On Top of the Aloha Beat BLOG

                            

Last week I attended the CRS Sell-a-bration in San Francisco.  The Sell-a-bration is a gathering of some of the top agents in the country.  We spent 3 days of classes, conference session with top speakers and some fun social mixers.  During the conference I picked up several pearls.  One that I truly liked was the phrase: "A Pricing War and a Beauty Contest."

When describing the sale process to a potential home seller, this phrase sums it up in the best direct way I can think of.

In most parts of the country we are in a buyer's market.  There is a good selection of inventory and prices are either flat or slipping depending on the area and type of property.  With that said, what will make you home sell before the others in your neighborhood?

You have to win the beauty contest plain and simple.  When the buyers walk in did you grab them?  If they liked what they saw did the price scare them off and send them down the street?  This is one of the hardest concepts for many sellers.  They have lived in this home.  Raised their family and have had so many great memories here.  Their friends and neighbors have all told them their home is worth so much more than all the others in the neighborhood.  Let me clear things up for you.  It is not!  Friends and family will tell you that to be supportive.  Neighbors have a conflict of interest.  They are hoping you will raise their property value by selling at a higher price.

To keep it simple, when you are getting your home ready for sale remember you are entering a Pricing War and  Beauty Contest.

I just finished closing a short sale and was pleasantly surprised to see how smooth a transaction it was! We even closed 5 days ahead of our 30 day escrow. After analyzing the entire transaction I realized that this was the result of a combination of a few good steps taken by all of us before the listing and while meeting the bank's requirements. From now on, I will always do the following:

•1.       List the property at or slightly below market value. We received 4 offers within one week of putting the house on the market. The highest offer was about 5% above asking price. This strategy works well if the seller cooperates by understanding that a major condition from the lender to approve the short sale is that the sellers cannot walk away with any money from the seller's proceeds. 

•2.       Have Home and Pest Control inspection reports available before the house goes on the market.  Most short sales are on an "as-is" condition. Potential buyers will have fewer or not contingencies if they are provided with recent house reports prior to making the offer. Most of the times we even pay in advance for those reports and then include a reimbursement back to us in the escrow instructions. 

•3.       Turn your CMA into a BPO. Banks ask for a list of documents to see for their approval of the short sale. The listing agent is asked to provide a CMA (Comparative Market Analysis,) then they call for an Appraisal and also another Realtor who typically does a  BPO (Broker's Price Opinion) while preparing my CMA, I simply changed the forms and send it as a BPO. It is the same information anyway. When the bank saw that, it bypassed the BPO. This simple step saved us a few days at closing and eliminated  another step in the long process. 

•4.       Type the "Seller's Hardship Letter" verbatim for clarification purposes. (and mark it as such)The sellers are asked to write in their own words a letter giving an explanation as to why payments cannot be made anymore. My clients provided me with a 3 page handwritten document, granted I could read it, I knew that the faxed copy will be difficult to read, the typed copy was necessary.

•5.       Put the loan number on EVERY SINGLE DOCUMENT that you send to the bank. We actually had to fax a package of over 35 documents, and even then they asked for some of them to be faxed again.  I also recommend faxing late at night... Why? Because nobody else is faxing at that time and your package has a better chance to get there in one piece and not mixed with another fax from somebody else. Clear, small labels with the loan number keeps it all together.

Short sales are still NOT my favorite transactions, but after this closing I am now looking forward to my next dealing with the banks. I realize that the people I deal with in these types of transactions are employees who simply have to follow a set of rules from their employers, they are not Realtors; I must make it easy for them to find, read and understand the mountain of documents we send them. The easier we make their job, the faster we can close. 

Antonio & Alexia Cardenas, GRI, CRS, E-Pro.

Selling Real Estate since 1985

The Realtors In Motion. www.ListedByAntonio.com

Open 25/7 to receive your referrals anywhere in the San Francisco's bay area communities of Alameda and Contra Costa Counties.  Call us! We'll come and TANGO WITH YOU!

(The extra hour is for faxing)

New Update!- as of 3:30p EST Speaker Pelosi states the revisions are still being drafted and the House Vote has been postponed until tomorrow to allow for time to review the language. As of this moment there are still no new updates on the Library of Congress site. I will continue to check and likely post a new blog once the info is available. As of this time most press sources are reporting the tax credit has been reduced to $8000 max- FYI.

UPDATE! As of 9A EST, 02/12/09- We have all heard conflicting reports that the $15k tax credit provision has either been scaled back or removed completely! The Library of Congress link below still shows the bill including the tax credit but this is politics folks, things can and often do change at the last minute.

If you think it's the big deal everyone obviously thinks it is we should ALL be calling our US Representatives. You can get contact information for your Rep at the following website:

http://www.house.gov/

I strongly suggest you call the DC office and at least leave a message indicating your support for the tax credit. I have called my Rep and have a message into his staff to verify if the bill currently includes the tax credit or not. I'll be updating this post as the news becomes clear, and when I say clear it means I see it on government websites or I hear it from my Representative's staff.

A cursory review of the bill agreed upon by the House and the Senate today shows a number of changes to what both sides had originally wanted. On the plus side it looks like the final tab has been reduced a bit. On the downside it looks like housing didn't get the boost it certainly deserved. Here are the items that impact us the way I see them. Bear in mind the bill has not had its final vote but change at this point appears less likely. Also, the draft of the bill is undergoing constant update so some of it may not be reflected accurately.

•·         We got our 10% to $15,000 tax credit, and there doesn't appear to be a repayment provision! Kudos to NAR and the National Association of Homebuilders for getting that win! It does appear the credit can be claimed as a 2008 purchase and you "may" divide it up to receive half then and half next year. This will allow our buyers to amend their current 2008 taxes to reflect the purchase and receive the credit quickly. The purchase must be a principle residence but the credit is NOT limited to first time buyers. Should the buyer sell or fail to occupy the home as a "principle residence" within 24 months of purchase, the amount of tax credit received will be due on their next tax filing. There are a few exceptions to the recapture provision such as death and divorce (same thing isn't it-J). The new credit will last for 1 year after the date this bill becomes law. Do note the old system of $7500 that must be repaid goes away the day this new bill is enacted.

•·          USDA is getting over $10.4 billion for the guaranteed program alone. Although that may not be enough to fund the rest of the year it's a big jump from the approximately $7 billion that was used last year. This demonstrates the administration's commitment to the USDA Rural Development loan program.

•·         The Hope 4 Homeowners refinance program is being tweaked to allow for hardship in the case of "decrease in income". The private mortgage insurance factors are also being reduced to no more than 2% up front and 1% annual. There is also a provision to entice lenders that have these loans to refinance. They can receive $1000 or more for "performing services associated with refinancing" such mortgages.

•·         Mandatory mortgage loan modifications and a Foreclosure mitigation section that refer to the $50 billion the Treasury is allocating to mitigate foreclosures. Details were sketchy so look for more on this. Do note the lenders servicing these mortgages could receive payments not more than $2000/loan to modify them and seem to be granted the authority to do so if it seems reasonable that not modifying the loan will result in a bigger loss. I think this can be potentially huge if the private sector embraces it.

These are the salient points I could find for now but the bill is HUGE! If you want to try to pour through it you can access it here but you will be required to refresh your screen often as changes are coming in constantly. Many sections were stricken including provisions continuing the higher FHA loan limits and the reinstatement of seller funded down payment assistance wasn't there;  but again, the cost was reduced and that is always a good thing!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Has Fannie Mae pulled their head out of their... sand box?

What if I told you Fannie Mae is offering special financing if you buy one of their bank owned homes?  Would you believe me?  Well you should because it is true!

Why does this benefit you?  Well frankly... the terms of their offered financing is pretty darn sweet!

The benefits of their HomePath program include:

• Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
• You may qualify even if your credit is less than perfect
• Available to both owner occupiers and investors
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
• No mortgage insurance
• No appraisal fees
• FREE home warranty is included with the purchase.

I recently wrote a blog about another local Sacramento Agency that is offering a similar incentive if you buy one of their bank owned homes.  Read the blog now >> 

BUT the catch is they only have 2 or so homes available in the Sacramento Area to purchase.

Here is the best part about this program... There are over 250 homes available in the Sacramento area right now that qualify for this program!

Here are some other homes available in the Sacramento Area:

Elk Grove... 46 homes available!
Citrus Heights... 21 homes available
Rancho Cordova... 16 homes available!
Fair Oaks... 4 homes available
Carnichael... 14 homes available!
and so on...

Here is some more specific information about their guidelines:

97% (3% down) for owner occupied financing with NO MORTGAGE INSURANCE!

Why is this such a big deal?
A typical FHA loan with an equivalent down payment (3.5% down) would require 1.75% of the loan amount to be paid upfront for a mortgage insurance premium. Then on top of your monthly payment (PITI), you would be charged .55% (of the loan amount) every year for ongoing mortgage insurance.

Let me break this down so I don't throw too much loan lingo your way.. Here is an example mortgage insurance fees for an FHA loan of $200,000...

$200,000 x 1.75 = $3500 You would be charged this amount at closing or you could roll this into a loan on a traditional FHA loan program for the upfront mortgage insurance premium.

$200,000 x .55 / 12 months = $91.67 This means $91.67 would be added to your payment every month for mortgage insurance.

With this special financing offered by Fannie Mae you could put .5% LESS down than a FHA loan and you do no pay ANY MORTGAGE INSURANCE!  This really is a sweet deal!

Do you feel like a little more sugar today? Wait until you see what they will do for an investor!

90% (10% down) for non owner occupied properties with NO MORTGAGE INSURANCE!
If you are looking for an investment home in Sacramento, you know that you will get a better return on your investment if you have less money in the deal.  Right now with typical financing (actually offered by Fannie Mae for non-Fannie Mae owned homes), you should expect to put down at least 25%.

 

Wow! So for example if you purchased a home for $150,000 (not owned by Fannie Mae), you would need to put down $37,500 plus closing costs.  If you buy a home owned by Fannie Mae, you only have to put $15,000 plus closing costs. If that does not help you"sharpen your pencil" I am not sure what will!  This is a really big deal!

They even offer a renovation program that allows you to finance light renovations upfront and add it to the loan amount.  So if you find a Sacramento Fannie Mae owned home that maybe has some vandalism issues (which many do), you can probably get a discount for the home and finance in the repairs that are needed to bring it back to livable condition!

It is so nice to be able to report some good news to folks.  It really has been a drag having to shovel through the bad news to try and find something good to report as far as guideline changes go!

Here is a link to search for homes in your area >>

We can offer this special loan program... so just give us a call and we can discuss this opportunity further!

Happy Hunting!

 

This blog by:

Team Newington
Sacramento Mortgage Planners
(916) 687-6868
www.SuperiorLoanTeam.com

Subscribe to our Blog Feed