months to complete.
Another snag: Home sales increasingly involve "flippers," said Henderson, referring to investors who buy properties that they try to quickly resell for a profit.
But if the so-called flipper hasn't held the home for at least 90 days, the first-time buyer can't get a Federal Housing Administration loan, which requires only 3.5 percent down.
"Minefield? That's an understatement," said Henderson.
For Bane, who's looking for a house below $200,000, it's not been easy.
"I'm just looking for a small, manageable house for myself and one roommate. Yet everything I find is sold within the day," said Bane, a facilities business coordinator at Rancho Cordova-based Vision Service Plan. "We'll write an offer and submit it, and then find it was already sold."
Bane had expected she'd be moved into her first home by now. With the federal Nov. 30 deadline for an $8,000 first-time buyer tax credit approaching, she's fretting.
What's roughing up buyers like Bane is a shortage of bank repos – and an unwillingness of most private homeowners to sell at today's prices. For reasons that aren't fully understood, banks have held thousands of repos off the market. The result is bidding wars, especially for homes listed below $200,000.
"I really feel for first-time buyers right now," said Bruce Hammer, associate broker and agent with Keller Williams in Sacramento.
"Usually, within 24 hours, I have multiple offers coming in," said Hammer, who lists repo properties for banks and asset managers. "I almost dread it. My phone rings off the hook with people asking if (the house) is still available."
With defaults and foreclosures back on the rise regionally, Hammer believes a "substantial" new supply of repos may hit the market next month.
"I am hoping that's true because right now, I'm telling you, it's tough on buyers."
In Rocklin, would-be buyer Karin DeFoe said she's just had her fourth offer fall apart. DeFoe, house hunting for her college-age son, said, "We haven't had any luck."
Last month, she told Home Front she's lost offers on three houses to cash investors. All made lower bids than hers.
"All the repos are priced real low to start bidding wars," she complained.
To Bane, it's just plain frustrating.
"We'll go into houses and people are there before us, and people are there after us," she said. "Every house we look at has lines of buyers."
Mortgage protection, anyone?
Elsewhere on the first-time buyer front: The California Association of Realtors says only 385 applications have been approved for its program to help first-timers pay the mortgage if they lose their jobs. Of those, 14 are from Sacramento, Elk Grove and Folsom.
The association is looking for lots more applicants.
"We thought we'd have five or six times that many," said Jim Liptak, CAR president.
The CAR "mortgage protection" program announced in April contributes up to $1,500 a month for six months to first-time buyers who've lost their jobs. It's free and scheduled to run through the end of 2009.
Liptak says 2009 buyers should ask their real estate agents about the program, which is funded by contributions from real estate agents and associations in California and nationally. Approval takes two to three weeks.
In a state where unemployment has hit 11.6 percent, similar deals have been rolled out by home builders and car dealers.
CAR says it has enough funds to cover $1.4 million in mortgage payments for jobless Californians who bought homes between April and December this year. So far, says Liptak, the payments haven't been needed.
Source: SacBee
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