Article from REALTOR.org interview with Gary Keller, Chairman of the Board for Keller Williams Realty, Co-author of The Millionaire Real Estate Agent, The Millionaire Real Estate Investor and his newest book The Shift.
The immediate impact of the new economic stabilization bill, signed by President George Bush, will be renewed confidence in the market, two real estate experts said in separate interviews with the editors of REALTOR® Magazine. But don’t expect credit markets to turn around tomorrow. The recovery process will take time, say Gary Keller, head of national residential real estate franchisor Keller Williams in Austin, Texas. We asked Keller about the impact of the credit crisis and the stabilization bill on residential real estate.
REALTOR® Magazine: Now that both the House and the Senate have passed the stabilization bill and President Bush is set to sign it, what can we expect the impact to be?
Gary Keller: The market should regain some confidence, and since markets are built mainly on confidence, that’s no small thing. In fact it’s a huge thing and it’s imperative for the market to move forward. But beyond that, we have to wait and see. Although the intent of the legislation is to free up capital for lending on homes, cars, college, and business inventories, the government doesn’t have a mechanism in the bill for making the banks turn around and lend the money back. So no one knows what will actually happen once a bank has its capital freed up.
RM: What are conditions on the ground now? Is anybody getting a loan, and if so, who and at what terms and costs?
Keller: We’re not seeing any properly qualified buyer being turned down for a loan. But even more important, every foreclosed home automatically has financing on it, from the bank that owns it. From a buyer point of view, this is the market we’ve all been asking for. In most cities it is one of the greatest buyer’s markets we’ve seen in a long time. From a seller’s point of view, it varies. If someone bought a home in the last five to six years and put little to nothing down they might not be in a position to sell without bringing money to the table. But if they want to move up, this is the perfect time to do it. Any loss they take on the sale could very well be made up on their new purchase.
RM: What will be the most reliable sources of financing going forward? Local banks? At what terms and costs?
Keller: So far, it’s business as unusual. Lenders who have money are lending and banks that own houses are lending on those houses. The real estate market has actually shown signs of short-term progress. Beyond that, these are questions no one knows the answer to. In other words, we’ll know it when it happens.
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