Last week prominent finance expert and TV personality Suze Orman wrote a post on Facebook that caused quite a stir among real estate professionals.
She told her followers to delay any home buying until September, because of a pending threat of foreclosures due to high unemployment.
I agree with delaying your home purchase till fall. The housing market is overheated right now. You will likely have to compete with other buyers and possibly overpay for your new home.
However, Orman’s statement that pending foreclosures will lead to tumbling home values is totally wrong.
Here’s why her claims are false:
Claim: Expiring Unemployment Benefits Will Lead to Foreclosures
Even though unemployment benefits will expire at the end of July, lenders offer homeowners with government secured loans the option to delay payments (forbearance) until the end of the year.
If you don’t get your job back, you can stay in your home until December 31, 2020 without making any monthly payments.
A huge uptick in foreclosures is unlikely, even if homeowners can’t pay when their forbearance expires. Unlike in 2008, most have enough equity to sell their home at market value.
If they can’t sell, lenders will likely offer move-out cash in return for a deed-in-lieu of foreclosure. This will save the lender’s attorney fees and shorten the lengthy foreclosure process.
Claim: Foreclosures Sell for Half the Home’s True Value
This claim is totally false. Even during the height of the Great Recession, bank owned properties sold for 80% or more of market value.
What would happen if you list your property for half its true value?
You would be overwhelmed by offers. Buyers would engage in a bidding frenzy, and you would sell your home close to its true market value.
If a house is in poor shape an investor will buy it for a discount, make necessary improvements, and sell it to a homeowner. Investor flips often fetch top dollar. They increase the retail value of homes in your neighborhood.
The One Reason Why You Should Delay Your Home Purchase
Don’t worry about a wave of foreclosures hitting your neighborhood. Check out my coronavirus resource page for weekly updates on home sales and listings.
You will discover that the housing market is super-hot right now.
That is the only reason why you may want to delay your home purchase … there’s a chance you will face less competition this fall.
If you have any thoughts of selling this year, click here to schedule your FREE Virtual Listing Consultation and Call or Text me at (614) 975-9650.
Susanne Novak has been a Realtor since 2007. She is the broker and owner of RE/MAX 24/7 in the Dublin Historic District. Susanne typically helps 50-60 families each year with their real estate needs. She's your trusted advisor when you search for your dream home, and a skilled negotiator when she lists your property to get top dollar when you sell.