Hey, Loan Guys! Have Qualified Buyer - Can't Find a Loan - Got Any Money ?

By
Real Estate Agent with Desert Gold Realty - Mesquite NV Homes For Sale Mesquite NV Realtor

This is the Scenario:

I have a studio condo listed - it is only $54,800.  The HOA fees of $155 (which is average for Mesquite, Nv) cover all utilities except cable and phone.  They currently rent for $550 or more per month.  Pool, spa close to casinos and stores.  (This is not an ad, you can see the ad on the above link.)                                             JPEG file

Good deal for a single person - nothing else to buy under $100,000 here!  Easy to rent, everything else here rents for over $600 plus utilities.  Good deal for a renter, good deal for a lower income buyer.

Does this sound like a good deal for an investor to you?  Apparently it is, many were sold to investors in the past few years.  Quite a few were cash sales.  Many are rented by the month, some are used as a vacation home and some rented seasonally to snowbirds.  Very few unwanted vacancies - Not that many for sale, either.

This is the Problem:

I have a buyer with excellent credit, enough verified income to qualify, and just enough cash to put 20% down and pay his closing costs.  I can't find him a loan!

JPEG file

 

Four different lenders told me today that they are not allowed to do a loan for condos in this subdivision any more because the investor ratio is too high.  They are a "no warranty home - disallowed".   Sorry!  So I have a perfect buyer who can't afford anything else and I can't find him a loan.

I am not worried about the seller, we will get a cash buyer eventually, but what about my buyer?  I know $$$ is not growing on trees right now, but he is counting on me!  Got any money?

 

 

 

Virginia Hepp
ERA Brokers Consolidated
Mesquite NV Real Estate
Mesquite Chamber of Commerce Member
702 622-1177
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Ambassador
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Virginia Hepp - Mesquite NV REALTOR
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Jeff - Please do - I wish you had written it 2 weeks ago.  I am here to learn and share.  I am taking a well-deserved whipping here.

One thing - These condos were "loanable" prior to Feb.  The buyer prequalified with a lender who was not from here, which could be OK, but that particular lender did not "prequalify the property".  The lender told the buyer that he could get the loan.  I found out about this problem when I saw the high charges on the HUD.  That was the red flag and I told the buyer to shop around.  We started locally and that is when I found out that we have a problem.  The lenders here knew, the agents here did not.

"What about the buyer?"  This buyer plans on living in the condo for a long time, but if he changes his mind due to whatever reasons - yes, he will be in the same position that the seller is now in.  Please address this issue.

Sq ft is 335!  Big issue!

Jeff, if you have any questions about this scenario in particular, email me!

Mar 12, 2008 06:05 AM #51
Ambassador
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Virginia... I am not god nor am I perfect. I say this because I don't want people to think that I know it all... nor am I trying to criticize you.... or that out of stat lenders are even bad.

Let's attack one thing at a time.

  • You said... these condos were loanable prior to February.  By whose standards? 
  • When it comes to pre-qualifying, it's on the basics of that borrower.... if a borrower picks out a non-financiable property, we don't usually know this until they pick the property out.
    • now.... once they tell me that they found one, I ask them questions on it. If they tell me it's a condo, I then go over the specifics with them. This part shouldn't take more than a day.
  • lenders in an area might know quickly about a certain area or type of property... but an out-of-state lender, as I mentioned... if they ask the right questions can find out almost as quickly.
  • even with non-warrantable condos, square footage matter. It goes back to the resale of the property.
jeff belonger
Mar 12, 2008 06:40 AM #52
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Virginia Hepp - Mesquite NV REALTOR
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Jeff - Loan reps from Wells Fargo (local) and Flagstar (another state) said they were doing loans on this condo subdivision and were not allowed to do them anymore as of last month.  Lender who prequalified buyer had the address of subject property and name of subdivision.  Gotta go, hope to see your blog when I get home tonight. 

 

Mar 12, 2008 10:38 AM #53
Anonymous
Nevin Van Nest

Hello Virginia,

Thank you for recent comments on my active rain real estate blog. I appreciate the input. I had a look at your Mesquite Nevada real estate blog, and you have a lot of good content posted their. Way to go! How is the market in Mesquite these days? Calgary is still going strong but I'm not sure for how much longer with the huge increases we've seen over the past two years. I think in 2008 we will see the market level off. I was wondering if you would mind, if I posted a link on my site to yours in Mesquite Nevada as my contact down there? You are welcome to do the same if you're looking for a Calgary contact. My website is www.NevinVanNest.com and my blog is www.CalgaryRealEstateOnline.ca . I hope you have a great 2008, and enjoyed the blogging world.

All the best,

Nevin Van Nest . Realtor . Royal Lepage Foothills

Mar 12, 2008 11:34 AM #54
Rainmaker
51,073
Katharine K. Whiting
Solutions Real Estate - Tempe, AZ
CRS, Realtor, Tempe, Arizona, East Valley

Good Afternoon, Virginia,

I'm responding to this particular blog of yours because your title includes Loan Guys and you helped my lender, Mark Organek, when he first started blogging and he is now helping me (3 days at this) and give you thanks for helping him so I added you to my subscription list.  Your help has come down to me so I wanted to thank you.  Have a great day and I hope your assistance helps many others out there.

Mar 12, 2008 12:03 PM #55
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Virginia Hepp - Mesquite NV REALTOR
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Hi Nevin - The Mesquite Market is picking itself up and dusting off the cobwebs!  And we are getting lots of buyers from Canada.  Please do add me to your site and I will do the same.  I visited your website - very well done and lots of information.  And thanks for the comment.

Nevin - You should login to Active Rain, then make comments.  That way, you get 25 points and we see the link to your AR profile and your blogs.  Good luck and see you in the rain.

Mar 12, 2008 01:25 PM #56
Rainer
22,857
Sherry Connor
Myers Park Mortgage - Charlotte, NC

Virginia, I tried calling you back..I am east coast and you are in Nevada - so we have a slight time delay.  I have the info I need on this one...just by reading all the blogs...Here's the deal...This loan has a square footage issue now - it resembles a Condotel (which we do loan on- nonwarratable) but this loan rate is going to be UGLY!  This would require a substantial downpayment - which borrower may not have, and his credit score really needs to be over the 720 or the fees paid on it will compound.  I will reach a point on the rate sheet where I can not go any higher and the points remaining will need to be paid at closing. 

I am out of the office in the morning but will return around 1:00pm my time...email me at sherry.bradley@chase.com and let me know if this borrower can put atleast 25% down.  If so we will go proceed from there.   

Mar 12, 2008 01:27 PM #57
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Virginia Hepp - Mesquite NV REALTOR
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Katharine - Mark is quite a blogger - it seems to come naturally to him.  Not me, I have to work at it.  I subscribed to your AR blog as well, hope to see more blogs from you.  Good luck - if you have any questions, email me.
Mar 12, 2008 01:28 PM #58
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Virginia Hepp - Mesquite NV REALTOR
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Sherry - I will send an email right now.  I am working on some seller financing, too.  Thanks for getting back to me - talk to you soon.
Mar 12, 2008 01:33 PM #59
Rainmaker
102,712
Liz Carter
Liz Carter & Team Realty-Your Real Estate Resource For Life! - Katy, TX
Broker/Owner of Liz Carter & Team Realty, Katy TX (Houston)

Hey Annie Oakely, just wanted to check in with you and make sure you were just busy finding money for your buyers, and selling real estate like crazy?  Hope all is been well in your world, I ran across this and remembered you ask me about Hidden Gem once, so here is the link for you, HIDDEN GEMS IN THE RAIN...the list goes on...guidelines and complete list of Active Rain's Hidden Gems. (Members Only) .  The weather has been glorious in TX, March is my favorite because the Azaleas are in full bloom, and they are incrediable this year, but I say that every year, here a picture for you.  Liz

flowersflowerMy back yard

Mar 16, 2008 05:19 PM #60
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Liz - beautiful!  We have our own version of spring here in the desert.  I have been SO busy!  The real estate market in Mesquite is really picking up.  No time for AR.
Mar 16, 2008 05:58 PM #61
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Virginia Hepp - Mesquite NV REALTOR
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FYI - Sherry Bradley and Kingsley Conway (above) both came up with a loan that would work - yes, a little more in fees and higher interest rate, but possible.  And Jeff Belonger stepped right up with info and guidance.  I knew I would find answers here on AR.  Thanks, guys!
Mar 26, 2008 05:03 AM #62
Anonymous
stephanie Dodd

I am probably feeling this probably worse than anyone on this message board. I am disabled from an accident where roadway conditions were negligent and several years ago got some personal injury money to help with my financial needs....WHICH -TO THE POINT... I wound up putting almost all of this money into purchasing 4 condos that are not considered non-warrantable because of their owner occupancy ratio which is about 48%. THIS IS REALLY HURTING NOW BECAUSE I NEED TO SELL AS THEY WERE SOMETHING I BOUGHT FOR RENTAL INCOME AND NOW NEED THE MONEY MYSELF AND I HAVE YET TO FIND SOMEONE TO FUND DUE TO THE 48% OWNER OCCUPANCY RATE ( WHICH MEANS MORE THAN HALF ARE RENTALS).- I AM STARTING TO PANIC AS I HAVE NOT RENTED THEM BECAUSE I WAS PLANNING ON SELLING THEM AND AM NOW CARRYING ALL THESE CONDO FEES EACH MONTH AND LIVING OUT OF SAVINGS WHICH IS DWINDLING. I AM GOING TO TRY SOME OF THE SUGGESTIONS HERE AND APPRECIATE THIS BOARD. IF ANYONE KNOWS OF ANY LENDER ETC THEY THINK COULD HELP, PLEASE POST OR LET ME KNOW......SOON TO BE DESPERATE SELLER WITH ALL EGS IN NON-WARRANTABLE BASKET!!!!!!!

I invested this way because-At first I wanted to buy a free standing house but realized I enjoyed the safe feeling of having others all around me in apartments, ( I obviously have good nieghbors), and they are always there for me if I do happen to occassionally need help with something, so I decided to stay in my current apartments until I could find

Aug 06, 2008 04:46 PM #63
Anonymous
STEPHANIE

CORRECTION-BAD TYPO...!!!- THEY ARE ALL NON-WARRANTABLE CONDOS, MY FIRST NOT WAS SUPPOSED TO BE THAT THEY ARE NOW CONSIDERED NON-WARRANTABLE!!!

Aug 06, 2008 04:48 PM #64
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Stephanie - Luckily for my seller and buyer - the buyer was able to pay cash and did, so I didn't end up dealing with a non-warrantable condo loan.

I did get a good response from Sherry Bradley@Chase.

Jeff Belonger, as always, is a great mortgage guy who will direct you to someone who can help you, I am sure.

You will have to have a buyer with very good credit and probably 30% down - Sherry did have a loan with a high interest rate.

You can reach them from their comments above.  Where are you located?

I wish I could help you.  Loans are so tough right now, especially these!  You must be so stressed - Please feel free to call me if you need to talk about it.

 

 

Aug 07, 2008 05:13 AM #65
Rainer
5,696
Richard Baggett
AFI Mortgage - Lake Charles, LA

If Chase were to pass you will be looking at hard money lenders with high interest rates.

Aug 15, 2008 03:58 AM #66
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Richard - Yes.  I was quoted about double the current rate and the buyer had a credit score about 750.

Aug 15, 2008 01:33 PM #67
Rainer
3,460
Ben Passman
MHK Mortgage - Phoenix, AZ

After reading all the comments and responses, I believe Hard Money is the only real option.  Double the rate is a relative thing.  If you can not get financing any where else, then the rate on hard money is not double of anything, it just is what the rate is for this property at this time.  As the realtor, you need to be able to explain to your buyer that this is the only option and he either decided to move forward or not, but to compare hard money to FNMA or FHA rates is a huge mistake.

Seller financing is the only other option but it sounds like that is not a real option.  If you really think about it, $60,000 is not a lot of money and you may be able to send something to your database of clients, float it in your office and talk to others you know in the community about getting one or two private investors involved.  You will still have to pay a higher rate and maybe some points, but you could try to structure something your self.

If you have the details on this property, I would be willing to explore the options with my clients and the people in my firm as well.  You are not at the end of the road yet, but you definately have to put on your thinking cap and find a way to reach out to your network to get this one done. 

Best of luck...

Aug 16, 2008 10:18 AM #68
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Virginia Hepp - Mesquite NV REALTOR
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Ben - "to compare hard money to FNMA or FHA rates is a huge mistake."

You are so right.  Apples and oranges.  I shouldn't have compared any available loan on this type of property to a FHA loan at current market rates.  I learned a lot from this post and from listing the property itself.

As I stated in a comment above, the buyer ended up paying cash for a reasonable price on the property and solved his own problem.  But I will be listing or selling these same condos in the future and I may call on you for help.

Aug 16, 2008 11:10 AM #69
Rainer
30,910
Scott Blanchard
Mortgage Force - Newtown, CT

Is he a Vet ?

Aug 20, 2008 05:55 AM #70
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