Sean,
It was the FHA guidelines. Percent of ownership. Getting the FHA approval on a building/development if it's not already. No liens in the building. etc. etc.

Oakland,

Did your agent say that because of the FHA rules on % in a development? Meaning they just had to see if a development could have any more FHA deals?

Sure it is a little bit more work but outworking the competition is what makes deals happen in this tough economy.

Good to see you found something.



Sean Dawes

Don't give up! I went through what you are going through and I totally understand your frustration. I am also FHA looking for houses within the same price range. After 5 months of looking and 7 offers written, I finally got an offer accepted. Out of frustration I considered townhouses and condos. My agent deterred me and said the process of buying a condo with an FHA loan was much more difficult. She did suggest broadening my search in terms of location. Originally I was just looking in Oakland and broadened my search to San Leandro. After writing 3 offers in San Leandro I finally got an offer accepted and halfway through escrow right now. It's not impossible, you just have to be patient and keep trying.

With the $8,000 credit, the $250K - $400K range priced homes are selling like hot cakes. The credit is pumping up the market so that prices start going back up to boom time prices.

This cannot be sustained and when the credit expires, the prices will fall again. Thats why this credit was extended and also second time home buys are going to get upto $6500 credit if they buy another house. So this will alos pump up demand for $500K-$750K homes.

Dear First Time Homebuyer,
I understand your frustration, and I specialize in first time home buyers as clients and it has been especially hard the past few months. While the inventory is at its present level it is going to be very difficult and some times it may take even longer than the 8 or 9 trys that you have done. I know it seems a bit crazy but you should not give up. The prices are still lower in our area than they have been in ages and the rates for mortgages are also lower than they have been in ages, put on top of all of that the $8000 credit for the first time homebuyers that is now extended until April and you can't lose.
Remember, alot of the criteria for FHA loans is going to be tightening up very soon and if you are not working with a REALTOR that has explained alot of these facts to you then come speak to me.
As far as working with an REO/shortsale specialist-- I would say we all are (or should bd) REO and Short Sales Specialists because the majority of all transaction are just that.
I hope I have answered some of your questions for you.
Leslie Guzman
510-706-3214

Pacita... this video is great! So true!
I am glad I am not alone.

...anybody, Realtor, Homebuyer, and especially Lenders and Bankers need to spend 3 minutes to watch that video link.

Thanks for making omy week

Maurice

Since you've received some great advice from the realtors who answered your question, here's a link to a video that puts this in perspective. I am calling on your wicked sense of humor to really appreciate this.

It's titled: "How to buy a bank-owned home"

http://www.youtube.com/watch?v=SM7oWKgCVo4

Enjoy!

Thank you for the great answers.

I do have a pre approval letter from a mortgage bank and an agent who writes all my offers.
Due to my working/ family situation I cannot really go any further than Oakland... and considering the prices there, this may not be a smart move. I am also looking for properties under 300k, and so far no luck. I guess I will start looking at townhomes and condo. As Charo said, I may have better chances there.

Sean, thanks for suggesting the 203K loan. I have never heard of it. I will contact my lender and ask her about it. I know I qualify for a conventional loan, but this would diminish my buying power while increasing the down payment which will limit my cash funds to improve whatever issue the house may have. That is why I stuck with the FHA loan.

I will keep shopping for short sales and see if I will eventually get lucky. ;-) Hopefully after the 8K tax credit expires, there will be less buyers around to compete for the few houses out there.

Carl, thanks for all the links. I will read them and see if I have a change in the competitive REO market.

Thanks all,
M

Hello

All the answers offer you some portion of the puzzle; however, from the perspective of a loan consultant, my question is:

Do you have a pre approval letter from a mortgage bank?

Simple answer, is to get one.

Call me and I will have a letter in your hands 30 minutes after we complete your application. No charge whatsoever.

I must also agree that a conventional lender's letter is stronger, and I can arrange that, too, if you qualify.

We are a Mortgage Bank, a direct lender, and can manually underwrite your loan in house [if that is in fact a problem].

Best advice, don't give up! There are Realtors out there that will stick with you until you are IN your home.

...and I'll finance it. Call me

E.Maurice Golde
Sr. Mortgage Consultant
American Financial Resources, Inc afrmortgage.com

800 856 9600, or my cell phone 510 755 9596

Sellers generally prefer buyers with more cash down, especially if the price being bid is a recent high and the appraisal may not support it. The higher down payment buyer would have more cash to deal with the extra down payment if the property doesn't appraise for the purchase price.

Ask your agent to get feedback on your offer from the listing agents you've submitted offers to, to see if what you could have changed to have been selected.

Good luck with your home search, it won't be easy, but once this 1st time home buyer credit is gone, it'll get rid of some buyers and more sanity will appear.

-sunil

SMA REALTY

Sunil Sethi / Associate Broker, REALTOR, MBA, CPA / SMA Realty
38350 Fremont Blvd. #202 / Fremont, CA 94536
Office 510 793 8600 / Mobile 510 388 2436 / Fax 510 431 9046
My Bio: http://sunilsethi.com/about_me.htm
Personal: http://www.sunilsethi.com
My blog: http://fremontrealestate.blogspot.com/
LinkedIn: http://www.linkedin.com/in/fremontrealtor
CA DRE#: 01173766

Hello Home Buyer and thanks for your question.

As the others have already mentioned, and you have suspected, the answer is "yes" the FHA loan has something to do with your inability to purchase a home. FHA loans are considered "weaker" and subject to more problems than would be a conventional loan or cash, so often a seller who must sell the home (as in distressed properties) must find the strongest offer. As Carl noted below, this is a "different" market now than we have experienced in the past, and there are a plethora of buyers who can buy with cash or have loans with excellent down payments. That is not to say that you cannot find a home, but your tactics will need to change.

Since you're asking these questions of the forum, I have to ask...are you using an agent to submit offers? If you're trying to do this by yourself, that, alone, can be a huge red flag to many sellers. Work with a real estate professional to write and submit a really solid offer with explanatory notes and give as much information as you can to the seller about your financing package, your willingness to buy and your financial position. For FHA buyers, I also find that a personal presentation to the seller is often more effective than simply faxing the offer. "Personalizing" the offer can make the difference between a "yes" or a "no" by the seller.

I would not necessarily recommend that you try to modify your housing desires, but encourage you instead to keep looking and making offers. I know it can be very frustrating, but I did this last year for one of favorite clients and after working with a bank on an REO purchase for 40 days, their offer was finally approved and their family is enormously happy in their 4 bedroom home. It took a lot of time to find the home, and we were discouraged plenty of times, but the right home came along eventually.

I wish you good luck and let us know if we can help you!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
Tel (408) 426-1616
Email: GraceAreaProRealty@att.net

Hello first home buyer of Fremont,

First of all let me help you by saying that you are not the only one in this boat!

80% of homes are sold in this price range; therefore there is highest activity in the price range that you are in. Very competitive, you are competing against the all cash buyers, buyers with large down payment, quick close of escrow, AS IS sales etc.

Last week I wrote an offer for buyers, who paid more than asking price and all cash offer ... they didn’t get the house because there was another all cash buyer who paid even way more than asking price!

You read all the remarks and answer from the other Real Estate professionals. My recommendations are …

• Change from single family home to town home or a condo
• Change your City preference. i.e. Hayward, Dublin or beyond towards Tracy if that’s works with your work commute, family timing and schools
• Have you tried BMR units with builder i.e. KB Homes and been to City of Fremont for that? May be that is another best route for you if you qualify.

Honestly, changing your agent is not going to do much good. Yes, make sure your agent knows how to and what to do to make your offer most attractive and presentable without any errors, and is looking for your best interest. Listing REO agents may not have time for you. They may put you with their assistant agents and that may be another frustrating experience for you. Submit offers on short sale may be a great option which you said you already exercised… I would say continue on that aspect and don’t give up. You may just get it accepted with patience and be a winner.

Good luck to you,

CharoBhatt
510-381-2105
CharoBhatt@gmail.com http://www.HomesByCharo.com
Web Reference: http://www.InstantHomeValue.Info

To elaborate a 203k loan allows you to finance in the repair costs into the mortgage as long as it appraises for 110% of the after repair value.

Pacita just mentioned something that triggered another thought.

She asked if you qualified for another loan. Are you trying to go fha in order to save money to you can use cash to renovate?

If so look into a conventional 203k loan. Might be a better solution for you.



Sean Dawes

Some agents may not tell you, but I have seen in the confidential remarks of the listings, NO FHA loans. Not that they won't look at it, but rather, it's because FHA loans (as well as VA) must conform to very strict guidelines before loans are approved.

STRICT GUIDELINES
For REOs, where many of the properties are trashed and/or stripped, these may not pass the FHA guidelines. For example, a functional kitchen requires a stove/oven. If the REO (or even short sale) is stripped of this, you can't get your loan approved.

MULTIPLE OFFERS
Also, $20K may not be enough in a competitive situation. Many of the short sale and REO listings are listed "artificially" low to get buyers excited enough to write offers. The problem is, there is a lot of excitement at certain budget ranges. Recently, my buyers were contemplating writing an offer on an REO --- but by the time I got hold of the REO agent, he had already received 98 offers!

Another competitor is the all-cash buyer. Many of these investors have formed a buyer consortia where they buy properties all cash, no contingencies. Even if the offers are lower than others, the lenders may decide to accept the cash offers because they are, in their view, a SURE THING.

TYPE OF LOAN
Has your lender determined that you will only qualify for an REO loan? Or is there a possibility you can get a conventional loan? Knowing what your options are, you may be able to position yourself more competitively.

CHANGE YOUR SEARCH PARAMETERS
If you are preapproved for $300-400K, have you tried to lower your expectations, and search for properties under $300K? Then you'd have a little more wiggle room to submit an offer higher than the $20K you've established.

A couple of things to understand:

(1) We are in a totally bizarre market right now – this cannot sustain itself and will correct as soon as the pool of available buyers slows down. Many are in the same boat as you right now.

(2) If a seller has a choice between cash, conventional or FHA offers, they will take the better financing or cash any day. The higher the amount of down payment, the higher they buyer can go because they don’t need to worry about appraisal issues. In addition, the building does not need to be in premium condition so there will be less chance of it falling out of escrow when the FHA appraiser shows up.

(3) A short sale specialist is not going to be much help – they are needed on the selling side to make sure a short sale gets approved by the bank once an offer is submitted. You need a local expert that understands all of the products on the current market – regular sales, short sales AND REOs.

And yes, I recommend that you use an REO agent with a lot of experience and a lot of REOs under their belt. They’ll have a better chance of navigating the minefields of writing offers that will get accepted AND knowing how to get you through escrow safely and securely.

Here are some posts that may help:

Wanna Buy An REO? You MUST Watch This ...
http://www.trulia.com/blog/carl_medford/2009/10/wanna_buy_an…

Bank Tactics Causing Repeat Of Crash Conditions in San Francisco Bay Area
http://www.trulia.com/blog/carl_medford/2009/08/bank_tactics…

Top 10 Things I HATE About REOs: AND 3 Startling Consequences
http://www.trulia.com/blog/carl_medford/2009/07/top_10_thing…

How To Buy An REO – Top 17 Questions Answered
http://www.trulia.com/blog/carl_medford/2009/04/how_to_buy_a…

If I Want to Buy A Foreclosed Home …
http://www.trulia.com/voices/Home_Buying/If_I_want_to_buy_a_…

I would consult with a local realtor who specializes in short sales if that is the route you are interested in going with.

Under the advice and opinions tab of trulia you can click find a pro and see what agents are active on here in your local area.



Sean Dawes