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The NEW ABC's of FSBO Financing in Grand Rapids Michigan

Trying to move my stuff Trying to sell a home in Grand Rapids, Michigan has not been easy for the past few years due to the crisis in the manufacturing sector, the mortgage industry implosion and the glut of homes which deluged the market within the past 24 months.

Selling a home without help as an Unrepresented Seller presents some additional challenges. In a conversation with an experienced mortgage broker, this past week, I was surprised to learn about some unique criteria which are now pre-requisites for homeowners who are selling their own homes.

According to this source, she indicated that many area lenders are now requiring at least 2 appraisals on any home purchased directly from a home owner. This additional expense is due to the fact that much of West Michigan is now considered a Declining Market.

Thus homes sold by Unrepresented Homeowners aka FSBO's are scrutinized more closely because they represent a higher risk to investors. This is also why title/escrow costs are often higher for Unrepresented Sellers.

The designation of Declining Market has two significant implications for all home owners in West Michigan. First of all, many lenders are looking more closely at ANY HOME which has been on the market for over 6 months even if the location has not been designated a Declining Market. If a home has been on the market for some time, (in West Michigan, our average was between 9-11 months in many areas) the lender may require that the buyer put a deposit of 5% or more down for a mortgage. Unfortunately, many buyers today are unprepared or unable to come up with additional funds.

In addition, areas which have been designated as Declining Markets may experience this added burden on ALL HOMES regardless of how long they have been listed. This contributes negative leverage to the drag that Foreclosures and Short Sales have already had on home values.

There are some lending options which may diminish the impact of these additional fees and these should be explored with an experienced lender PRIOR to placing a home on the market. Now, more than ever...it's important to have a Strategy in place to Sell your Home. Unfortunately, today...simply getting a Buyer to sign a purchase agreement will NOT guarantee you a seat at the Closing table.

If you'd like a referral to a highly qualified lender or need to discuss some options to successfully market and sell your home, please contact Audu Real Estate. We are available to discuss the current Market Conditions in your specific neighborhood in the comfort and convenience of your home.

Lola Audu, CRS, GRI e-Pro ~ Audu Real Estate

Lola Audu, is the Designated Broker & Owner of Audu Real Estate. Our company specializes in helping people buy and sell homes in the greater Grand Rapids, West Michigan area. We've had the privilege of helping hundreds of clients succeed in their goals of purchasing and selling property including demonstrated success in the negotiation of Short Sale Transactions. You can contact us via e-mail @ info@auduhomes.com or by phone at 616-791-0511.

Posted by Lola Audu~Real Estate Broker/Owner Grand Rapids, Michigan Real Estate on 04/12/2008 06:26 PM

Comments (13)

home buyers, home sellers, home purchasing, cost of selling a home, grand rapids, michigan, audu real estate

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13 Comments on The NEW ABC's of FSBO Financing in Grand Rapids Michigan

APR

2008

Our largest local lender here in the valley has been requiring two appraisals on FSBO's for about 6 months now, and we are NOT in a designated declining market.

The declining market is affecting more than FSBO loans in NH..They tend to do review appraisals in all questionable areas. Not fun!

Hi Melina, That is very interesting. This lender indicated that foreclosures were even more time consuming to process. However, I was surprised to hear about all the extra steps and safeguards that are being required to get mortgages on FSBOs. She indicated that it was because they are rarely priced properly.

Hi Monika...that term is becoming an "all inclusive" over here too. It's not just being applied to areas which have been determined to be declining market but also to Specific homes which have remained unsold for a period of time determined by the lender to be "too long." Very interesting developments....

This is insane.

They didn't require two appraisals when homes were selling at 5-10% above market. That horse has left the barn.

I've come to the conclusion that the government, the lenders, et al., have made a determined effort to take the real estate consumer in the poor house and kill off the real estate industry as we know it.

Lola, Wow! This was news to me, but tend to have to agree with Lenn. This is just getting ridiculous.

Lenn, your educated opinion/observation may be more true than we would care to believe. I was genuinely surprised to hear about this development. Sometimes, it feels as though we are taking one step forward to go three steps backward in this crisis. It would seem to me that a purchase agreement defines the current market value in most cases...perhaps they are afraid of transactions which are not "arms length" in the case of FSBOs.

Marc...I would use the term Interesting...:) The Declining Market Issue as it is NOW being RE-DEFINED by some underwriters and lenders could really open up a can of worms. It basically can be used to penalize any seller for failing to sell their home.

Lola, I work for a direct Lender and the rules on "Declining Markets" were not created by us, they have been created and handed down by Fannie Mae and Freddie Mac. These rules affect us as much as it does the Realtors and we do not like them either.

In Connecticut if a house is in an area that has be designated a "Declining Market" (and right now we have very few) the Buyer will have to put down 10% down in order to do a 95 LTV Loan, because the underwriter has to depreciate the appraised value by 5%.

George, Thank you for weighing in on this discussion and giving clarity about the source of the new rules. In talking to this lender, it seems as though the rules are subject to change at anytime now. We have several areas in our state which have been designated declining markets.

What surprises me is that even if a home is not located in one of those areas but has not Sold within (X months) it can be judged by the same standards. If buyers have to put down 10% to buy homes, we're going to loose a huge percentage of the pool of rapidly diminishing borrowers. My understanding is that there are some loan combinations which can be utilised in a combined fashion to mitigate this.

APR

2008

Lola, I've never read one of your blogs before....I don't know why...........but you were mentioned in Katerina's blog today so I decide to search your site....and I was blown away...your post on 'addictions' really hit home.........and I love how you added to the list. Good to print out the list - and pray over it - i'm thinking..:-)

APR

2008

Hi Liz, Thank you for visiting my blog. I always appreciate a visit from a new reader. The blog on Addictions allowed me to look at the topic in a different way.

JUL

2008

I prefer FSBO sites, but not real estate agency. Agents take commissions and it is cheaper that money to sell your property at FSBO site. I saw many sites, but I think Fizber was the best. There are many services that can help sellers and buyers like real estate forms at http://www.fizber.com/real-estate-forms.htm for sellers or http://schools.fizber.com/ for buyers.

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