My client wanted it all!Â 3 Bedrooms, 2 full updated baths, new kitchen with granite counter tops, hardwood floors and a fireplace on a large, private lot with a commute of 30 minutes, more or less.Â And she only wanted to spend about $200,000.Â Those of you who are familiar with the Northern New Jersey market are probably saying, 'Yeah, right!" and so was I.Â
We looked at several options but either the price was too high, or the commute too long.Â She didn't want to deal with a short sale and she wanted the house to be in 'move in' condition.Â We looked and we looked and we looked.Â We even made several offers, but to no avail.
Finally, I said to my client, "Look, either you are going to have to compromise on your wish list, or lengthen your commute, or purchase a short sale, preferably one that needs work."Â We had discussed the FHA 203K renovation loan a few times but it was a tough sell.Â Then, we found it, the house of her dreams!
It was a short sale.Â And the boiler was not operational.Â The home could only be purchased with cash or, maybe, a conventional loan.Â UNLESS, of course, we used an FHA 203K renovation loan.Â I advised my buyer to make a low offer, based on the worst case scenario, until we could do a home inspection and find out exactly what we were dealing with.Â And, it was a good thing we did, because it turned out the house needed not just a new boiler, but a new septic, radon remediation and numerous other repairs, big and small.Â
We then got an estimate from a contractor who was familiar with the loan product and its requirements.Â With estimate and inspection in hand we were able to negotiate a good deal with the short selling bank, they would accept $171,000 for the home.Â My client would use the FHA loan to do about $40,000 of repairs.Â At the end of the day, she would have the home she wanted, in absolutely move-in condition, with a new boiler and a new septic system.Â Â And, as a reward for her patience and extra work, she will have between $30,000 and $40,000 in equity in her home.Â
If you have a home to sell that needs some TLC or even a complete renovation, or if you are a buyer who is willing to go to just a little extra time and trouble to get absolutely everything you want in your new home, call me.Â With a little creativity and my FHA 203K renovation loan team, we can make it happen for you, too!
If you're going to be a short sale agent these days, you need to be smarter and better educated than the bank you are dealing with.Â A perfect example is a situation I was faced with today.Â The buyer of my short sale listing was requesting a 1% Seller Concession to defray closing costs.Â The Bank negotiator, not knowing the difference between a Seller Concession and a Seller Incentive, told me that was not allowed under the guidelines. I knew he had to be wrong, so this evening I did an exhaustive internet seach and found a document issued by HUD that gave the rules for these types of short sales.Â And, you guessed it, I was right and the bank was wrong.
If you or someone you know is considering short selling their home, make sure you hire an agent who has the tenacity, credentials, education and good old fashioned stick-to-itiveness to get the job done.Â
This past week I have run into two situations where buyers' agents have, foolishly in my opinion, not only left money on the table, but failed their buyer clients miserably.Â In both instances the buyers are ready to close on their new home within a matter of weeks and in both instances the buyers have decided to rent their current home rather than sell.Â AND in both instances, their buyers' agents did nothing to assist them in renting their homes.
Where I live, in Northern New Jersey, rentals can provide a good deal of business and help realtors build their client list.Â A lot of homeowners are renting their current homes in order to move up to larger quarters because they are 'upside down' on their mortgage.Â They are willing to lose a couple hundred dollars each month while they wait for the market to improve rather stay where they are or risk damage to their credit rating.Â These homeowners will be sellers within a few years and their tenants will be buyers.Â So, an opportunity exists to make a little money now and a lot of money later by simply doing a couple of rental listings each month.Â I prospect for rentals on a regular basis.
TWICE last week I called owners who were renting their homes only to learn that their buyers' agents were not assisting them with renting their current homes.Â In fact, ONE agent went so far as to tell the homeowner to take pictures and room measurements and email them to him.Â UNBELIEVABLE!Â The homeowner was so unhappy with this agent that they expressed a desire to list their rental with ME instead, as long as there was no conflict of interest.Â The other homeowner hadn't even thought about listing their rental with a realtor.Â
Buyers agents, if you don't know whether or not your clients have homes that need to be sold or rented in order for them to purchase the home for which you are representing them as a buyer, you are doing your client a grave disservice.Â AND you are leaving money on the table.Â But, hey, you know what, if you don't want the business, I do!Â So, keep up the (not so) good work and I'll get your back!
Recently, some of my clients have been experiencing difficulties with the big banks
that I call â€˜bait and switchâ€™.Â It has
happened to me now twice.Â The scenario goes like this, the
borrower is an excellent candidate, good job, excellent credit, no issues with
debt to income, nothing.Â They are pre-approved for the mortgage and submit all the required paperwork.Â In two of the instances I myself experienced, the borrowers were business owners, however and I am not sure if that is the unifying factor or not at
We get to within 48 hours of our closing date and, low and
behold the underwriters find some sort of problem.Â The bank agrees to close, but only if the borrower agrees to pay more, a higher interest rate, more points, something that increases the banks' profits and the borrowers' costs.
In one instance the bank said
the comps used by the appraiser they chose did not support the appraised
value.Â They had the appraisal for weeks
but only mentioned the problem less than 48 hours before we were supposed to
close.Â We bombarded the bank with comps
that DID support the appraised value, made mention of â€˜bait and switchâ€™ tactics
and were able to close but the closing was delayed by one business day.Â Unfortunately for my clients, the business day in question came on the Tuesday AFTER Memorial Day week-end so they lost a three day stretch of time during which they could have been moving into their new home and were, for all intents and purposes, homeless for the holiday since they had closed on THIER house the Thursday before.Â My clients were not happy to say the least.Â
In the second instance my client was a wealthy business owner and real estate investor.Â He owns several rental properties in addition to his current residence. He is also in the process of getting a divorce. which is the reason for his purchase and move. At the eleventh
hour the bank said they do not believe for one instant that the property in question will
be â€˜owner occupiedâ€™.Â Â The bank in question did agree to issue the mortgage commitment but at a higher interest rate.Â
As a realtor, my fiduciary duty is to my clients, not to the banks.Â I am appalled at these tactics.Â I know that interest rates are very low but that is no excuse.Â I for one am taking names and the guilty parties will not get MY business if I have anything to say about it.Â It's just not right!
Come to my Home Buyer's Seminar tonight at 6:30 pm at the Keller Williams Offices on Madison Avenue in Morristown NJ to find out how you can take advantage of this unprecedented opportunity!Â The first 10 people to RSVP will receive a free copy of Gary Keller's book, 'Your First Home'.Â RSVP NOW and reserve your free copy!
Did you know that if you work in Morristown New Jersey you might qualify for $5000 to help you buy a home in Morristown as well?Â Â
Did you know that with the New Jersey Smart Start Program you could receive $3000 in down payment assistance?
Did you know there are special mortgage programs for civil servants such as nurses, EMTs, teachers, police officers, fire fighters and municipal employees?
Do you know your credit score?Â Do you know how that figures into your ability to purchase a home?Â Do you know what other criteria the bank will use to determine whether you qualify for a mortgage?
Do you know the process for buying a home?Â How a home inspection works and what to look for when issues come up during a home inspection?
Do you know the role of an attorney in closing a real estate transaction?Â
All these quesetions and more will be answered Wednesday evening at 7:30 pm at the offices of Keller Williams Metropolitan Realty 55 Madison Avenue, Morristown NJ 07960.Â Please Join Us!Â The first 10 people to RSVP will receive a free copy of Gary Keller's book "Your First Home".Â RSVP to firstname.lastname@example.org
.Â See you there!