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.
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.
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. http://homebuysblog.com/2010/03/03/second-straight-month-sim
What exactly do you mean by "mark"?
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.
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.
As far as the FHA goes. FHA guidelines are more strict and lots of homeowners are afraid of locking in with them I think.