In some cases, your past experience will help you make a good decision about what to do in a current home-sale transaction. But if you rely only on past real estate experience to make decisions about selling a home today, you could end up with an unsatisfactory result.

The old rules, such as they were, don’t always work for the current home-sale market. For example, more purchase contracts specify that time is of the essence. In other words, contingencies will be met on time.

In today’s market, it’s often difficult for buyers to remove their financing contingencies on time unless they are paying all cash and don’t need to go through the rigors of mortgage underwriting. Due to no fault of the buyers, they often need to ask the sellers for an extension in order to satisfy a contingency.

Extensions should be reasonably granted but only after making due diligence investigations. For instance, it wouldn’t be wise to grant an extension to a buyer that hasn’t even submitted a loan application. In this case, it would be better to find yourself another, more dedicated buyer.

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However, if the lender is so backlogged that it hasn’t had a chance to underwrite the buyers’ loan package, and there doesn’t appear to be a problem other than the time delay, grant the extension.

HOUSE HUNTING: To make it through a home purchase or sale in the current market, it’s important to understand the point of view of the person on the other side of the transaction. It’s impossible to control all facets of a home-sale transaction. Patience and compromise are essential.

When buyers are doing everything they can to make a deadline in the contract, or the closing date, but are delayed for conditions beyond their control, they are doing what they agreed to do.

Most buyers don’t like to ask for extensions any more than sellers like granting them. But, standing on principle could result in a dead deal. If you won’t grant an extension because a seller refused to grant you one in a previous transaction, you could find your home is back on the market.

Buyers have a choice. They don’t have to buy your house, no matter how much they like it. Some buyers will walk away from a home if they think the sellers are unreasonable or are treating them unfairly.

Another rule that is broken fairly often in the current market has to do with inspections. In situations where sellers provide buyers with presale inspection reports, the expectation is that buyers won’t come back and ask the sellers to pay to correct defects they were aware of when they made their offer.

Buyers were more forgiving in the bubble market when prices were rising rapidly. They felt they had less to lose and could afford to take on some of the repairs. Today’s buyers are more cautious and conservative. Some are more risk-averse than others.

Second opinions by buyers’ inspectors are more common today than they were when the market was hot. Second opinions can lead to different conclusions about the seriousness of a defect and the urgency for making repairs.

Although sellers may feel they’re being taken advantage of, they should weigh the merits of the offer in hand, even if it means settling for a lower price, before they decide to play hard ball. If you can’t resolve inspection issues, you might have to start over again searching for a buyer. This takes time and could cost more if you have to sell for less.

Disclosure obligations vary from state to state. Even so, it’s wise to make any future buyer aware of all reports generated on the property to protect yourself legally.

THE CLOSING: Another buyer might be even tougher on inspections.

• International investors have always been attracted to the quality and stable fundamentals of U.S. commercial properties.
• After the 2008-09 recession, the percentage of cross-border investments in U.S. markets has risen from six percent in 2009 to 10 percent in 2011*.
• In comparison, 20 percent of Realtors®’ sales of commercial properties were made to international clients and investors, according to the 2012 Commercial Lending Survey.

*Source: Real Capital Analytics

There are many positive signs in the housing market right now that suggest 2012 may be the best year for real estate since the subprime meltdown in 2007. However, the recovery has been inhibited so far due to lenders’ reluctance to originate enough new mortgages to meet buyer demand, experts said yesterday at the 2012 REALTORS® Midyear Legislative Meetings & Trade Expo.

That hesitation stems from a number of factors, ranging from continued elevated levels of unemployment to deep staff cuts in financial institutions’ mortgage servicing departments, said Federal Reserve Governor Elizabeth Duke, who spoke at a joint Real Estate Services/Regulatory Issues Forum yesterday morning. And she added that lenders needed to tighten up credit immediately following the financial collapse.

However, she argued that present lending levels are far too constrained and that the biggest challenge to lender confidence today is the lack of clarity around the current regulatory and political environment. Specifically, Duke cited ambiguous standards for qualified residential mortgages and servicer compensation, as well as delayed reforms of government-sponsored enterprises Fannie Mae and Freddie Mac, as contributing to this problem.

“Perhaps the most important solution I’m suggesting today is that policymakers move forward with the difficult decisions that will affect the future of the mortgage market,” she said. “It will not be easy to decide what to do about the GSEs, or how best to promote a robust secondary market, or what form crucial regulations should ultimately take. And it is unlikely that anyone, including REALTORS®, will fully agree with the final decisions that are made. Nevertheless, until these tough decisions are made, uncertainties will continue to hinder access to credit, the evolution of the mortgage finance system, and the ultimate recovery in the housing market.”

In a panel discussion that immediately followed Duke’s presentation, Michael Stegman, counsel to the secretary of the treasury for housing finance policy, acknowledged the need for GSE reform. He said this issue would further be addressed by the Treasury Department “sometime in the spring,” and wryly noted that spring goes through the first three weeks of June.

Copanelist J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said the GSEs didn’t need wholly new reforms so much as a return to pre–housing boom policies and standards. “The basic core GSE programs are solid, time has shown that they’re solid, and we need to make sure that we don’t foul it up,” he said.

Scott added that the continued, drawn-out discussions around regulatory and policy issues were not helping the housing market. “End the conversation about changing the mortgage interest deduction,” he said. “End the conversation about 20 percent down payments for QRM.”

That theme of ambiguity in the political sphere continued into the afternoon. The panelists at the Real Estate Summit general session maintained that new rules and institutions weren’t necessarily needed at this point. Instead, they argued that the housing recovery wouldn’t get into full swing until the existing laws, policies, and regulatory authorities settled into a predictable, stable overall system.

“You don’t know what’s coming out of the chute next,” said Cutler Dawson, president and CEO of the Navy Federal Credit Union. “You don’t know if you’ll get a new appraisal system or something else. I almost wish we could have a moratorium on new ideas.”

“One thing the regulatory system should do is define the rules,” Moody’s Chief Economist Mark Zandi said. “Once we know what the rules are, we’ll get the market going again.”

With a win by the socialist party in France’s presidential election, bond investors will be shifting money into U.S., U.K. and Germany.  That means lower mortgage rates, at least temporarily, for U.S. consumers.

The 10-year borrowing rate for German bonds fell and now stands at 1.58%.  By contrast, the French government has to pay a 2.78% interest rate.  The comparable U.S. and U.K. borrowing rates are 1.86% and 2.00%, respectively.

With the new socialist president at the helm, the retirement age will be lowered to 60 for all and the top income tax rate could reach 75%, if campaign promises are kept.  A relaxed approach is what French citizens evidently desire, but fewer people working will mean more debt accrued to the already high French budget deficit, thereby pushing French government borrowing rates higher compared to other countries.

Some of the money flowing out of France will go across the Rhine to Germany.  Because Germany implemented a higher retirement age a few years ago, more people are working and its budget situation has improved.  The bond investors simply trust Germany much more than France in the ability to repay the borrowed money.

Greece meanwhile has to pay 22% interest to borrow.  Investors lending to Greece at this high interest rate will probably come up empty as Greece defaults.  Even the back street loan sharks are afraid to lend to Greece.  Given Greece is a democracy and given that more than half of its workers are employed by the government, there is little likelihood of government pension cuts or of raising the retirement age to that of Germany’s.

Singapore, meanwhile, is able to borrow as cheaply as Germany.  Known for its exceptionally clean streets and good dim sum, this former city of the British Empire was made into a world-class city-state by peasant immigrants from southern Chinese provinces just a few generations back.  This illustrates the ability of previously poor people to quickly rise to the top provided the citizens are willing to work hard and are not compelled to retire early.  Furthermore, people work hard because Singapore goes to great lengths to emphasize its respect for private property rights.

Regarding America, the uncertainty related to Eurozone economies (outside of Germany) has brought money into U.S. bonds.  Mortgage rates, which follow the pattern of U.S. government borrowing rate, will stay quite low for the time being.