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Sellers & Listing Agents -- Are you hurting your potential buyers mortgage payment?

Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

April 13, 2008 07:30 AM

direction to take
You are a seller that lists with a real estate agent, and one of you decides that you will not accept FHA financing as a means of a potential buyer purchasing your home? Why is this? Have you been misinformed by the general public? By a real estate agent that doesn't know any better? By an agent who is remembering issues with FHA appraisals from the 1990's?

What about the lender that the previous buyer was using who was helping them with a FHA mortgage. And the loan didn't close. Was is it because it was a FHA loan? Was it because of the incompetency of the lender or the loan officer?

Overall, are you willing to shunt away a better buyer who might just be using FHA financing, just because of the rumors of the past?

fha information

So, how bad do you think FHA mortgages actually are...... What sparked me to write this post was a comment made by Mike Smith, a loan officer out in California.

Mike said this.... "In my neck of the woods, CA, in addition to FHA, I utilize Access with a Radian second mortgage as well as CalHFA with a silent second and silent third. In both cases we can get a 3% seller concession and although the rates are not as good as a SRP bought down rate with an FHA, some sellers still won't accept an FHA offer, so we go with alternatives in a declining market."

Sellers and real Estate agents.... just because it's an offer backed by a conventional mortgage, doesn't mean that it's still guaranteed, even if it is backed by a pre-qualification letter. Conventional and jumbo guidelines are still changing. Could you lose money on your home if a conventional loan is delayed because of a change in program? Yes, it happens. Do you realize that a buyer with a credit score of 679 or less and 10% down or less, will be better off with a FHA mortgage. Here is a great example of this : FHA mortgages vs Conventional mortgages.... which is better?

Overall, are you a stubborn seller listening to the wrong people? The wrong advice? And part of the blame should be given to the loan officer for not educating both the seller and the real estate agent that might think otherwise. Conventional mortgages doesn't always mean better, even for the seller. FHA mortgages are not just for first time homebuyers, those with less than perfect credit, and those with less than 5% down. Read more to find out : FHA mortgages - FHA loans & things that you need to know about them!!! What you need is a true mortgage professional that has all of the programs and understands what is best for the buyer. Most of all, can step in to explain it to the seller or their real estate agent.

ONE FALSE RUMOR..... FHA appraisals are terrible... harsh.... picky. This is False!! They are done on the same form as a conventional appraisal and they aren't picky anymore.

And read this to understand that putting less money down might be better for the buyer. : FHA / Conventional mortgages OR Cash purchases???

And more education of FHA mortgages : Top 10 reasons FHA is a great way to finance your home....

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For more information on FHA loans, please go to this link. The FHA Expert

For more information on how you can obtain your dream home, please click here : Mortgage Financing Options

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags !!!!!

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Heather the Realtor Orlando, Lake Mary

LemonTree Realty - Orlando, FL

First Time Home Buyers, Bank Owned Homes

I didnt use to put on there FHA, but in this new market most here in Orlando have to put down 10% financing, but with FHA it's only 3%. I took a listing today and made sure FHA was on there. If an agent doesnt check it, it doesnt mean a seller cant accept that kind of financing though.

Apr 13, 2008 07:35 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

You're preaching to the choir here, Jeff.

I've been writing blogs touting the benefits of FHA for a month now. From time to time, when one of our agents writes a contract with FHA financing, the listing agent still balks. It's insane.

What I've done in the past is get an appraisel for FHA and conventional at the same time. If the appraiser says it will appraise for FHA, then we switch. I pay the lender charges and only deal with a loan officer that has low fees.

Works for me. But, don't forget that a lot of the licensees working now were just licensed during the boom years and they only know what they were taught when no one around here would even look at FHA.

Apr 13, 2008 07:39 AM

Kris Wales

Keller Williams Realty - Lakeside Market Center - Macomb, MI

Real Estate Blog & Homes for Sale search site, Macomb County MI

Jeff, for years I have been shouting out to anyone that will listen (especially sellers) that if you don't offer FHA/VA terms that you are going to be cutting out a large percentage of potential buyers.

Finally people are listening. Finally.

Apr 13, 2008 07:51 AM

Maria Mastrolonardo, IL Probate Specialist

RE/MAX of Naperville & RE/MAX Enterprises - Naperville, IL

Illinois Probate Realtor

Jeff, I think FHA financing coupled with Nehemiah or Ameridream is a great way to open up a whole pool of buyers for sellers and in this market who wouldn't want that?

Apr 13, 2008 08:50 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

HEATHER....... and that's the sad think about your first statement. Even if they put 10% down, if their credit score is less than 680, that is not good for the borrower to obtain a conventional mortgage. And if they struggle to get 10% or don't leave themselves any extra savings, that is bad. You can still go down to 2.25% as a downpayment for FHA and only needing 3% out of their own pocket.

On another note... yes, if the agent doesn't check FHA financing, it doesn't mean that they can't obtain it... even when a client of mine tells me that it says in the MLS, that it doesn't allow FHA financing, I ask them to get me in touch with the listing agent... or to ask themselves, the questions, why... actually, why not.

LENN...... I know... but just maybe this would reach a few sellers out there that thought FHA was an evil way of financing. Just maybe it would open up the eyes of a few realtors, that thought differently. Lastly, just maybe, it would get loan officers and or realtors to educate their clients more... to open up their eyes.

Getting a FHA and conventional appraisal at the same time back then was a great marketing idea. But nowadays, not necessary, considering that the FHA and conventional appraisals are done on the same forms... and HUD doesn't require the appraiser to be picky in regards to the property.

Overall, some good points as usual. Wish there were more realtors like yourself, with knowledge. thanks

KRIS.... yes, I know you have, from talking to you. And yes, depending on your geographic region, you might be cutting down on the amount of potential buyers. And if that is the case, your house might sit on the market even longer. People need to be educated, but in the right manner of things.

MARIA..... I think so also. Especially when even putting 10% down on a conventional loan with credit scores under 680 more in likely is not the best way to go. We are talking about $130 to $170 a month difference in payment, depending on the loan amount. That is a huge difference for anyone. And why should a seller dictate that, which would not be in the best interest of the buyer. Why, because FHA appraisals were harsh and picky 7 years ago, but that is not the case now....

Apr 13, 2008 10:26 AM

Ann Cummings

RE/MAX Shoreline - NH and Maine - Portsmouth, NH

Portsmouth NH Real Estate Preferrable Agent

Hi Jeff - I find it infuriating when I run into a listing agent who turns their nose up at FHA, and then I know right away what that seller is then going to think as well. Ill-informed agents are usually the ones hurting buyers on this.

I've written a number of posts on my AR blog and my outside blog about the benefits of buyers using FHA financing. I'm a firm believer in buyers being able to use whatever type of financing best suits their individual needs.

Ann

Apr 13, 2008 10:54 AM

Anonymous

Larry Bettag Illinois FHA Specialist

FHA has changed so much, but the problem is that some agents have been around "forever" as well. Those agents are afraid to change. The fear of change means that these realtors won't get the knowledge they need to compete in the current markets. These realtors speak ill will against FHA because they are basing their negative(s) because of their past experiences not the modernization of FHA. Not using FHA will shut down realtors who want to do a lot of business in the future.

Apr 13, 2008 02:52 PM

Doug Fritchie

DOUG FRITCHIE-Silver Legacy Properties,Inc. - Portland, OR

This is really good information about FHA that more people need to see and understand.

Apr 13, 2008 03:04 PM

Thesa Chambers

West + Main - Bend, OR

Principal Broker - Licensed in Oregon

Jeff - funny you should mention this - I actually just gained a new listing because the seller was told the home would not qualify for a loan - so the previous agent did not want to list it... what was funny is it is completely FHA (2002 manufactured on foundation on an acre)

Apr 13, 2008 04:14 PM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

ANN........ I know that there are many good realtors such as yourself, but you hit the nail on the head when you said,...."Ill-informed agents are usually the ones hurting buyers on this."

LARRY...... I agree, there have been many changes and so many that haven't changed with those changes. We need to keep writing about them. And more so than ever, get those agents and sellers that don't know any better to understand that the process is no different for FHA mortgages as it is for conventional mortgages. The appraisals are done the same way. But it is also a bad loan officer that can put a bad taste in a realtors mouth, if the deal goes bad.

Your statement that said, "realtors not using FHA will shut down more realtors who want to do a lot of business in the future." Well, then these realtors need to forge ahead and help educate. But I am more worried about my client getting the best type of mortgage for that property that they love. thanks

DOUG...... thanks and I hope more do see this and understand that it's not an evil process or a bad type of loan, even for the sellers. Besides, in all honesty, it still was never that bad back in the 90's, even with the stricter appraisal requirements.

THESA..... that is funny. That should sell easily even with a FHA buyer. Actually, because of today's mortgage options, it's the only best way to buy that property.

Apr 14, 2008 12:32 AM

Sarah Eubanks

Hill Valley Financial Services - Oregon City, OR

Preferred Oregon Loan Consultant & Notary Public

Jeff ~ Very nicely written. Short and to the point, so people will read it and get the point. FHA is a medicine for this economy! :-)

Apr 14, 2008 06:10 PM

Paul Francis

Francis Group Real Estate - Las Vegas, NV

Las Vegas Real Estate Agent - Summerlin Homes

Crazy that anybody would even think about not accepting something legit if it means making a sale.

Apr 15, 2008 06:59 PM

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

Jeff - like Mike Smith in your post, I, too, have a hard time selling my FHA clients to REO listing agents and their bank sellers. But then, it's also challenging to sell my CalHFA clients to them as well. Just yesterday, one of my FHA clients had her offer rejected again. Why? Because the bank chose to go with a conventional loan buyer, even though my clients offer was best and highest.

I can show them anything they ask for to prove to them that my FHA/CalHFA clients are just as viable and worthy as any conventional loan buyer but they simply refuse to believe that CalHFA/FHA are worthy buyers.

Around here (Ventura County), many listing agents turn their noses up to my CalHFA/FHA clients. You would think that with the levels of inventory around here they would start to get with the program and not automatically disregard a qualified buyer simply because they are CalHFA/FHA. Some are starting to get it but others will probably never get it. Personally, I think it's just their own ignorance that is showing through.

Sep 30, 2008 04:54 AM

Brien Berard

Remax Professionals Laurel MD - Laurel, MD

Maryland Real Estate Agents - Laurel Real Estate

FHA is great. When I first got into the business 14 years ago, thats all we did. Then the seller market hit and we only did conventional. Now FHA is cool again, except with foreclosures. I don't recall FHA appraisels as being real tough, but still not as easy as a conventional appraisel.

Oct 09, 2008 03:43 AM

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