Katherine's New Hampshire Real Estate Blog

FHA? Downpayment Assistance?... What's That?

Fri, 09 May 2008 14:27:28 -0700

When I first got into real estate, I was working for my parents in Dayton, Ohio. Dayton had (and still has) a very affordable real estate market. It was very common to see most buyers purchasing using FHA financing or other government loans.

When I moved to the Seacoast of New Hampshire back in 1999, I found that FHA and VA financing was hardly ever used. In fact, I was working with a young couple who were TRYING to buy a house VA, but their offers were continuously turned down just because of their type of financing. They went back to Tennessee.

Anyway.... that was then, THIS IS NOW! We are no longer is a sellers market, so sellers need to do whatever they can to appeal to buyers and we need to do all that we can to make homes available to as many buyers as possible.

In April, it was announced that there would be no more 100% conventional financing available due to PMI issues. (You can still get an 80/20; basically a first & a second mortgage to start ~ but who wants to do that?)

RE-Enter: Nehemiah and FHA! It's like an old answer to a new problem!

I was cruising around in the Rain and saw somone comment about the lack of 100% financing and we had just closed one, so I wondered how that could be! I contacted the loan rep that closed our 100% and he confirmed it. He says: "Yeah, you guys got in right under the wire on that one". He then tells me about Nehemiah and how it works with FHA. I think, WOW, this is Great! I call my mom (who's still selling in Ohio) and she was like: "Oh Kath, that's old news!". I've been doing that for years! (Boy did I feel dumb!)

Well, I guess it took a while for us to hear about it up here in New Hampshire because we have been so used to these conventional loans that we forgot all about FHA, VA and other types of loan programs.

Anyway... I checked out the Nehemiah site, took the FREE Training and now we are all set to start offering this to folks.

If you don't already know... Here's the scoop:

Nehemiah is a non-profit organization that is approved to give gift monies up to 6% of the purchase price. FHA works well with Nehemiah because their program accept gift monies. Traditionally, these funds were from parents or other relatives, but now the seller can contribute up to 6% to Nehemiah on behalf of their buyer. This is not a loan, it's a gift!

Buyers don't have to be first timers, and the FHA loan limits are high enough to cover most of the market. Currently, Rockingham and Strafford County, NH is $523,750 for single family homes!

In this market, many sellers are giving up more than 6% of asking price just to get a sale. If they can donate this to Nehemiah on behalf of their buyers, they will make their property available to more buyers, thus making it sell faster and for closer to asking price! BTW... I asked Nehemiah if the donation is tax deductable and they deferred that question to an accountant, so just check with yours!

Agents can get free training, free sign riders, advertising materials and can put their listings that are participating in the program on the Nehemiah site for FREE. More exposure for our sellers!

What about those homes that need work? Well, try the FHA 203K program! Nehemiah works with that too!

IT'S A WIN, WIN, WIN....

Buyers WIN with a down payment gift

Sellers WIN with a larger pool of buyers and probably a quicker sale and higher net

AND

Agents / Brokers WIN with more sales and probably referrals, repeat customers and friends made by helping others to find this WONDERFUL PROGRAM!

If you are looking to buy or sell in the Seacoast of New Hampshire, give us a call! We would love to help you!

EXETER, NH - FIRST QUARTER MARKET STATS 2007 VS. 2008

Fri, 28 Mar 2008 14:29:41 -0700

Data for these stats was pulled from the NNEREN MLS Database on 3/28/2008.

2007 stats run from 1/1/07 to 3/28/07

2008 stats run from 1/1/08 to 3/28/08

*Avg. DOM = average days on the market **Median L/S Ratio = median list price to sold price ratio

Conclusions / My Take:

Based on these stats, I would conclude that the condo market in Exeter, NH is recovering. Condos are selling faster, for more money and closer to asking price.

As for the single family home market in Exeter, NH... These stats suggest that it is still more of a buyers market in that the sales prices 2007 vs. 2008 have declined and homes are taking longer to sell. Also, sellers are granting higher discounts on their list prices this year than last year.

My take on this is that the more affordable properties tend to sell faster and condos are generally more affordable than single family homes. Also, a larger percentage of condo buyers are first time buyers versus those who buy single family homes.

I believe that the reason the single family market is still suffering is because single family home prices, on average, are still quite high. Many folks who buy a single family home have to sell in order to buy. This results in a domino effect when the first property takes longer to sell, or doesn't sell at all.

The key here is to make sure that if you are buying or selling that you hire a good local REALTOR that really knows the CURRENT MARKET in YOUR AREA. They can advise you as to your local market condition and counsel you on the pros and cons of buying or selling in these uncertain times.

If you have any questions, please feel free to contact me. We specialize in New Hampshire's Seacoast town s

-Katherine Anderson, Broker / Manager

Coldwell Banker Hobin Realty, LLC

Rye & Hampton, New Hampshire - USA

visit us on the web

How Flimsy is YOUR Loan Commitment and how much could it cost YOU?

Wed, 19 Mar 2008 12:52:08 -0700

It's no secret that the mortgage industry is in trouble... we are hearing about it on a daily basis through our favorite media outlets.

As with most things that we hear about in the news, it's just more bad news UNTIL... we have a personal experience that hits home.

Recently, I wrote about some trouble that we were having with lenders not wanting to keep us informed on the lending process and turning down buyers that should have (and eventually did) qualify for financing. For more of a background, please read those previous posts:

The facts are that the market is different today as compared to a few years ago and to survive, you must adapt. We must know the possible pitfalls and prepared to avoid them.

DON'T WORRY, I'M GONNA GET TO THE POINT!

Here in New Hampshire, our Purchase and Sales Agreement includes a financing contingency clause. Most folks are familiar with this clause and understand it to mean that if they are unable to obtain financing that they will most likely have their deposit returned. Well..... not so fast. What if you have a conditional loan commitment?

If you are not not sure what a conditional commitment is... the easiest way for me to explain it is that your loan can be approved pending certain conditions. Generally conditions are cleared as the loan is processed, so initially you will have lots of conditions and as the underwriters process the loan they clear conditions. By the time your commitment letter is due, you don't want to see any conditions that could cause your loan not to close. In other words, if you are uncertain as to whether or not a condition can be cleared, you are at risk that your loan may not close AND you (or your client's) earnest money may be at risk.

In New Hampshire, our Purchase and Sales Agreement contains wording that you MUST understand:

The existence of conditions in the loan commitment will not extend either the Financing Deadline described below or the closing date.
If SELLER opts to treat the financing contingency as waived or relies on a conditional loan commitment and BUYER subsequently does not close in a timely manner, SELLER can then declare BUYER in default. SELLER then, in addition to the other remedies afforded under this Agreement:
(a) Will be entitled to all deposits in accordance with the Deposit Procedures; and (b) This Agreement will be terminated; and (c) The premises may be returned to the market for sale.

In layman's terms: The seller takes the risk before the loan commitment date and the buyer takes the risk after the loan commitment date. So, make sure that you are very careful when you review your commitment letter. If there are conditions referenced, make sure you get the list of conditions and review them carefully. One BIG RED FLAG is receiving a loan commitment with an appraisal condition. In our current market, an appraisal can certainly come in low. Also be aware of the appraisal being subject to review by underwriting. Some lenders are even turning down appraisals that are coming in at or above the sales price. They are questioning their own approved appraisers! We never like to see any sort of appraisal condition.

In todays uncertain times, we need to be more careful than ever before. Lenders are tightening up their guidelines and are requiring more verifications in order to lend. This will lead to more conditions and probably conditional commitment letters.

BUYERS: If your loan commitment letter has conditions, it's probably a good idea to talk to your REALTOR about getting an extension of the financing deadline. Also beware that if you are buying in New Hampshire and using the standard NHAR Purchase and Sales Agreement and Deposit Receipt, you are instructing your lender to communicate the status of your financing and the satisfaction of lender's specified conditions to the SELLER, SELLER'S AGENT AND BUYERS AGENT. Your information isn't as private as you may think.

REALTORS: Be careful. Review your loan commitments carefully. If you receive a commitment letter that references conditions and if you don't get a list of conditions, contact the lender immediately and obtain it! Don't leave your buyer out there unprotected and warn your seller about the possible pitfalls of accepting a conditional commitment. If you need to get an extension in order to protect the parties... ask for it!

SELLERS: Although the P&S Agreement in New Hampshire seems to protect you, remember that the earnest monies cannot be released from the escrow agent unless both parties (buyer and seller) agree to their release. If there is no agreement, this may go to Interpleader where the disbursement of those funds will be decided by the court.

****Remember, every area and every contract can vary, so make sure that you seek local, professional advise for your specific situation. This post is not to be interpreted as legal advise. I am not an attorney, so please, if you need an attorney, call one. ****

Good luck in your next real estate transaction!

-Katherine Anderson, Broker

Coldwell Banker Hobin Realty, LLC

Rye & Hampton, NH

ColdwellBankerHobin.com

I'm Tellin' Everyone!

Fri, 14 Mar 2008 12:43:32 -0700

A few weeks ago, we had something wonderful happen…. One of our listings went under agreement for full price AND we found the buyer! The buyers are first-timers and needed to go for 100% financing and some seller contribution. We knew this up front, so they offered over asking in order to make sure that the seller still netted full price. This was all well and good. The home inspection came back pretty good with only a minor issue that was quickly resolved.

I know what you’re thinking… WOW… This sounds too good to be true! Well, you’re right! As with any good real estate story, there’s a twist!

As always, we tried to explain to the buyers that they should use one of our trusted lenders. Unfortunately, they had a “friend” who happened to be a mortgage broker and were intent on using this company. They company is out of state and we had never heard of them, but okay… ultimately the choice is the buyers to make.

So, as always, we put a call into the lender and proceed as usual:

Give them our names and contact information
Fax them a copy of the P&S Agreement and a copy of the MLS sheet
Inform them that the buyers have signed a release (via the P&S) allowing them to talk to us on the buyers loan.
Ask them who the title company or closing attorney will be
Give them the important dates of the P&S (loan commitment date & closing date)

Well, every time we tried to call the company, we got their voice mail. It was as though nobody was every actually in their office. I started to become suspicious, so I did a little checking around on line to see if I could find another number to reach them. I found a couple numbers, but one had been disconnected. Luckily, the other went to a lady who worked in their office. She wondered how I had found her cell number. Well, it was listed on the state banking web-site.

Okay, so we start talking and I find out that they generally use a particular attorney for their closings. This attorney is located out of state. I ask her if they would have any objection to using a local title company instead. She tells me that it would depend on their fee schedule. Okay, fair enough. So, I fax her the fee schedule and contact information for our preferred title company and await her reply. I wait……

And I wait….

I call back several times to check on the status of the loan. I tell her I don’t even care about who closes the loan, but that I would like to know how things are going with the loan. Did the appraisal come in all right? Will they be able to meet the commitment date? Will they be able to meet the closing date? Of course all these questions were left on voice mail because no one ever answered the phone, EVER!

So, a few weeks go by and we get notice that the loan was sent to an attorney’s office in Massachusetts, so we get all the information together that they will need in order to get the pay offs, etc. I ask the attorney’s office if they can email me a preliminary HUD (settlement statement) showing their fees. They do this and I find that they charge the buyer $650. This is $150 more than the company that we offered. So, obviously the lender didn’t care how much the buyer had to pay, they just wanted to use their preferred closing agent. Okay, fine. We’ll make the buyer aware of this, but we have bigger fish to fry in that we need to know what the heck is going on with the loan! We have a commitment that is coming due and a closing that is supposed to happen!

We keep telling the buyers that we are not able to get in touch with the lender, but they tell us that the lender is in contact with them, so we figure that they have CHOSEN to keep us in the dark. I even wrote a post about this a local group to see if we were alone in this problem. This isn’t the only lender recently keeping tight-lipped.

Well, unfortunately (but not unexpectedly) the lender turned these folks down. They never told us, but told the buyers. Of course, we needed a denial letter and were having one heck of a time getting it. I finally left an irate message at the office and on this one lady’s cell phone stating that we must have the denial letter immediately and that if they were afraid to call me to just fax the dang thing to me. I had it in about 30 minutes!

Okay, so that’s the BAD news. Are you ready for the GOOD news?

The buyers are completely distraught and are now willing to do ANYTHING to get this house. We put a call into our trusty Coldwell Banker Mortgage Advisor and see if he can save the day. He says that he can probably get them done in about a week so that we can still close the same day! I’m sure that you’re thinking… TO GOOD TO BE TRUE! Well, I understand that thinking, but know from experience that this guy is good to his word.

That was last Friday. We are closing today with our preferred title company . We got the loan commitment (including appraisal) this past Wednesday! Everyone’s happy!

We have another one that we are trying to move to our trusty Coldwell Banker Mortgage Advisor right now, but the buyer (through another agency) still seems to be putting trust in his friend, so I’m not sure how that one will turn out.

I told Mike that if he could pull this off… “I’m tellin’ everyone!” – So, that’s what I’m doing!

The moral of this story?

Buyers: Don’t put all your trust in a lender just because your friend works there. Trust your REALTOR to protect your best interest. If you’re unsure, ask for a referral. I’m sure your REALTOR has many past clients that would be happy to vouch for the referral you are receiving.

REALTORS: Don’t be afraid to push your preferred lenders, title companies, inspectors, etc. If you have a Dream Team working hard on your transaction, maybe your next transaction won’t be a Nightmare!

OUR LIPS ARE SEALED!!

Wed, 05 Mar 2008 11:30:09 -0800

I just wanted to see if any of you are having the same problem with lenders and their privacy policies as we are. Currently, we have two lenders that are refusing to give us information on the loans that they are processing. In one case, we are representing the buyer and in the other, we represent the seller and buyer.

As I'm sure you are aware, the P&S has a built-in release at the bottom of page 3 that gives us the right to obtain information from the lender. We were told by one of these 2 lenders that they had their legal department review this document (NH P&S Agreement) and that it was determined that they are not a party to the agreement and are therefore not bound by it. Their conclusion was that they would stick by their privacy policy and not give us any information on the loan and also told us not to call them anymore!

This is obviously putting a great deal of stress on our seller clients as they are required to be out of their house by closing, which is less than a week from the commitment date. At this point, we don't even know if the properties appraised out.

I have posed the question to the Legal Hotline, but thought I would check with you all to see if anyone else is having this problem and of so, have you found any way around it? Maybe we're just very UN-lucky.

Thanks,

Katherine

BUYER (SELLER, AGENT & BROKER) BEWARE!

Fri, 21 Sep 2007 11:53:59 -0700

WHEN THE GOING GETS TOUGH, THE TOUGH GET CREATIVE!

The other day, I read an post by Glen Gaspar entitled Are some of our fellow agents violating our Code of Ethics? and it got me thinking about what I am seeing in our local MLS.

With the market such as it is... deals have been harder to come by. I am sure that many of you have thought of some creative ways to get your listings noticed. My mom always told me: I'm a tea-bag person ... I work best in hot water! Well, I think many of us are that way. When times are tough, we get creative in order to make things happen and that's good! However, I have to wonder ... could some of us have taken it too far? Don't get me wrong, I'm ALL FOR CREATIVITY, but I have seen some things that I feel in my gut are not ethical.

Please read the following scenarios and let me know what you think:

Scenario #1 ~ Recently, I received an email from a listing agent advertising an open house and new bargain price. It happened to look like an exceptional deal and was in the price range and area of a buyer that one of our agents was working with. I forwarded the email to the agent in our office and recommended that he tell his buyer about it. Well, he was going to be out of town for the weekend, but decided to tell his buyer to go ahead to the open house. He told her to let the listing agent know that she was working with him as her buyer agent. (Normally, I wouldn't advise a buyer going on their own, but it seemed like an extremely good deal, so we thought it best that she see it rather than possibly miss out on such a good deal.) While at the open house, the buyer gets the high-pressure pitch from the listing agent. This doesn't turn her off because she has already fallen in love with the home and is prepared to pay full price. She meets with her buyer agent and they write up the full price offer. Well, that wasn't enough! The listing agent kept pushing for more & more to the point that this (very mild-mannered lady) buyer was nearly put off to the point of walking. Long story short... she finally closed at several thousand dollars over asking. (and this wasn't a high priced home, it was a starter priced condo) We don't believe that there were other offers as this went on for quite a long time. Certainly, if there were other buyers they would have just gotten it over with and taken the other offer. After all was said & done, the listing agent tells the buyer agent that their office attended a seminar where they learned a strategy whereby they list property below market value with no intention of selling it for that price and work people into a frenzy to over-pay. I thought that was called a "bait & switch". I do admit that the agent certainly seemed to do a good job for her seller, but at what cost?

Scenario #2 ~ In reviewing listings to update a market analysis for one of our listings, I noticed a listing that was priced way below the others in this condo association. At closer inspection, it was noted in the remarks that "seller would entertain offers between $140,000 - $175,000". Wow... that's quite a range! Now, it was in the MLS listed at $140,000. What do you think buyers are going to offer? Duh! I questioned whether or not this was against MLS rules. Certainly seems sketchy to me! However, after calling and asking the direct questions, I was told that "it does seem very odd, but we don't have rules against it". I started doing some research and found that there are quite a few listings that are in the computer this way. Some agencies put in the high end of the range, some put in the middle, but one almost always put in the low end of the range... with the exception of 1 listing that showed up at the high end of the range with the disclosure "broker interest". Hmmmmmm ... does that seem fishy to anyone else? I am certain that the idea here is to get as much interest in the property as possible, but I have to question how ethical it really is. Seems to me that any buyer (and especially in a buyers market) would obviously offer the bottom range or lower - AND - Any Seller that would not really consider an offer at the low end of the range shouldn't have it listed and / or advertised at that price. So, who is this practice serving?

SO... Buyer, Seller, Agents & Brokers BEWARE! Know that these strategies are being used and arm yourselves with knowledge so you'll be prepared to deal with these types of strategies. Remember that saying that begins?: If it sounds too good to be true...