By Dave Robison
In the midst of the government shutdown, we are still working with our clients to get their deals closed. Yes, the FHA is still committed to getting loans processed, but other government entities are closed, including the IRS. Lenders require a 4506-T form, but the IRS is now unable to fulfill requests. So what does this mean? If your lender requires this, the loan won’t close until the IRS reopens, thus putting your deal at risk. Some lenders are waiving the 4506-T requirement, with income verification to follow later. But you can be proactive and help your clients. Here are some tips:
1. Contact any buyers you currently have under contract and talk to their lender about this. Evaluate your buyer’s current situation and determine if they have the ability to close or not.
2. If the lender needs the 4506-T and doesn’t have it from the IRS, then your buyer’s earnest money may be at risk. Check your due diligence deadlines and possibly extend them.
3. Talk to your sellers and warn them of the potential issue of delayed closings. Be proactive right now so your sellers don’t pack up and then their home doesn’t close. Show them you are a professional and proactive in helping alleviate stress.
4. Renegotiate with sellers on closing dates, if possible. The odds are in your favor, as the only way a seller can close with a different buyer is if they find a cash buyer.
6. Stay up-to-date with the government shutdown and its impact on real estate here: www.realtor.org/articles/government-shutdown-updates
If you are seeing any workarounds regarding this issue, please post a comment. Also, if you are experiencing other issues related to the shutdown, let us know!
Dave Robison, known as “Utah Dave,” is broker/owner of UtahDave.com Neighborhood Experts.
By Scott Newman
Many agents forget that barriers to getting deals to the closing table exist in both good and bad markets. We are seeing a lot of appraisal issues in the Chicagoland area as over-regulation and timidness on the part of appraisers to push values — despite undeniable appreciation — has resulted in many deals dying at the financing stage.
How do you avoid becoming one of the statistics? Follow my 3 practical tips below…
Know Thy Appraiser
The biggest mistake an agent can make is not meeting the appraiser at the property.
To assume that your appraiser is a true expert on that particular neighborhood, city, property type, etc. is foolish. You know what they say about people who assume!!
You need to be there — both agents should be present, in fact, to show solidarity. Make sure you walk that entire property with the appraiser and give him or her the comparables you feel best reflect the true value of the home. Also, follow up with them afterwards to make sure things are going smoothly.
Remember, lenders are no longer allowed to speak to the appraiser on their file, so you are the first and last line of defense in making sure someone who’s under-qualified doesn’t blow up your deal .
Know Thy Lender Continue reading »
By Heather Soldonia
More scary than mummies, black cats, or cobwebs is the looming question: Has the real estate market bottomed out?
We REALTORS® have been asking Congress “Trick or Treat? … Please come up with some creative ways to revive the real estate market. Pretty please?”
When Forbes reported the 10 worst real estate markets of 2009, eight were in California. Currently, the unemployment rates are still above 12 percent in California — and remember that unemployment rates are only determined based on the number of people still receiving unemployment benefits — it doesn’t include in its calculation those who have received the maximum amount of unemployment benefits and now have absolutely no income.
Obviously, we can understand why so many mortgages are still going unpaid. In California, default notices have dropped by 10 percent, but that is specifically because lenders are modifying loans and/or short selling.
That being said, let’s take a quick moment to consider how the unemployment rate effects commercial real estate: Continue reading »
By Dave Robison
A short sale would have you think it’s going to be a quick and short closing. The problem is they all have too much Junk in the Trunk. In a race, their tail end is dragging along the ground, which makes the vehicle go about as slow as my kid in a wagon.
Here are two examples of what is going wrong and what you can do about it.
First case involves Aurora. We submit an offer in to the bank on our listing from a buyer. It goes 60 days or so before we get a negotiator from the bank. In the meantime a couple comes in with an offer for higher than what the current offer is. Aurora approves a sale price and we should be good to go right? Wrong!
The bank will only take the offer they reviewed. You can’t switch it out for a higher offer. If you do, you have to cancel the offer, resubmit another offer and guess what …. wait another 60 days for a negotiator. Too much junk in the trunk! All of these policies in their trunk are making the banks lose even more money.
Second case involves Fannie Mae. Banks appraisal at $230,000. FannieMae wouldn’t accept less than $270,000. Really? That’s right, Fannie Mae won’t take anything less than $270,000 when the purchaser owes $255,000. That is just plain silly that they think a buyer is going to come up with $40,000 more than what it appraises for.
This home got foreclosed on. Today, it is on the market for the same price it could have sold for 8 months ago. They could have cut their losses 8 months ago but now their cut is getting deeper and deeper.
Third case from various lenders. They approve the short sale but want the seller to sign a note for the difference. The sellers are going into bankruptcy. This doesn’t make any sense. If they could make payments for the difference, they would rent it out and make payments for the difference.
I have three deals right now with different banks that the banks want a note and the buyer won’t sign. The buyers attorney said don’t do it. We are doing bankruptcy.