By Kelly Reark
I have been representing a buyer since June of this year when he made the decision to put in an offer on a short sale. We aren’t closed yet, and it has been a bumpy road. Our journey actually began in January of 2007, but who’s counting?
There are many ways that this deal could die along the way. Here are my top five buyer bail scenarios that could stop you in your tracks.
1. Before actually writing the offer, counsel your buyer on what a short sale will likely involve. Make sure they are prepared for the waiting game. It is up to you to keep them interested and excited about their purchase.
2. Buyer’s remorse. Are the buyers seeing other properties sell for the same amount or less than the one they have the offer in on? A longer waiting period between the offer and the acceptance can issue a set of military spec cold feet. Keep a working CMA for your buyer that you can update during the waiting period. Point out the benefits to the home they have chosen.
3. Work with the lender to get your buyer’s finances in order ahead of time. If they are serious about making a purchase, they should begin the paper trail for their loan package long before hearing back from the seller’s representative. State your contract in such a way that there will be ample time to complete a mortgage after the seller’s approval comes back. (And lock in that great rate!) In the case that their offer is denied, they will be ready for the next one. Continue reading »
By Nobu Hata
The skinny: The Department of Housing and Urban Development is seeking public commentary through Aug. 14 on three “measures” that “reduce financial risk and preserve affordable mortgage financing for responsible consumers.”
1. Update the combination of credit and down payment requirements for new borrowers. New borrowers seeking FHA-insured financing will be required to have a minimum FICO score of 580 to qualify for FHA’s flagship 3.5 percent down payment program. New borrowers with credit scores of less than a 580 will be required to make a cash investment of at least 10 percent. Borrowers with credit scores of less than 500 will no longer qualify for an FHA-insured mortgage.
2. Reduce allowable seller concessions from 6 percent to 3 percent. Allowing sellers to contribute up to 6 percent of the home’s sales price to offset a buyer’s costs exposes the FHA to excess risk by potentially driving up the cost of the home beyond its appraised value. Reducing seller concessions to 3 percent will bring FHA into conformity with industry standards. Continue reading »
By Jonathan Osman
Step 1: Find a buyer. In my market, the unemployment rate is 11.1 percent and the under-employment rate is around 16-20 percent. While a few years ago, one could conceivably purchase a house without a job; today, employment is essential.
Step 2: Find the buyer a loan. As long as the buyer has a job, modest credit scores, and reasonable debt load, this can be accomplished with relative ease. However, only 75 percent of buyers ever make it past Step 2.
Step 3: Find the house. SO VERY EASY especially with only 24,000 homes in the market to choose from; 5 percent being REO, and the buyer wants “a deal.” The buyer then proceeds to view all 24,000 homes, making offers at fifty cents on the dollar, with only a $10 earnest money check.
Step 4: Under contract: Oh yeah baby. I can count the dollars now. Just sit back and wait for the closing day. If that were only so true…
Once the home is under contract, now there stands a nearly insurmountable set of obstacles that will kill any transaction such as (All of the following actually happened at some point in the last 3 years):
- Did the inspection reveal needed repairs? Yes. Will the seller repair? No! Deal dead.
- Does the inspector freak the buyer out over unnecessary repairs? Yes! Deal dead.
- Does the house have mold? Yes every house has mold? Buyer freaked? Yes! Muerto.
- Did the house burn down before closing? Yes! Does the buyer still want it? No! Done. Continue reading »
By Brian Copeland
Anyone who knows my business knows I pride myself on strong counseling of all my clients prior to any signed documents. It’s the secret sauce of my business.
This week, I messed up…bad! During the hustle and bustle of NAR Midyear, I had a remote buyer counseling session. I was so busy that I condensed the normal hour-plus session to a smooth 25 minutes. One of the biggest parts of the session is discussing pre-qualification and lending process. Since the buyer had checked, “Yes, we are prequalified with undisclosed mortgage lender,” I took it at face value.
Last week the buyer came to town. We spent two days together. We were ready to go to contract. Buyer says, “Oh by the way, my lender can’t do loans in Tennessee.” They call a lender I often use. They can’t even think about buying a home.
While my initial response was to internally be annoyed at the buyer, after about two minutes of mental processing, I realized I had used a short cut in one of my core business values. I realized this was solely my fault. I am the professional. It is my job to prepare and pave a path of success for all my clients. Continue reading »
By Nobu Hata
With the down market and the inevitable mass exodus of “those” loan officers, you’d think we could rest easy knowing that the loan officers left would be – for lack of a better word – decent.
Holy Hannah, would we be wrong.
In the last couple weeks, I’ve had various buyers shop their loan around, including those using FHA. What I thought were set guidelines and fees isn’t what it seems. One particular buyer of mine asked for Good Faith Estimates based on the same home, price and mock closing date, from each of the loan officers he’d met with who’d pulled his credit, on my recommendation. Lo and behold, one origination fee was $1,100 more than the other. The rest of the meeting was an eye-opening study of mortgage v. mortgage.
Now, I’m not going to get into specifics of big bank versus broker, nor the merits and drawbacks of each. But what I will say is that there’s no better time to brush up on the new GFEs and fees associated with them. Fees and guidelines for all types of loan products are changing at a lightning pace, and while it’s largely up to our clients to perform their due diligence, it’s up to us to impart some insight. Continue reading »
By G. M. Filisko, contributing writer, HouseLogic
In today’s economy, there’s no shortage of potential buyers, but few have emerged from the recession without a few dings on their credit. Help potential buyers boost their credit with tips from the June “Get Ready to Own” bundle now available at the REALTOR® Content Resource:
1. Know your credit score. Credit scores range from 300 to 850, and the higher, the better. They’re based on whether you’ve paid personal loans, car loans, credit cards, and other debt in full and on time in the past. Buyers will need a score of at least 620 to qualify for a home loan and 740 to get the best interest rates and terms. They’re entitled to a free copy of their credit report annually from each of the major credit-reporting bureaus, Equifax, Experian, and TransUnion. They can access all three versions of their credit report at www.annualcreditreport.com and then review them to ensure the information is accurate.
2. Correct credit report errors. If buyers find mistakes on their credit report, they can write a letter to the credit-reporting agency explaining why they believe there’s an error. They should include documents that support their case and ask that the error be corrected or removed. They can also write to the company, or debt collector, that reported the incorrect information to dispute the information and ask to be copied on any materials sent to credit-reporting agencies.
Those are just two of seven tips buyers can use to boost their credit now available at the REALTOR® Content Resource. If buyers’ credit is impeccable, share tips on steps to take before buying a home, finding the right home, determining how much mortgage you can afford, understanding real estate representation, and keeping your home purchase on track, all of which are also part of the “Get Ready to Own” bundle.
The REALTOR® Content Resource, the new tool brought to you by the NATIONAL ASSOCIATION OF REALTORS®, is an exclusive NAR member benefit that entitles you to download free homeownership content in your consumer Web site, blog, or e-newsletter. HouseLogic is the NATIONAL ASSOCIATION OF REALTORS’® no-topic-left-uncovered consumer website geared to helping home owners make smart decisions to maintain, protect, and increase the value of their home.
By Laura Rubinchuk
When I heard about the new FHA DELRAP/HRAP guidelines for condo financing, my gut reaction was, “Well, I might as well go find another job.” Some of the subjective guidelines for the new approval process will greatly affect my market:
-Proximity to a noise (i.e. busy streets, highways)
-Proximity to a gas station
-Percentage of commercial space
And the list goes on, and on… For those of us in a Metropolitan/Urban environment, the whole point of condo living in the city is ease of travel and lifestyle. In the D.C. area, we have numerous major highways that lead into the District, the metro system, etc. and the majority of our high-rise condo buildings are located within blocks of these things.
So tell me how it makes sense to take buildings we’ve been selling for years with spot-approved FHA loans, taunt first-time buyers or other qualified buyers who have the minimum 3.5 percent down-payment, and tell them that because it’s the first of the month of this year, now they have to wait WEEKS to months for a green light on the home they fell in love with, if the seller is willing and/or able to wait at all!
Again, I ask, how does the economy continue to grow if the FHA puts the cabash on condo financing and eliminate the pool of buyers who don’t have the minimum 10 percent down-payment but qualify for the loan? Even funnier, why is the HUD website of approved condo projects only searchable from Monday-Friday, 8 a.m.-9 p.m.? Does the site need beauty sleep?
I don’t intend to start a political debate, but I can’t help wondering if the underlying reasons are a bigger concern? Is the FHA running out of money? Are they trying to keep out some buyers so some remain for later in the year?
By Heather Soldonia
Despite the condition of the nation’s real estate market, California still holds some of the strongest property values in the country.
Forbes Magazine recently released its annual article of America’s 500 Most Expensive Zip Codes. And it’s actually easier to identify which San Francisco Bay area towns aren’t listed. The median home price in Sunnyvale (#498) was $499,000 and the median home price for Atherton (#2) was $3,850,000.
Simply put, the San Francisco Bay Area is one of the toughest housing markets for first-time home buyers to break into. Entering this market requires strategy. It’s not for the faint-of-heart and it’s not for the uninformed.
The following are things I believe will help your clients succeed in this, and any market:
- Manage your clients’ expectations.
- Get them pre-approved before you show them a $700,000 home when they are only approved to finance a $500,000 home.
- Remind them that their first home DOES NOT NEED TO BE THEIR DREAM HOME!! It is just a step to get them in the game.
- Direct them to ethical mortgage brokers.
- The Life of the Loan is the most important aspect to consider. If they have no intention to grow old in this starter home, it’s not imperative to obtain a conservative loan.
- Creative Financing is what will get them into a $500,000 home here. It’s important that you direct them to someone who will educate them about the financing process and potential problems so that they can make informed decisions.
- Suggest Home Buyer Programs.
- Local Programs: http://www.hud.gov/local/ca/homeownership/prgmscity.cfm
- State Programs: http://www.calhfa.ca.gov/homebuyer/programs/index.htm
- Federal Programs: http://www.federalhousingtaxcredit.com/2009/index.html
Heather Soldonia is a Broker/REALTOR® in the San Francisco Bay area with Windermere Welcome Home. She can be found at www.heathersoldonia.mywindermere.com.