Preparing Your Home For Sale

Are you getting ready to put your home on the market and want to know what you can do to help your Realtor sell your home?  Below are some ideas that will get your house looking neat and ready for potential buyers to walk through.

1.  Reduce the amount of furniture you have in a room.  You want the home to have a large floor area and all doorways and halls to be open and clear. 

2.  Get rid of clutter.  The photos that you cherish and are hung throughout your home are a distraction to future buyers.  They want to imagine themselves in the house and not what kind of family currently lives there.  Remove knick knacks from counters and shelves and throw away or hide magazines.  Begin packing and store boxes in a storage unit or in your attic or donate to a good cause.

3.  Repaint those colorful walls.  Create a neutral canvas for buyers, paint walls an off white or light beige color.  You may have loved that bright orange in your kitchen and adorable pink in your little girls room, however, it's time to paint and create a generic look for future buyers.  Paint is cheap and will make a huge difference when your home is on the market.  It will look fresh and clean with a good coat of paint.

4.  Organize closets.  Buyers want to look in every door and sometimes the cabinets as well.  Take a day or two to throw away, donate or pack items that you aren't using.  Closets can get very cluttered and you want to show off your storage space as it is a great asset to your home.

5.  Put valuables in a safe deposit box or in a hidden safe.  Remember that strangers will be coming into your home to view.  Don't put your grandma's wedding ring or your rare baseball cards in drawers or counters where people can take them. 

6.  Make your home sparkle. Keep your home as tidy as possible by vacuuming, dusting, keeping dishes out of the sink, hang fresh towels in the bathroom, get your windows washed, dust fan blades, replace worn out rugs, remove cobwebs.

7.  Do the sniff test.  If you made fish the night before you may want to open some windows and boil a pot of water with some cinnamon sticks, light a candle or bake some cookies. 

8.  Do some minor repairs.  Fix leaky faucets, replace old grout, put some W2 on squeeky hinges, replace any burnt out bulbs, repair holes in drywall, remove wallpaper, etc.  Walk into each room and really look around to see what you can do to repair anything that is visible.

9.  Check your curb appeal.  The first impression your buyers will have begins before they ever enter your front door.  Lure them in with fresh planted flowers, neatly trimmed bushes, green and well manicured lawns, clean sidewalks and patios and clean exterior paint.  Make sure your address is easy to read from a car.

10.  Recruit your Realtor or best friend to do a walk through and give any advice after you have completed the previous 9 items.  Everyone sees things differently and they may have some great advice on something that was overlooked. 

Doing these 10 things will be the best things you can do to get your home sold quickly after you have decided on a competitive listing price. 

10 Commandments Home Buyers Must Follow

These 10 Commandments home buyers must follow may seem like common sense to many. Buyers, however, can sometimes forget with all the excitement surrounding the buying of their new home. In the past couple of weeks, I have heard of two separate buyers who saw their home loan turned down, and their dream shattered, a few days before closing because they had bought furniture for their new home before it actually became their home. Both of them now have beautiful furniture with no home to put them in.

These two buyers were not my clients but it always hurts when I hear of transactions falling apart for reasons that could have been avoided. These 10 commandments are part of the buyer packet I give all my clients when we first meet and I always stress that once they get pre-approved and the process is started, they can't do anything that might affect their credit.

1. Thou shalt not change jobs, become self-employed or quit your job.

2. Thou shalt not buy a car, truck or van (or you may be living in it)!

3. Thou shalt not use credit cards excessively or let your accounts fall behind.

4. Thou shalt not spend money you have set aside for closing.

5. Thou shalt not omit debts or liabilities from your loan application.

6. Thou shalt not buy furniture.

7. Thou shalt not originate any inquiries into your credit.

8. Thou shalt not make large deposits without first checking with your loan officer.

9. Thou shalt not change bank accounts.

10. Thou shalt not co-sign a loan for anyone.

If you are in the process of buying a home, remember that your credit must not change or be affected in any way until you actually sign the paperwork and get possession of your new home. Lenders will not only look into your credit when you first get pre-approved, they will check it again (and sometimes again and again) before they let you sign the mortgage. If you want to buy new furniture for your home or change jobs, just be patient. There will always be time to do it after the closing.

Every Seller Needs To Know, What Sells a house?

Every Seller Needs To Know, What Sells a house?

There are four varibles that sell a house.

1.  Price

 

2.  Terms

 

3.  Condition

 

4.  Location

 

 

All four of the variables go together to create the "perfect sale."  Each aspect must be taken into consideration if you want a property to sell.

1.  Price fixes everything!  Don't let anyone tell you different.  When the buyer perceives there is a value because of the price, they will buy the home.

The other three varibles always can effect the price.

There are circumstances where a buyer has lost the ability to qualify for a traditional loan because of a foreclosure or bankruptcy and the buyer needs owner financing.  With Owner carry Terms that particular buyer may be willing to pay more because they have ownership with possibly a small down payment. 

Conversely, if the Condition is bad the price will have to be reduced to reflect a value in the home where a buyer will have to come in and do repairs or cosmetic updates.

Location is the toughest variable in the sale to compensate for.  Most people have heard about in Real Estate the terms Location, Location, Location. If the location is bad.. ONLY price will sell the property possibly combined with terms so exciting that a buyer will not be able to pass up the deal. 

2.  Terms.  If the Terms are attractive, sometimes a seller can get more money for the home.  For example: a home with a value of $325,000 listed with owner carry terms of $25,000 down and no bank qualifing might be able to sell at $350,000 because of the terms. 

Under any owner carry situation, it is important the seller speak with their accountant and attorney before accepting any contract and agreement to finance.   The seller should be completely aware of the liability and consequences in owner financing. This is just an example how price can increase with the right terms.

3.  Condition is a key factor in selling a home.  When the property is in top condition, looking like a show home the seller may get top market value for the property. In times where homes are selling at a slow pace, in order to procur a sale, the home should be the BEST property at the Lowest price to get to the closing table.

Taking a seller on a preview tour of the homes in the area similar to their property can save months of discouragement with a home not selling.  When a seller can see the competition and accepts the fact their home needs to be the Best house at the lowest price to sell, the home will sell and the seller will see what they are up against in comparison.

Carpet or paint allowance does NOT work in selling a home.  If the home needs carpet, put it in.  If the home needs painting, get it painted.  Many times this can cost a seller $5,000 to $8,000 to do those upgrades.  Investing, yes, investing is the correct term, for getting the house sold. The money invested will come back in the form or a quick sale at full market value.

A picture is worth a thousand words so think about how the property looks and even take some pictures to see what a buyer is looking at.  Sellers should look at the pictures like they were a buyer and ask, "would I buy this house in this condition for this price?"  Are the kitchen counters cluttered?  Are the closets a mess?  What does the front door look like and the yard when people drive up to the house? 

A seller has 8 seconds for a buyer looking at a home to decide if they really like the house and if it will go on the A list.  The buyer starts the decision making process when driving up to the home while looking at the surrounding properties and the entrance to the home. 

There are many agents are trained in "staging" a home and there are "staging services" which help a seller to understand what needs to be done to create a "marketable product." Listen to these people if you want to get the house sold.

The seller needs to separate from the house and see it as an investment or product that needs to be sold. The seller needs to take all the emotions out of the happy memories in the home if they are serious about selling.

4.  Location is the only variable which cannot be changed.  A bad location, is a bad location so only price and terms are going to help this situation. 

It does not matter that the same model home across the street sold for thousands more, because it was ACROSS THE STREET and did not back to the highway.  A seller needs to get a reality check on location and think about when they purchased.  If the seller got a good deal when they bought because it had a bad location then they have to give the new buyer the same good deal to sell. 

Sellers should take all the emotion out of the business of selling a home and treat the transaction as an investment decision. 

If the goal is to get the home sold then listen to the professionals and let them do their job. 

As Donald Trump would say, "It's only business." 

 

Cosmic Cow Pie

Carra Riley

Huge FHA News!!! FHA IS ADOPTING HVCC AS OF JANUARY 1ST...GET READY FOR CHANGE!

 

Yes it is true, just yesterday, September 18th FHA sent out a Mortgagee Letter to all lenders that they are adopting HVCC in most of its current form.

By now most of you know about HVCC, if not please check my previous blogs on the subject. Fannie Mae adopted HVCC (Home Valuation Code of Conduct) on May 1st. as they wanted to insure appraiser independence. In short this means that mortgage brokers can no longer order appraisals from appraisers. It is now being handled by AMC's (Appraisal Management Companies) or the Banks directly. No production staff that is paid commission based upon a loan closing can order appraisals.

Due to this change, what was happening was FHA loans were on the rise BIG time as the brokers still had control over the appraisal process. That will end January 1st. FHA does not want to take on any more risk than they already have and FHA does not want and they are not asking the Federal Goverment to bail them out. They have enough in reserves to deal with any loses they have. So FHA must make sure that appraiser independence is guaranteed to minimize on this lending risk. I am not surprised at all, I really was expecting this from FHA.

What does this mean?

1. Good news for appraisers, the AMC's who normally pay CUT rate fees and who care less about quality appraisal reports and experienced appraisers and more about making money, must pay appraisers based upon normal market rates for completing FHA assignments. However the borrower will wind up paying more for FHA loans as the appraisal fees will be even higher....at least this is my take on the situation as the AMC's will jack up their prices to the banks to pay the appraisers what they should and to make profit for themselves as well.

2. Mortgage Brokers will no longer be ordering appraisal reports. So this repsonsibility will go to the Banks or the AMC's.

3. Appraisal reports will only be good for 4 months rather than 6 months.

4. Good NEWS: FHA will allow appraisal reports to be transferred to another lender rather than having another appraisal report completed.

5. The only way another appraisal report can be completed if someone does not agree with value is the report will have to be flawed in some way and it will have to be proved that flaws exist in the report

6. No one can talk to appraisers about value issues. REALTORS, you can still give Appraisers comparable sales data, that is NOT prohibited, you just cannot talk to them about value. The banks and AMC's can discuss particulars of the assignment, but no one can pressure an appraiser for value PERIOD!

7. As of October 1st only CERTIFIED Appraisers can complete FHA appraisal assignments.

8. FHA will require that the appraiser is knowledgeable in the area that they appraise. So if you find an appraiser coming from way out of the area to do an appraisal, this would be one reason to suspect the accuracy of the report. This has ALWAYS been required of appraisers as part of USPAP ( Competency RULE) but many appraisers would take the job no matter where it was and this is not good, if they have no clue about the area.

9. Banks will be liable for the loans they underwrite, not brokers, so there may be more FHA brokers coming from the picture.

To read more about it click here for the full story:

http://www.mortgagenewsdaily.com/09182009_drastic_fha_guideline_changes.asp

Pass this along, this WILL affect your business as of JANUARY 2010.

Mary Thompson

Your Active Rain Appraiser

www.marytappraisals.com

 

 

 

Listing Your Home for Short Sale, Part 6: Patience and Cooperation

Listing your home for short sale is not as complicated as you think.  This is the final installment in a series.  If you've missed the prior installments, you can link to them here: 

Listing Your Home for Short Sale, Part 1:  Do You Qualify?

Listing Your Home for Sale Sale, Part 2:  Choosing Your Listing Agent

Listing Your Home for Short Sale, Part 3:  Collecting Your Financial Information

Listing Your Home for Short Sale, Part 4:  The Hardship Letter

Listing Your Home for Short Sale, Part 5: The Authorization Letter

So you've got your Listing Agent, have them authorized to talk to your mortgage holder(s).  You've gathered all your financial information and hardship letter and sent them to the mortgage holder(s) too.  This is where patience and cooperation come in.

First you must wait for a buyer to write an offer on your home.  If you've hired a good Listing Agent, your home will priced right and that won't take too long.  Once you've got the offer that is acceptable to you, you'll sign it and make it a contract.  From there, your Listing Agent will send the contract to the mortgage holder(s) for approval.  Next.....

HURRY UP AND WAIT

I find that weekly phone calls to the mortgage holder(s) get me very little information that makes a seller or buyer feel like there is progress being made. Calling more frequently does not make it go any faster.  Your patience as a seller during thes long periods of no information is appreciated.

After the contract is given to the bank, the bank scans the document into their internal databases.  This process alone can take two or three days.

Next a negotiator will need to be assigned.  Depending on the bank, it may be immediate, may take a month.

Once that negotiator is assigned, they will order an appraisal or a BPO (Broker Price Opinion).   Just getting the BPO or appraisal ordered adn back in the mortgage holder(s) system can take two weeks.  This is an important part of the process because getting a value on the property will tell the negotiator if the contract needs to countered with a higher sales price.

Once the negotiator has determined whether or not the contract needs a counter offer or is fine the way it is, the contract is then given to the investors on the loan to determine whether or not they will accept the loss and approve the short sale.  This can take days or months.  All depends on the investor.

And while all of this is going on, there will be periodic requests for updated financial information, or requests to resend information you've already sent.  Cooperate with your Listing Agent and mortgage holder(s) and don't argue.  Cooperation is the key to success.

So while all of this is going on in the background, and you are about to give up, one day the phone will ring with the news you've been waiting for.  Your Listing Agent will be on the other end of the phone telling you that the short sale has been approved or why it has not been approved.  In my business as a Listing Agent, nine times out of ten, I'm giving good news to my Short Sale sellers.

Short sales are certainly more complicated than regular resales, but they aren't impossible when you are prepared and you hire a good Short Sale Listing Agent.

 

 

 

$8,000 Tax Credit for First Time Home Buyers

$8,000 Tax Credit for First Time Home Buyers Mortgage News What Would You Do With $8,000?

What if the government decided today that, instead of bailing out Wall Street, it was going to give every American $8,000? What would you do with the money? For most Americans, paying off credit card debt would be a great way to use the free money. According to a Nilson Report released in April 2009, the average credit card debt per household in the US was $8,329 at the end of 2008. That money from the government would almost wipe out your debt completely. Imagine being completely debt free. Healthcare is a big topic these days. According to the most current Census Bureau statistics, some 45.7 million Americans do not have health insurance. So, many Americans might choose to use their $8,000 to enroll their family in a healthcare program through their employer. The federal government tracks the average spending on health insurance for people with job-based coverage, and the most recent figures (from 2005!) indicate that the average individual's premiums were $3,991, while families spent an average of $10,728. Your $8,000 would go a long way in insuring your family. Some Americans might choose to start a small business. Experts estimate that start-up costs for many new business ventures are between $10,000 - $15,000. With $8,000, a large portion of your initial investment would be covered. If you really think about it, there are so many things you could do with $8,000. You could open a 529 college savings plan. You could add your 8 grand to the government's $4,500 Cash for Clunkers plan and buy a new car. You could take your family on an amazing once-in-a-lifetime vacation. You could open an IRA and save for retirement... But what's the point in dreaming. The government's not giving away $8,000, right? Wrong. Right now, through November 30th of this year only, the government is giving qualifying first-time home buyers up to $8,000 for purchasing a home (or up to 10% of the purchase price). This is free money that you do not have to pay back. And here's the best part: if you qualify, you can get your money from the IRS this year, even if you've already filed your 2008 taxes. There are, of course, limitations and other qualifying factors, but they are all pretty reasonable and easy to explain, and we'll be glad to discuss these with you or anyone you know who is looking to buy a home. With today's combination of lower home prices and lower interest rates, this temporary incentive from the government is really a great option for many Americans who act now to finally fulfill their dreams of owning a home.

If you know anyone who is looking to buy, sell or refinance a home, please forward their name and telephone number to us. We will happily provide the same high level of service that we have provided to you. The greatest compliment you could possibly give us is the referral of your friends and family.

 

Karl Peidl
Lincoln Mortgage Company
251 Bellevue Avenue, Suite 102
Hammonton, NJ 08037

609-878-7013

kpeidl@supmort.com

www.facebook.com/newjerseymortgages

 

Pennsylvania: Licensed by the PA Department of Banking as a First Mortgage Banker and licensed pursuant to the PA Secondary Mortgage Loan Act. New Jersey: Licensed by the N. J. Department of Banking and Insurance Maryland: Authorized Mortgage Lender by the State of Maryland Commissioner of Financial Regulation. Florida: Licensed Mortgage Lender by the Florida Office of Financial Regulation. Delaware: Licensed Lender by the Delaware Office of the State Bank Commissioner.

© Copyright 2009. All About News, Inc.

Top 10 Reasons Why Your Short Sale Will Not Close

10.) You sent in multiple offers to the bank. Put yourself in the bank's shoes, what would you do if you got 3,4,5 or 6 offers on your property? That's right you would wait to see if you get more at higher prices. We all know short sale departments at banks are extremely organized and they can surely keep track of multiple offers (Yes I'm being sarcastic). Oh did I mention accepting and having your seller sign multiple offers is probably a little against the law and at the very least unethically? Third party approval is just a contingency just like an inspection or financing. You wouldn't keep accepting offers if there was an only and inspection contingency right?

9.) You don't call the bank periodically for updates, you rely on them calling you. With literally thousands of short sale offers coming in, you need to keep your file fresh on their minds. Files are always being lost or misplaced, yes even in this digital age they get lost in cyberspace. A file goes to a negotiator via email and the pdf gets deleted accidentally. Do actually think the negotiator is going to remember let alone try and recover that info when he/she has another 100 or so to work on? They just say NEXT.

8.) You don't bother to lower the price periodically. Do I really need to explain this one, this is real estate selling 101.

7.) Your marketing, well sucks! No pictures, no virtual tours, poor description, etc. Again real estate selling 101.

6.) You don't know what the hell you're doing and are too pigeoned minded to actually take formal training to get better because of course you've been in business 28 years or that's what your broker told you to do. Formal training is not some 2 hour course given by your local board nor is it a 2 hour webinar. I'm talking at least 8 hours of classroom instruction or distance learning curriculum. Nothing substitutes for a live instructor if you have a choice chose the classroom.

5.) You don't submit an offer you feel is too low. WHAT? Let the lender tell you it's too low. Get the process going and hopefully you can get a hard number from the bank on what they'll take.

4.) You don't check this property's status and the bank forecloses. The short sale department does not communicate with the foreclosure/legal department. You don't know how many times I've called and informed the S/S department about an impending sale date and they reply, "Oh let me send them a message to delay the sale." This doesn't stop the process but in my neck of the woods if you delay a sale, you just bought yourself 60 days. It takes 30 days to get in front of the judge to schedule another sale date and that date is usually another 30 days out.

3.) Poor communication with the buyers/buyers agent and they walk. Mindset is crucial here. You need to prepare the agent and/or buyer for a long wait at least 90 days before you can go into the sales phase. You also need to let them know that not a whole lot will happen in the first 30 days and to expect updates every two weeks or sooner if developments occur.

2.) You're disorganized. If your the type that gets overwhelm at times (Like me) you need to systematize your business. You should have already done this but this is even more crucial in short sales. I designed an excel spread sheet that holds all my listings. I note whether they are active, pending , short sale, etc. It contains all the info I need in the notes boxes of the spreadsheet and I note every time I call with date and name of person. If you want a copy of it send me an e-mail.

...........drum-roll please........and the number one reason your short will not close is:

1.) Your short sale package is incomplete. A bank will not call you and say hey your package was incomplete. It will go in the round file cabinet. The more info you send them the better. I always call the lender first and ask for their specifics. I then send them what they ask and then some. A complete package should be at least 50 pages. I've seen some that are 100 pages. These servicers do not have a clue about your market. The more you send them pertaining to the market value the better chance you have at getting your package looked at sooner. You come across as a professional that really knows what you are doing, perception is the key here. (Who cares if you just took the Short Sale class 24 hours ago, you're a pro act like it!)

Good luck and happy short selling

Noel Padilla, CDPE

The Sins Of A Seller

 

Many of you know that I recently bought a home. 

And, for those of you that don’t know that I recently bought a home…I recently bought a home.  Here’s proof.  

Although we are very happy with our home we did purchase, during this process, I happened to notice that as we viewed house after house, I kept seeing the same things happen over and over.  And….not good things.  Bad things.  Bad things that were blatantly obvious to me.  Bad things that literally turned me off.  Bad things that were keeping this otherwise fine house I was standing in from selling faster.

So, as we went through the homes, I started keeping track of things that I saw that made the average buyer – ME – want to run away screaming.  Here is my “Top 10 Seller Sins”:

1. Addition Addiction – Ok…exactly what were these people thinking when they added this addtion to their home??  It isnt level.  The door frame isnt square.  And, that simulated wood-grain indoor/outdoor burber carpeting is HIDEOUS!!  Wasn’t this were the garage should be anyway??  I guess that explains the severely sun-faded paint job on the Sport Family Truckster in the driveway and the Christmas decorations piled floor-to-ceiling in the closet in the spare bedroom.  I don’t care what anyone says…Bigger is NOT always better.

2. The “Pet-Owner Moaner” – The over-all assumption that since the seller loves their pets more than chocolate, so does everyone else.  Here are a couple of quotes I heard directly from the sellers mouths: “Awwww, my cat must really like you to nestle into your neck like that.”; “I know he looks big, but he is really just a teddy bear.”; “We were able to clean up everything in the house except the cat room.”; “I cant remember if my son put away the ferrets or not, but feel free to look around downstairs.”
a.  Ok…first and foremost, Im allergic to cats.  I don’t mean that cats make me sneeze.  I mean that I quit breathing and require adrenallin shots to keep from dieing.  That thing is lucky I didn’t toss it out the open window that was next to me. 
b. The “teddy bear” they were referring to…Yeah, that was a 158lb Rotweiller with a googlie eye and a broken tooth on the right side.  His chain was tied to a cinder block that he happily drug around and tossed into the air during “playtime”. 
c. The “cat room”???  Oh Lord in heaven!!!
d. If you cant figure out if your son left out a pack of rodents in the dark rooms down the creaky stairs without a safety rail and a working light switch, you can be damn sure Im not going to find out for you.

3. Auditory Unawareness – If you cant hear that your refridgerator is making a clicking noise that can be heard from the front yard, Im fairly sure you cant hear the floorboards creaking, the doors squeaking, or the apparent family of raccoons living in the attic.  You also only hear what you want to hear.  Instead of “Your house is priced too high”, you hear “Your house is of a high value”.  Its not the same.  Pay attention!

4. Color Blind – Holy Lord!!  Who decorated this place??  Its like Andy Worhol threw his color pallet into a Cuisinart and hit ‘liquify’.  The fuscia flower print wallpaper needs to go.  And, I don’t carew what you say, it doesn’t do any justice to that wall with the fake woodgrain panelling it joins up to by the sunshine yellow couch.  Worse yet…the white cabinets, white-washed walls, white countertops, and white tile is just a bit much. 

5. “Take it or leave it” – Yup.  Heard that come right out of a seller’s own mouth.  We were discussing the possiblity of him making a necessary repair to a sliding glass door that lead out to a deck.  Between the glass panes was about half an inch of standing water.  Obviously, the seals on the window were compromised.  When asked if he would spend the money to get the glass replaced and the seales re-done…or just replace the entire door…that was the response I got.  Guess what…I left it.

6. Price-itis – The fear that your home wont sell for the price you are asking for it.  I put in an offer on a home that was only $5,000 under what was being asked.  The counter came back with a reduction of $1,000, but a clause to pay $4,000 in closing costs.  Now, I may be bad at math…but, isnt that the same damn thing???? 

7. Fried Food Funk – You know what Im talking about here.  If you can smell it, you won’t sell it.  Bottom line here is that fried food smells, kitty litter, a back yard filled with dog crap, a nursery reaking of dirty diapers, etc…all add up to one thing – a very short showing.  (Well, it also leads to gagging, shortness of breath, tears streaming down your face, and everyone skrunching up their nose and making that internationally known face that says, “Do you SMELL that???”)

8. Photog Fog – Everyone should take pride in their family photographs.  I do.  But, Im not trying to sell my house!  I went into one home where, I kid you not, the entire living walls…every square inch…was covered in frame pics of family.  There must have been 100 pictures in that room.  Frames mounted together like a patchwork quilt of memories and bad matting jobs.  Love the sentiment…love the family pride.  But, I was COMPLETELY distracted from seeing the actual house. 

9. “I collect them” – No kidding, really???  Nothing would have made me realize you collect dolls were it not for the fact that Im now suddenly very aware of the fact that 226 eyes are now following me through your house like Chucky with an ax to grind.  Yeah, I couldn’t tell that you collect Vegas casino ash trays since they are on every flat surface in your entire house including 4 separate 6-ft tall bookshelves, your coffee table, the top of your TV, the end-tables,  and the extra two shelves that you put up encircling the entire living room.  But, worse than that, you have them on your toilet tank, your dresser…and in an amazing twist, you have drilled holes in them and replaced half of the doorknobs in your house with them.  In case your agent hasn’t told you this….PACK THIS CRAP UP!

10. Livin in the past – I don’t care what you think, the pea soup green shag carpeting is not coming back in style.  And, regardless of how many memories are associated with it, the nine-foot long, hunter orange, faux-leather couch on the wooden legs with the sleigh-style arms on the each end is FREAKING UGLY!!  Regardless of whether or not they still work, the matching avocado green stove, fridge, and counter tops are ugly…and they are ugly 24/7/365.  If you want to move this house…replace this ferocious eyesore.  Better yet…HIRE A HOME STAGER!

Yeah, selling a house is hard.  Selling a house in the market is harder.  Selling one of THESE houses with a seller that sins like this…nearly impossible.  Sellers, if you are reading this…listen to your agents.  Agents, if you are reading this…make sure your sellers understand that buyers – like me – will look at these like neither of you know what you are doing and act accordingly.  Probably by running away quick.

 

 

 

If you would like more information about Real Estate Client Referrals and how we can send you more clients to work with, please contact Clint Miller at 800-977-7058.  Or, follow me on twitter www.twitter.com/TheRealClint.

203k Made SIMPLE? Yes, for your clients..........

203k MADE SIMPLE?

Ok, maybe not, but I will attempt to make it as simple as possible for the client to understand and want to read on.  For many of us in the business who are " in the know"  we forget that we need to go back to the basics and spell it out in simple terms for others to understand.  So I've compiled some information based on my most recent commonly asked questions just this week.

In Southern California, FHA loans were just not utilized over the past 10 or so years because of the FHA Maximum Mortgage limits  But now that the limits have been increased and the prices have decreased, FHA loans have become the most utilized loan in recent months.  HOWEVER, because it was not a popluar loan, you would be amazed at how many lenders/brokers do not know what they are doing.  Especially when it comes to the 203k loan.  I spoke to a client today that was given such mis information it made me cringe. 

                                            

 Apparently they told the client that 203k loans were no longer being done (Gee, you think it was after realizing that they had no idea what they were doing?) and they tried to flip them into another loan. This was after telling my client that their loan amount would be for the contract price and the extra money would just be separate and sit in an impound account to be disbursed over the next 6 months.  Ok partially true, the extra amount would be in escrow to be disbursed as the remodel progressed, but for free? Who pays for the extra 50,000 dollars you just borrowed for repairs? Your loan amount is for the entire amount you are borrowing.  Makes sense right? 

So what is a 203k loan and why use one?

When a buyer wants to buy a home that needs repairs utilizing FHA financing, normally the repairs would have to be completed prior to the close of escrow.   The repairs would normally fall on the responsiblity of the seller.  With so many foreclosures in today's market, the bank is the seller.  And many times the home in need of repair is listed "as is".  Which in the past would require a cash buyer or conventional financing.  This is another reason that people in the business decided to shy away from FHA loans.  I believe it was pure ignorance of the programs that were available by the brokers and the realtors couldn't properly prepare their seller for what to expect that gave FHA loans a bitter taste. 

 My associate Jeff Belonger said it best in his post about ignoring what your listing agent tells you about FHA loans

Here we go....203k loans for dummies 

                                           

*  203k loans allow you to FINANCE the cost of the repairs in the new loan amount. (Not to exceed 110% of the after improved value determined by the appraiser and 203k consultant) What does this mean?  I buy a house for 200,000 that needs 50,000 in repairs and I can borrow the extra 50,000?  Too good to be true?  NOPE.  That's it in a nutshell....

ok details please.........

*  Down payment is basesd on the sale price PLUS the final cost of the repairs x 3.5% so for example:

Sale price is 200,000 (DO not calculate 3.5% on this)  PLUS 50,000 in repairs/costs (which includes certain costs and reserves the lender will require) 250,000 x 3.5%.  Down payment is $8750.00 (closing costs are separate as usual)

* Buyer will hire (lender can recommend) a HUD approved FHA 203k Consultant  to go to the property with the buyer to determine the required repairs and wish list repairs.

 The fee charged by the consultant can be included in the mortgage.  The fee can range anywhere between $ 400 to $1200 depending on the repairs required.  Please check with the consultant prior to scheduling your appointment.

*Buyer will obtain estimates from several licensed contractors for the work to be completed depending on how extensive the repairs.

Three estimates are recommended for each contractor but not necessary.  The buyer can act as their own general contractor only if experienced and licensed.  (FHA says experienced, but most investors require the buyer to be licensed)  The contractors must provide documentation to be approved by the lender prior to approval.

The consultant will determine the "required" repairs versus the "wish list repairs".  You must start with the required repairs and then move on from there for you wish list. This is an important step for the consultant and appraiser so that you don't over improve the home and exceed the comparable properties in the area.

* Once the consultant completes his report of required and wish list repairs, the lender will forward it to the appraiser for an "After Improved Value".  This is where you may run into problems with OVER improving the property based on current values.  Between the consultant, appraiser and buyer - the FINAL FINAL report will be tweeked to come up with a final report that the contractors will be hired to do.

* So now the file is submitted to underwriting and approved ( you need to qualify at the full amount you are borrowing of course, which may include your current mortgage payment for the home you will live in during the rehab period) and the normal steps for closing will occur.

(BIG PLUS - you can include 6 months of mortgage payments in the new loan amount since it's assumed that you will have TWO housing payments during the rehabiliation of the new home.  This money will be deducted each month during the reahab process) This is optional.

* Closing occurs, and the work begins within 30 days of closing/funding. (This is when your mortgage payments start since this is when you started borrowing the money - however, if you included the 6 mths mtg payments, they will be deducted from escrow starting when your first payment is due)

* Disbursments are made throughout the following 6 months from the escrow account (normally 4 draws with one final inspection, but  this can be increased for higher repair amounts) as the work is completed.

Remember you paid the seller for the price of the home, and then you borrowed an additional amount of X which is sitting in an escrow account to pay the contractors (your total loan is the total amount you borrowed)

Once the last disbursement is made and the final inspection showing COMPLETED AS PER THE CONTRACT........you are done! Simple ast 1 2 3  - okay maybe not, but that's why having an experienced lender on your side is crucial!

There are specific properties and repair requirements for this type of loan, so please call me for specific details if this sounds like the right loan for your new home.

Please send me your before and after pics!  I would love to see them and maybe even post them for people to see what can be done with this awesome program!  Or contact Colleen Craig FHA 203k Specialist for more details

 Happy Rehabbing!

 

 

 

 

 

 

  

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