Market conditions in the lending industry continue to go downhill. It seems like every other news report mentions a lender who has closed its doors or has stopped doing new loans.

Why is this happening?

There is a liquidity crisis in the secondary market where loans are sold. The investors who buy loans in the secondary market have virtually stopped buying nonconforming loans. This doesn’t just mean bad credit or stated income loans- this also means jumbo loans- any loan over $417,000. Due to the price of homes, most loans in Marin County are above $417,000. Yes, these mortgage troubles impact Marin! These loans , which are difficult to sell on the secondary market , are causing a liquidity crisis. Lenders are over compensating and raising rates and implementing restrictions which make it more difficult for borrowers to get a loan.

What does this all mean to you?

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Ever wonder how Marin became “Marin”?

Marin was the name of a famous chief of the Lacatuit Indians who lived in the area. Marin fought the Spaniards between 1815 and 1824 but was eventually captured. He escaped and took shelter on a small island in the San Francisco Bay, where he communicated the name of the land to the north-Marin.

He was captured again, but saved from death by the priests at the Mission of San Rafael. He converted his faith and later died at the Mission San Rafael in 1834.

A fellow Marin real estate agent and close girlfriend of mine is buying a house. She loves the house- it is absolutely perfect and fits all of her needs. Well, actually, it isn’t perfect- but she thinks it is. She is a buyer emotionally attached to a house. I asked her- “when is your home inspection scheduled?” “I am not getting one, the house is less than ten years old.”

WHAT??? I asked her if she would ever, ever let a buyer go without a home inspection. The answer- no, no and no. Why not? Home inspections uncover problems that could be very, very expensive for you to repair. Even if you are absolutely in love with the property and plan to buy it -no matter what- get a home inspection! Buyers often expect problems on older homes. They also may be willing to overlook issues if they are planning a major remodel. Inspections on new and remodeled homes can uncover more problems, or at least more unexpected problems. If you are paying top dollar because of a remodel, don’t you want to know what is beneath the surface? A good inspector will also tell you not just problems, but suggested maintenance to prevent future problems.

An inspection, doesn’t have to be a deal breaker. It just means that everyone knows what they are getting into. Even if you don’t write in an inspection period (always do!!), still get a home inspection. I have seen some inspections uncover issues what would warrant a buyer walking away- even if they had to leave a substantial earnest deposit on the table. I always advise my sellers to allow the buyer to have an inspection period, even if it is a short one. Buyers who get inspections help sellers avoid lawsuits later.

Buyer beware? Maybe. Buyer be informed? Absolutely!!! (oh yeah, and my girlfriend- buying the house? Absolutely! Putting the emotions aside, getting inspections and asking the hard questions- definitely!

A few weeks ago, everything my buyers wrote on was multiple offers. Mill Valley 2 offers, Tiburon 7 offers, Kentfield 3 offers. What was happening? Low inventory through the winter months and pent up demand for quality houses in Marin County caused anxious Marin buyers. With more inventory coming on the market, those same buyers are losing their anxiety, and sometimes getting cold feet on properties they might have bid up. The result- deals falling out of escrow!! I am surprised how many I have seen this week. Buyers and sellers both have to be fair and reasonable in their negotiations to keep deals together. Perhaps that leveling of the market is happening again?