Mood of the Market
Mood of the Market
Just before I sat down to write this evening, my eye fell on a lovely bowl of cut fruit I'd picked up this morning from my favorite produce shop, and which I'd quickly forgotten about.
My smile at the unexpected find turned south instantly, when I took a deep whiff and, expecting to smell the sweet scent of fresh berries and melons, instead found that the fruit had begun to ferment -- I had inadvertantly left them out in the hot weather.
Tragically (OK, fine, it was a small tragedy, but still) I had to throw the fruit out. Then I started to page through reader questions about how to know whether they're ready to buy, how to pick a listing agent, how to know whether a short sale is legitimate, how to understand this or that about mortgages, and so forth. And as I read, I kept coming back to the memory of the smell test that my fruit had so soundly failed.
Notwithstanding the unpleasantness of a rotten odor, and the moment of disgust when something fails to pass it, the essential nature of the smell test is quite brilliant and utterly useful.
No, it doesn't have the power to tell you whether you should proceed with something, because everything that's rotten doesn't smell. But when something does smell, in a nanosecond, everything that is within you gets the message.
You recoil, physically and sometimes even emotionally, but always uncontrollably. A smell-test fail is visceral -- it's instinctive. You can't run from it. You can't argue yourself out of it, or reason your way around it.
The nose, as they say, knows.
When paging through my latest batch of reader real estate questions (by the way, you can submit your own questions here), it dawned on me that perhaps a full third of these questions could have been resolved without even sending me an inquiry if the asker had simply applied the smell test to the scenario.
If every house in your price range is a two-bedroom, one-bath condo except one, which happens to be a seven-bedroom Colonial mansion on 3 acres, your sniffer should be going off. Some listing agents put very low list prices on short-sale listings so they can get an offer, submit it to the bank and get a better idea of the bank's true bottom line.
If your sole source of income is a $500 per month disability insurance payment, you have $30 in the bank, $20,000 in debt and a FICO score of 300, I'm not sure exactly how to say this sensitively, but no, you probably will not qualify for a mortgage. (And, frankly, you have bigger, more urgent fish to fry, my friend.) If someone tells you otherwise, you should be very, very suspicious.
Hopefully it's obvious that I'm exaggerating the facts to protect the innocent, who in fact are guilty of ignoring the two most basic of senses: common sense and the sense of smell. I'm exaggerating, but not as much as you might guess.
Part of the problem is that the subprime era trained us out of respecting our innate smell-test instincts when it comes to real estate and mortgage matters, with its "No money? Crappy credit? No job? No problem!" headlines and guidelines. Now, many consumers don't know which way is up.
It seems that those who should by no means expect to be able to buy a home, given their financial and credit situations, do.
And, unfortunately, the opposite is also true: Many people who are actually creditworthy and financially prepared for homeownership have read the news, heard about tighter lending guidelines, and disqualified themselves in their own heads, and inaccurately so.
So here's the deal: If you have savings, pay your bills on time, generally have a history and documented track record of financial responsibility, and think you might want to buy a home while prices are low, do yourself a big favor and ask around for references to a local real estate professional or mortgage broker.
And just see whether you might be able to work with them to either (a) buy a home or (b) get an action plan together for buying one.
And if you have serious debt, struggle month to month to pay your bills, know for a fact that your credit score is below 600, or have experienced what you'd describe as a major financial trauma (i.e., job loss, foreclosure, etc.) in the past year, stop and smell the stench.
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