Blocked from housing market

Asked by Grafix311, Thousand Oaks, CA Wed Oct 28, 2009

Why do I get the feeling that by going FHA there is a mark on you! I need some good advice and a real estate agent to go with it.

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Ted Mackel, Agent, Simi Valley, CA
Thu Oct 29, 2009

There is no mark on you. The low interest rates and the low prices have brought out investor money and a large group of people who have money, who have been renting. For example, 65% of all the closings (this year 2009) in Simi Valley have used Conventional financing. Another 10% of the purchases were all Cash. There are enough 20% or more down payment buyers that the sellers figure less things to go wrong in the transaction.

-FHA appraisals can be tougher on homes with deferred maintenance.
-If the property is being flipped then the 90 day rule applies
-Low down payment and lack of reserve funds for a FHA buyer can make sellers uncomfortable.

If a seller is looking for the highest net and the property does not have deferred maintenance, then FHA is not always that bad. Few probably realize that until DEC 31st FHA appraisals are not subject to the HVCC.…
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Barry Shapiro, Agent, Camarillo, CA
Thu Oct 29, 2009
You are a very perceptive potential homeowner asking an excellent question. Rather than constantly running around writng offers on properties you won't have a chance to compete for, you should spend a half an hour sitting down with a Conejo Valley agent and lender that knows the local market. If you have the patience and persistence to reach your goal, our team can help you channel your frustrations to stay on track. You have a number of factors contributing to your future homebuying success: The first-time Homebuyer credit will be extended until next summer. We are coming into the Holiday season, when buyer interest tends to lag in favor of family celebrations. The banks are ready to release a plethora of REO properties onto the market, in all price ranges. As more and more "conventional" and all-cash buyers absorb the current inventory, you will see a shift in the market towards FHA, as supply increases and demand wanes. So, if you're ready to partner up and put in place a game plan for success, we are here to join YOUR team and make it happen! Good luck in reaching your goal of living the American Dream.
1 vote
Ted Mackel, Agent, Simi Valley, CA
Mon Mar 8, 2010
I am going to have to back up Bonnie here on this one. FHA financing matters a great deal to sellers. The FHA appraisal is far more rigorous than a conventional loan appraisal. The FHA appraisal process can generate a list of repairs large enough to kill an escrow.

The facts support this assertion as well. When you look at the closings month by month, 65%-75% of all the closings each month are dominated by Conventional loans and All Cashbuyers. I see this in East Ventura County as well as the west San Fernando Valley.

I write a market report each month on my blog and look at the financing vehicles used along with the closings.…
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Bonnie Sterl…, Agent, Simi Valley, CA
Mon Mar 8, 2010
Hi, I know and like Janis but I have to disagree. Sellers do care what type of financing a Buyer brings to the table. A 20% down conventional buyer has less red tape in the underwriting process, the appraisal comments about condition unless there are exteme issues will have bearing on an FHA loan where they would have none on a conventional loan. While it is very frustrating to be an FHA buyer in this market, it is practical to recognize the obstacles and work within the most likely opportunities. Homes that languish on the market, what few there are, may be some of the best opportunities for FHA buyers. Try to avoid situations where there are multiple offers, there you will find that you are spinning your wheels. Keep at it, I have helped many buyers purchase with FHA, it is a long road but with the down payment low and low interest rates, you must realize that it will be worth the effort in the end. Select a Realtor who is interested in helping you meet that goal and will work relentlessly because it is the right thing to do, even if it is not the biggest pay day. There are plenty of Realtors who still enjoy handing a first time buyer keys to their home more than an easier paycheck. Good Luck and please contact me through my trulia profile if I can assist you further.
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Janis Willou…, , Thousand Oaks, CA
Sat Mar 6, 2010
Purchasing a home with FHA financing is certainly advantageous to you. There is certainly no mark on you, only a type of financing that is your choice. Most of the buyers that I have been working with lately just recently closed on a property with FHA financing. Sellers do not care and that type of financing offers many good choices rather than just a straight conventional loan. Please let me know what I can do to help you!
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Hector G. Di…, Agent, Ventura, CA
Wed Oct 28, 2009
There is always a mark on you! It can be from the mortgage company, the government or even your social net work. Depending on how you deal with the "marks" is the difference. Do you have enough savings to go with a traditional loan or to pay for the house in cash? You will still have to pay property taxes, repairs and upkeep of the home (more marks). Think about that before you get into anything you might regret later.

What exactly do you mean by "mark"?
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Pacita Dimac…, Agent, Oakland, CA
Wed Oct 28, 2009

I just answered a question from someone who has an FHA loan and is having a hard time getting his offer accepted. Here's my answer to his question. Hope this helps turn on your thinking cap.

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.

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.

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.

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.

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.
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Sean Dawes, , Philadelphia, PA
Wed Oct 28, 2009
As far as a real estate agent to go with, have you looked under the advice and opinions section on trulia? There is a find a pro feature which you can then look up a local agent that is active. Think its a great way to find an agent to work with.

As far as the FHA goes. FHA guidelines are more strict and lots of homeowners are afraid of locking in with them I think.

Sean Dawes
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