Interesting things coming out of Washington in the last two days. First King Hank finally found out what most consumers had suspected... buying up toxic debt instead of the good stuff didn't make much sense. Second the government figured out what my Dad always knew ... if you want money... there are rules you have to follow. In this case taking money from the FEDS means that you better start lending that money instead of using the funds to buy other banks or pay higher shareholder dividends.
It never made much sense that the FEDS were willing to bail out lenders without any strings on how the money was to be used. Now that the US taxpayer is a large shareholder in these institutions we darn well should have a say in what they do. The Administration sold the Bailout as the only way to save the economy and the country from ruin but that doesn't mean there should not be conditions.
The credit markets were quick to take the funds but have been slow to make new loans. Rates and underwriting rules are changing by the hour. Buyers who are told they qualify for $XXX on Monday suddenly find they are no longer qualified by Friday. Good faith has become an estimate not a promise when it comes to many lenders.
Sellers who think they have a solid deal can't count on anything until the deed is recorded. Buyers who believe they can qualify with 20% down often find out they will need more cash at the last minute. Appraisals are a major concern. Lenders only want recent sales as comparables ... homes sold within the last 60-90 days. They don't care what the home down the street sold for in June. As sales are down in most Beach Cities this can often be a serious problem.
So what's the answer... for starters you are going to need a lot of patience and compromise . If you are a seller you may need to be ready to adjust your price if the appraisal doesn't come in. As a buyer you need to be sure you have done your due diligence prior to making an offer. You need to be sure the lender you choose has a track record of closing loans. This is not the time to try working with your wife's second cousin who just started in the business.