February 20, 2011
For the past few years foreclosures reigned supreme in the real estate market. As a realtor, I had to get used to the bank’ additional paperwork and timetables for closing a foreclosure transaction. Every bank was different not to mention the paperwork on the government or HUD properties. But we all learned the system and got used to the new foreclosure normal.
Now we have another ‘new normal’ – short sales. As I said in a previous post, short sales are overtaking foreclosures in the real estate marketplace. Given all of the other options for the homeowner, a short sale can actually be a ‘win-win.’ How do you know if you qualify for a short sale? It all begins with the nature of the hardship.
Your lender will want to know why you can no longer make your mortgage payment. Here is where it gets interesting… the answer can not be: 1) my house is not worth what I paid for it, 2) I no longer like the neighborhood or 3) I just want something else. I am not making light of a very serious situation but sometimes people want to use the short sale process to dump one home and move into another. That will not work.
An example of a real hardship is as follows:
- Loss of a job
- Job relocation
- Reduction in income
- Serious medical issues
- Dramatic change in interest rate
- Death of a family member
- Divorce or separation
The lender will want to see proof of the hardship such as a divorce decree, death certificate, termination notice, medical bills, etc. This will provide proof that you are in a very serious situation and that while you would like to continue to make your mortgage payments, you are no longer in a position to do so. A defined hardship is the first step in researching your eligibilty for a short sale.
April 6, 2010
I know I promised to continue this series with ‘Understanding the Buyer Brokerage’ agreement but I have to pause and address another issue. I have had several people ask me about the rules of buying condos and townhomes and I wanted to make sure I spoke to this issue quickly. Buying a condo or townhouse in Atlanta is very different than purchasing a single family home. The financing rules are different unless you are purchasing with all cash. Most buyers right now are using the government backed FHA loan program because the down payment is 3.5% versus the 10% or greater with conventional financing. Because most buyers are going FHA, they are subject to the governments’ rules regarding condo purchases.
First of all, not all condos will qualifiy for FHA financing. There is a section of the HUD website that you can plug in the condo name, city and state and find out if you can purchase your particular unit with FHA financing. The link is https://entp.hud.gov/idapp/html/condlook.cfm Why does the government care about the condo or townhome unit that you purchase? There are four main reasons:
- Lack of Occupancy – There are quite a few developments in the Metro Atlanta area that were started and not completed. The occupancy rate may be under 50% with a lot of vacant units or sections that have to be finished. In this current housing environment, many builders have gone out of business and the timeframe to complete these developments and get them sold is uncertain. The government is not willing to take the chance on financing in this situation.
- The Financial Position of the Homeowners Association – A strong condo association is what drives any community. The board is responsible for managing the upkeep on the property, ensuring that the residents follow the covenants and maintaining the overall welfare of the community. Any weakness in the financial position of the board can create an instability in the community and again the government weighs this before backing the loans.
- The Rate of Foreclosure in the Community – A high foreclosure rate causes instability in the condo community and again is one of the areas that the government examines prior to approving the condo for FHA financing.
- The Number of Rentals in the Community – A high number of rentals is a red flag for the government because it also signals a lack of stability. Renters come and go but homeowners are committed for the long haul.
Again, if you are considering the purchase of a condo, visit the HUD website and plug in your particulars. Find out before your commit money, time and energy only to find out later that you can not purchase the unit with FHA financing.
In Part IV, I will discuss the Buyer Brokerage Agreement and what it means to you.
April 2, 2010
So you have decided to buy a home and you have selected a Realtor. Now what … what are the next steps? Remember, not all realtors are the same but here is what I normally do next with a buyer. Step one – on the phone, I usually get the following general information:
- The area of town the buyer is interested in
- Type of home desired; singe family, townhome, condo, etc.
- Size of home – bedrooms, baths, etc
- Price range as well as desired monthly payment
- Timeframe for moving
- Age of home (Year built)
Step Two: I like to e-mail a Buyer Consultation Form to the buyer. It is a fairly lengthy form (about 5 pages) but it makes the buyer think of all the items that are important in the home purchase. It also helps me understand the buyers’ motivation when they tell me that they need certain items. For example, a buyer may ask for a bedroom on the main level; this is very important if their 80 year old mother is living with them. The bedroom then becomes a real need not just a want. I ask the buyer to complete the consultation form and have it ready for our first face to face meeting. (A copy of this form can be downloaded from the “Buyer Documents” box below)
Step Three: I schedule an appointment with the buyer, usually in my office. All parties involved in the purchase should be at this appointment so that we start off on the same page. This meeting normally takes about an hour and we cover the basic items such as:
- The buyer’s needs and wants in a home based on the completed Buyer Consultation form
- Timeframe for moving; any obstacles in making this happen
- The entire homebuying process from A-Z including shopping for home, inspections, appraisals, etc.
- Understanding the complexities of buying a foreclosure, pre-foreclosure (short sale) a traditional resale or HUD home. Each type of purchase comes with its’ own set of rules that the buyer needs to be made aware of prior to beginning the search
- The upfront cost of buying a home – loan application fees, inspections, earnest money, etc.
- Finances – loan programs, down payment assistance, etc.
- The Buyer Brokerage Agreement
Sandwiched in between step two and step three is normally having the buyer contact a lender for a preliminary discussion of their ability to purchase. The lender will want to pull your credit in order to give an accurate answer as to buyers’ ability to buy now, how much and approximate monthly payment. The lender will also be able to discuss any first time homebuyer programs that fit the buyers’ profile.
Once we complete the initial meeting, we can schedule a time to begin viewing property.
Next Blog: Navigating the Maze: Part III – Understanding the Buyer Brokerage Agreement
March 30, 2010
I spend a great deal of my time working with first time homebuyers which means alot of hand holding. No problem – that’s my job. Buying a home can be an overwhelming endeavor and scary in some respects. It certainly will be the most expensive purchase you will ever make and therefore, it requires thought, deliberation, questions and prayer. I am often asked about the process from beginning to end and I have become an expert at explaining it well. Again, no problem – that’s my job. My task here is to give you insight into the buying process and hopefully answer your questions in the process. This will take time so make it a plan to walk with me for a while.
Imagine that you have decided to move out of your apartment and would like to purchase a home. What is the first thing that you would do? Who is the first person you would call? Lender, Realtor, friend…? There are usually three ways that potential buyers find realtors – on-line, referral from a friend or randoming calling them from signs in yards. No matter how you find your realtor, here are three issues that you need to consider.
- While it is great to know how long a realtor has been in the business, what you really want to know is their level of expertise. A new agent that has hit the ground running and has sold 10 houses in 4 months is a good agent. Ask about recent sales, past clients, etc.
- Try to find an agent that is knowledgeable about the area that you are considering moving to. This is really important as you explore schools, accessibility, travel times and home values.
- Find an agent that you are compatible with. You don’t have to be best friends with the agent but this is a long process and you need to feel comfortable talking with them. The chemistry has to be right.
Next blog: In Navigating The Maze – Part II I will discuss what happens in the initial meeting with the agent.
March 7, 2010
I just attended a seminar hosted by the DeKalb Association of Realtors in partnership with Georgia Department of Community Affairs. As a realtor, it is my job to stay abreast of all of the changes in the housing industry and the financing available to potential home buyers. This seminar reminded me of a great program, Georgia Dream, that has served the homebuying community well for many years.
In addition to the traditional homebuyer first mortgage loan, Georgia Dream offers a special prgram for Protectors (firefighters, police officers, etc.) Educators (teachers, administrators, etc.) and Nurses. For individuals in these professions, there is a $7,500 down payment assistance program that can be used to purchase a home. There are several steps that the buyer has to go through – including completing a homebuyer education class and using an approved lender.
There are considerable funds available for first time homebuyers. Georgia Dream offers down payment assistance, the U.S. government is offering a homebuyer tax credit, and many of the Metro Atlanta counties are also offering various down payment assistance programs. Now is the time to find out what is available and get in the game!
By the way, Georgia Dream is not limited to Protectors, Educators, and Nurses; there are funds available for others – usually $5,000. Ask for details regarding income and sales price limits.
February 23, 2010
This is a great little home about 10 miles from downtown Atlanta. It is 3 bedrooms and 2 baths; perfect for the first time homebuyer or someone downsizing. Enjoy a private yard in a very quaint part of town.
Posted via email from Amazing Homes