Tis the Season to be Jolly...Fa La La La La La La La La (in my Mariah Carey voice). Home sells tend to decrease around the Holiday Season, however, it is a great time to search and buy a home. Here are some reasons on why you shouldn’t put your home search on hold during the holidays.
LESS COMPETITION: I find that the most serious homebuyers are the ones that search during the holiday season. During the seasons, a lot of purchasers, who were looking or interested in looking for homes take a break during the holidays, making it less competitive for the serious buyers to gain the attention of the seller.
SELLERS ARE VERY MOTIVATED: Especially if their home has been on the market for a while. Sellers that have their home and keep their home on the during the holiday season are serious sellers and may have more incentive to sale their home as soon as possible. This is a good time for homebuyers to take advantage and have more leverage for negotiations to get the best deal possible.
TAKE ADDITIONAL TAX ADVANTAGES: Buying a home right before the end of the year and before the beginning of tax season is a huge benefit to the homeowner. As some of the settlement costs paid to the lender and other fees are tax-deductible.
MORE TIME TO LOOK AT HOMES: Although there is less day light time to search for homes during the day, vacation time allows more time for homebuyers to look for a home during the holiday.
I do caution that homebuyer should be aware of your spending habits. It is important to be aware of your reserves (the amount of money saved) and the amount of money that a homebuyer is spending and splurging on credit cards, as this effects your debt-to-income ratio. I would also advise not to open up any new accounts during your house hunting holiday season, this too affects your credit, which ultimately will effect your ability to approve for a home loan.
On Black Friday, I took a prospective buyer home searching and I expressed how impressed I was with her determination to buy a home when she could’ve been out and about splurging on the holiday deals. She expressed how important it was for her to purchase a home so the following year she can entertain her family at her house during the holidays. Purchasing a home during the holiday season does take determination and focus, but the reward is so much greater....Welcoming the New Year in Your New Home!
The majority of the leads that I generate are First-Time Homebuyers, which I love. I enjoy the freshness, the inquisitiveness of home buyers seeking to purchase their first home. When consulting with potential buyers, I always let them know what type of properties are available on the market and the differences between: Short Sales, REO, Flip Properties, New Homes, HUD Homes, etc... As a Buyers Agent, I understand the trials and tribulations of searching, showing, submitting, and closing transactions for all of these types of homes. The challenges that I have had with FHA clients when submitting offers for Bank REO properties is that CASH is KING and Conventional offers are more attractive when it comes down to the bottom line. This is key when it comes down to negotiating multi-offers for FHA participants because they often give up more than they have bargain for.
As a result, I became an advocate for FHA clients to consider Short Sale properties over Bank REOs. After all, they tend to be in better condition and less competitive, which means the terms that the homebuyer is asking for tend to be more accepted. The problem with Short Sales is the timeframe and uncertainty of whether the offer is attractive enough to the lender/investor to accept. With Short Sales, I like to know the listing agent or at least know that they specialize in them so I can trust that they have the ability to close these types of transactions.
Now, flip properties are extremely attractive to FHA participants because of the condition that they appear to be in. I’ve learned that it is best to be familiar with the company or investor that is flipping these properties because quality of the renovation can be an issue. Appraisals can also be a barrier with these transactions because flippers tend to think their property is worth more than the appraisers do...I understand because they have put the money and the time into improving the property. However, I am all too familiar with the process of challenging an appraisal reports, this takes time from the transaction and often ends up the same way it began. This very situation just occurred with a client I currently have, luckily we were able to re-negotiate the terms to continue with the transaction.
So, why do I believe that FHA Financing and Purchasing HUD Homes is a marriage made in heaven? The proof is in the process...HUD has implemented guidelines that are beneficial to First-Time HomeBuyers that utilize FHA Financing. First, let me point out that FHA Financing has become more attractive due to the increased loan limits, 203(K) Rehabilitating Financing, and Energy Efficiency Mortgage. Oh, I forgot the low down-payment required.
HUD utilizes an electronic bid process, which is one of the more fair process in choosing an offer that is out there. The beauty in this bid process is that it allows me to be efficient and quick in submitting an offer. I can literally submit the offer at the property with the client without any paperwork. It is important to note that buyers have to use a selling agent that is registered and has a NAID#. Once the offer is submitted a bid acknowledgement is given and can be emailed to your client.
BID TIMELINE: Some properties are eligible for the “Lottery Round.” The Lottery Round time period is set to the side for the first seven (7) days for HUD programs (Good Neighbor Next Door Program and non-profit organizations). If an acceptable offer is not awarded within that time period and the property is Insurable or Insurable with Escrow, then the property goes onto the general list and priority is exclusively given to owner occupants for the first thirty (30) days that the property is listed. This process was implemented to maximize the promotion of homeownership. Its important to note that the first ten (10) days that the property is listed is a sealed bidding periond...meaning bids can be submitted in the system and reviewed. On the 11th day, if an acceptable owner occupant offer was submitted, the Asset Manager accepts the bid and begins the process of moving forward under contract with that buyer.
HUD performs an inspection on the home before it is listed. Once the inspection is completed a Property Condition Report (PCR) is given and available to the public to download. This PCR outlines the condition of the property which includes: the properties’ structure, exterior, roofing, plumbing, electrical, HVAC, interior, and appliances. Although, this report help educate the homebuyer on the condition of the property it is not a substitute for a Home Inspection and I would always advise a homebuyer to invest in their own home inspection (purchasers are given 15 days for inspection and are responsible to activate the utilities). Being that these properties are sold As-Is (no repairs or warranties), it is an important factor to take into consideration before placing a bid.
An extra benefit that HUD provides is a Termite Report and will pay for the treatment of active infestation and repairs in the event there is infestation and damage.
HUD also performs an appraisal before it is listed. This is a HUGE benefit to FHA homebuyers because it saves homebuyers time, money and the anxiety of knowing if the home is worth the offer price, which ultimately would have an effect on financing for FHA recipients.
BUYER INCENTIVE: HUD will pay up to 3% for the closing costs! It is important to note that in the bidding process another homebuyer can win the bid if they have a higher net profit.
One of my goals is to help develop communities by matching homebuyers that will occupy the resident and ultimately help that neighborhood grow. I would be naive to say that HUD Homes are the perfect transaction for any buyer but I believe that it is one of that it is a good match for any FHA recipient. Working with a selling agent and lender that is familiar with the process is key to having a smooth transaction. The information given is the beginning process to purchasing a HUD Home, subscribe to my blog to receive further education on Successfully Selling A HUD Home!
In this market, buyers often overlook the idea of purchasing a new home. Many buyers have the perception that they cannot afford the purchase of a new home. However, once you analyze the advantages of purchasing a new home and compare them to the resale homes that are on the market, the possibility of purchasing a new home may seem more practical. Many homebuyers do not realize that there are builders that are still in business and that their prices are surprising competitive with those of resale homes in the area. The bottom line..you get what you pay for!
ADVANTAGES:
1.Design Your Home: Purchasing a brand new home that has not already been lived in is a huge benefit in itself. There is very low maintenance for the upkeep of the home, especially for the first few years.
2.Energy Efficiency: Typically the new homes are built with the idea of bringing the homeowner savings through the appliances that are offered and saving on your overall energy usage.
3.Warranty: A wonderful advantage of purchasing a new home is that they all come with at least an one year home warranty, not only on the home but on some of the individual supplies that are used within the home.
4.Closing Costs: If the buyer choose to go with the new homes’ lender as an incentive they typically will receive credit for closing costs (amount varies from one builder to another).
5.Neighborhoods: New Homes allow for a great living in quiet neighborhoods that are great for all families.
6.Timeframe: For a home to be built on a new lot can take at least 3 months to complete.
7.Market Competition: Currently, the homes that are on the market consist of Banked Owned (REO), Short Sales, HUD, and Flipped Homes. These homes are As-Is sales that often do not come with warranties and often the repairs are not covered.
üIf you are working with a Real Estate Agent be sure to have your agent accompany you to the new home development to register you as their client. This will allow the buyer agent to continue to work in your best interest.
I have to admit that being a buyer's agent in a Short Sale transaction is not an easy position to be in. However,as a listing agent of short sales, I have my due diligence to communicate to the seller, lender, listing agent, escrow offer, so on and so forth. If we want this dance to go gracefully (without stepping on any toes) then I need to my dancing partner to follow my lead or at least communicate with me. Once, I receive a signed contract from the buyer and the seller my procedure is to contact the listing agent, at least every two weeks with any updates (event if there is no update). I do this because I want the buyer's agent to know that I am working on this file diligently and I do not want to lose the buyer due to being incompetent. So, my number one goal is to communicate effectively. However, having an one way conversation is not fun nor is it going to get the transaction closed.
When I read most short sale blogs, I see and understand the continual concern of non-cooperating the lender's, however, sometimes I have to go on experience and learned how agents can also be at fault in a short sale transaction being unsuccessful. Even though short sales may not be your niche as a buyer's agent I think it is imperative that buyer's agent take the initiative to learn as much as they can about submitting offers for short sales and how a short sale transaction is done.
I have to say, that I have learned how to communicate better on short sale deals from being a buyer's agent on them. I currently have a Stockton short sale that I am working on, the package is together and with the lender who happens to be Chase. With Chase, once they receive the offer, they have to immediately process that file and request that a negotiator be assigned to that file (typically, within 7 to 10 days). So, it is imperative to have your file completed when submitting because if the negotiator receives an incomplete package and doesn't receive the proper documents within a certain timeframe, they will close the file and move on. Just as a side note: Chase will also request a BPO to be complete within 7 to 10 days. I got lucky and the BPO Agent called within 3 days after I had submitted the file. In the interim, I requested the buyer's agent have the purchase agreement resigned because electronic signature was used on the purchase agreement and the processor informed me that that was not acceptable.
As a result, I went back to the buyer's agent to inform them that I will need their buyer's live signature and initials on the contract by a certain date...I even sent a reminder the day before and....NO ANSWER! So, as a result...back on the market it goes. I work along with my mother, Rosemary Brooks, and the motherly advice she gave me in this situation ..."communication works for those who work at it." With Short Sales...communication is key...
While in the process of putting together my 2011 business plan, I have reflected on what has worked and what hasn't worked for me in 2010. The one thing that was most frustrating has been the number of rejections on bank owned properties (REOs) and the number of accepted offers on Short Sale properties from the homeowner, but not from the lender. As I reflect and ponder on these Real Estate transaction foes, I have reconsidered to do something different for my buyers and that is to become more educated in Rehabilitation Loans. The buyer's I assisted in 2010 have been 90% FHA/VA clients. I think about the homes that I have seen in the past year that were advertised in the MLS as Cash or Conventional loans ONLY... NO FHA... As understandable this may be because of the restrictions and guidelines of FHA loans, it can be discouraging to homebuyers.
During a recent FHA Seminar, I learned that with a lender that specializes in Rehabilitation Loans, wonders can be done for homebuyers. Although, I know about the loan, I've yet to be able to utilize it. HUD's 203(k) Rehabilitation loanhelps to stabilize and revitalize the community and helps people realize that the owning a home is obtainable, without being a slave to your home mortgage. What I can appreciate about the Rehabilitation loan is that it will help my clients understand that even though a bank owned home is advertised "AS-IS" or "TLC" needed, they still can be competitive with their offer and have a fair shot at getting their offer accepted. I believe this can help restore the confidence for the homebuyers who qualify for a home, but remain on the fence. In addition, they can remodel and possibly get new appliances before moving into their new home. The Rehabilitation loan allows agents to hone in on their negotiating skills, as we will need to be strategic in the offer for the property and submit the offer in a timely manner. Click here for additional information on the requirements for HUD's 203(k) Rehabilitation Loan. I vow to look at the options of assisting a homebuyer in purchasing a bank owned home or short sale differently.
NOTE: Luxury items and improvements are not eligible for this loan, however, the purchaser can use this loan for needed repairs and improvements. It is also important to note that health, safety, and energy conservation issues have to be addressed prior to the general home improvements. Homebuyers will have to occupy the home once the repairs and improvements are complete, investors do not qualify for this loan program.
Beginning August 1, 2010...participants in the Making Home Affordable (MHA) Program will be assisting homeowners who are currently unemployed. The Unemployment Program (UP) offers homeowners a forbearance period to temporarily reduce or suspend their monthly mortgage payments while they seek re-employment. These loans are held by Fannie Mae or Freddie Mac, to read the guidelines for the Unemployment Program for non-GSE servicers, click here.
PROGRAM DETAILS:
Minimum forebearance period is 3 months (the mortgage servicer has the option to extend this period depending on the investor and regulator guidelines).
If the homeowner becomes employed then the forebearance will end and the homeowner will be evaluated for a mortgage modification under the MHA Program.
During the forebearance period, the homewoner's monthly mortgage payment MUST be reduced NO MORE than 31 percent (or less) of their gross monthly income.
QUALIFICATIONS:
The First-Lien Mortgage MUST have been originated on or before January 1, 2009. Also, the principal balance MUST be equal to or less than $729,750 and a one unit property.
The property MUST be homeowners primary residence. Investors do not qualify under the MHA program.
The homeowner MUST be unemployed at the start of the forebearance period. The homeowner MUST be able to provide documentation that their Unemployment benefits will begin within the same month that the forebearance began.
The total monthly mortgage payment is greater than 31% of the homeowner's gross income.
The mortgage MUST not have been accepted for a modification under the MHA program.
The homeowner was ineligible for a MHA Modification.
IMPORTANT:
The homeowner may be required to have received up to three months of unemployment benefits before the forbearance period begins.
Late charges may accrue while the homeowner is being evaluated for the program or in the program. However, the mortgage servicer can not charge late charges while in the forbearance period.
Foreclosure proceedings or conduct of a foreclosure sale can not be initiated by the servicer while a homeowner is being evaluated for the Unemployment Program or in the forbearance period.
Contact a HUD Approved Counseling Agency, who will prepare your paperwork FREE of charge, there is no charge to apply for the Unemployment Program! Look up to see if you have a Fannie Mae or Freddie Mac loan. Keep in mind that there are other mortgage servicers that also have an Unemployment Program that is currently in effect. Typically, HUD Approved Counseling Agencies have workshops that are FREE to the public, click here to see if there is one coming soon to your neighborhood.
While working with a Housing Counseling Agency, I am alarmed at the number of homeowners who are willing to take the chance and work with individuals that charge them large sums of money to complete a loan modification. This baffles me when there are plenty of HUD Approved Housing Counseling Agencies that put together your package for FREE and get results! Here are some tips to beware of when dealing with other individuals that homeowners are willing to pay to complete a loan modification.
Beware of any company that promises:
That it's okay to skip on any of your payments
That walking away from your home won't affect your credit
That they will buy your home and sell it back to you later
A specific result for a fee
Steps to Take Action and Report Loan Modification Scammers:
1) Contact the Homeowner's Hope Hotline 1-888-995-HOPE (4673)
2) File a complaint online through Lawyers' Committee for Civil Rights Under the Law
3) Contact the Federal Trade Commission (FTC) at 877-FTC-HELP 1-877-382-4357
4) Contact your state Attorney General For Additional information go online to: www.loanscamalert.org
HUD Approve Counseling Agencies are available to homeowners who qualify and want to stay in there homes. By talking to a Counselor a homeowner will be given options that are available to save their homes. Counselors will also compile the necessary documents together, contact the lender, and follow through until a decision is made through your lender. A counselor will not guarantee that you will receive a workout plan but they are very knowledgeable and helpful in getting resources and options.
DISCLAIMER: I must disclaim liability for any damages or losses, direct or indirect, that may result from use of, or reliance on, any information contained in this blog, or for the accuracy of comments or opinions expressed by visitors to my blog. The information contained in the articles is deemed reliable but is not guaranteed, and the opinions expressed in these articles are mine.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
shouldn’t put your home search on hold during the holidays. 
a listing agent of short sales, I have my due diligence to communicate to the seller, lender, listing agent, escrow offer, so on and so forth. If we want this dance to go gracefully (without stepping on any toes) then I need to my dancing partner to follow my lead or at least communicate with me. Once, I receive a signed contract from the buyer and the seller my procedure is to contact the listing agent, at least every two weeks with any updates (event if there is no update). I do this because I want the buyer's agent to know that I am working on this file diligently and I do not want to lose the buyer due to being incompetent. So, my number one goal is to communicate effectively. However, having an one way conversation is not fun nor is it going to get the transaction closed.
;)
;)
;)
