Wednesday, October 29, 2008

A dwelling fit for a librarian.

Houses are back down to 2001 prices which is really great because I currently make a 1999 salary; so owning a home is only slightly out of my reach.

All summer there have been "short sale" properties to consider. A short sale is when the owner stops paying their mortgage and then tells the bank they will try to sell the house for less money than the mortgage is worth. This gets back some money for the property prior to the bank foreclosing and paying all the legal fees involved with that process.

But the bank needs to approve prices. Some short sales are forty percent cheaper than comparable properties, so the bank evaluates the present loss against the future foreclosure loss.

I don't know how banks calculate their losses, what calendar they use, so short sales might be plentiful in the summer, but dry up in fall. Maybe they can write off the debt or get a tax break.

Which brings me to the latest property I tried to buy. Even though prices continue to drop, the bank turned down my offer and increased the asking price! They decided to go forward into the foreclosure process.

My only guess is that the government bail-out has created new financial incentives for banks to increase their holdings of bad debt. Maybe they get more money if they hold more foreclosures. Otherwise, I can't understand why a bank wouldn't want to sell a property as quickly as possible.

But that's why I'm a bad shopper. Some people know when to buy a car so they can negotiate the lowest price, but I buy one because it's purple.

Anyway, I'm still looking for a house. Or a refrigerator box, whatever a librarian can afford.