If your clients are FHA buyers in a multiple offer market, what do you do to help them get the house they want and can afford?

Asked by Darren, Stockton, CA Sat Jun 23, 2012

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Larry G. Wil…, Agent, Tracy, CA
Sat Sep 15, 2012
Some good advice here. Let me repeat and add to the list.
1. Get a good experienced lender. The answer by Gregorio is the best I've seen. So many pre approvals are one page and don't work in the competitive sellers market in Stockton/ San Joaquin County now.
2. Interview more than one agent. Lots of agents; many are not skilled to compete in today's environment.
3. Get educated about the area you want to buy in, especially if school district is a concern.
4. If client doesn't have funds for closing costs, they need to look at properties below the maximum amount they are pre approved for so that they can add the closing costs amount to purchase price.
5. If first time home buyers, don't expect to buy your dream home now. This is one of the biggest issues I see with first time home buyers is they want a castle for a shack price.
6. Be persistent. Don't give up if you lose a few homes to cash or conventional buyers.

I recently won a competitive bidding war for a client (not FHA) by having buyer pay seller's closing cost. There were 3 rounds of bidding and the difference was the closing cost. Probably won't happen with FHA buyers. Just realize that usually cash wins first, then 20% down conventional buyers are second and FHA buyers are next.
The one big advantage FHA buyers have is in offering on HUD homes which can only be sold to owner occupants ( and some non-profits) for the first 30 days. FNMA foreclosures give owner occupants 15 days first look
1 vote
cortney, Home Buyer, Stockton, CA
Sun Sep 2, 2012
That's a good question, I'm a first time home buyer and I had the same question. I just believe that you need to have a good realtor. I believe that the realtors I'm with can help accomplish this.
1 vote
Terry Bell, Agent, Santa Rosa, CA
Wed Sep 19, 2012
There are several programs available that give preference to first time homebuyers who will live in the house as their primary residence. Buying in this market will exclude competition from all the cash investors. And have them look in the market that is less than the ceiling of their pre-approval letter so they have room to offer more than asking price if there are multiple offers anticipated. Take opportunities while showing houses to your clients what a difference a coat of paint, molding and laminate flooring can do for a house, all things they can do themselves after close of escrow.
0 votes
Annette Law…, Agent, Palm Harbor, FL
Wed Sep 19, 2012
Are you asking as a real estate professional or an active home buyer?
Larry has provided the greatest understanding of what is taking place in the VA/FHA situation.
Position the buyer correctly. Optimize the offer. Have a plan B. Expect to lose a few. Be loyal to your real estate professional.
0 votes
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Wed Sep 19, 2012
Hi Darren,

I'm a Mortgage Banker with 23 years working with First Time Buyers. I'm helping my clients---FHA and VA and Conventional---get their deals accepted against competing Offers by teaching my clients to get all their "ducks in a row" and demonstrate they are the most serious Buyers for any given property. Realtors work harder to put a deal together when the Buyer is fully-prepared to move forward and SERIOUS. Many Buyers will waste the Realtors' and the Sellers' time; not my clients!

Here's my Primer on getting Offers of ANY type accepted in ANY market, "Five Steps To Making An Offer."

STEP 1. Always make offers in writing. Yes, it is absolutely true that offers can be presented verbally. Don’t do that. Put your offer in writing every time. Even if you are in a situation where you and the Seller are sending counter offers back and forth, every new offer should be in writing.

When your offer is in writing, you come across to the Seller as serious. Think about it, anyone who is taking the time to go in to the real estate office and sign the form is serious about buying a home. Seriousness counts big time.

Put the following into your written offer:

-The amount of your “earnest money deposit” or “good faith deposit.” That is the amount of money you’ll put into escrow with the Seller’s attorney upon signing the contract of sale.

-The amount of your mortgage financing. Of course you’ll back this up with a prequalification letter, but you must include the amount of your mortgage in the offer.

-Items included in the sale. If the appliances and the chandelier in the dining room are to be included in the sale, make sure they are written in to the offer. This shows the homeowner you were paying attention when you inspected the home and asked, “What’s included in the sale?”

-Attorney Information: the name, telephone and fax numbers for your attorney.

-Anticipated contract date. Always make this date within 48 hours of your offer. Present the assumption the Seller will accept your offer and immediately forward a contract to your attorney.

Again, this demonstrates to the Seller how serious you are. You are in effect saying, “I am so serious about buying this home I want to sign the contract immediately!” Imagine how many other Buyers out there are delaying things like signing the contract (and potentially changing their minds).

-Anticipated closing date. This is an interesting point for the offer. I always recommend putting the closing date for an offer within thirty days of the contract. The fact is most closings take place within 60 days of contract, and your attorney will likely put that in the contract, but if your offer says “thirty days,” once again you demonstrate how serious you are about buying the home.

STEP 2. Prequalification letter. Your mortgage professional should be available to fax a prequalification letter within hours of your making your offer; even on Saturdays or Thursday evenings.

STEP 3. Mortgage pro phone call. I think a phone call from your mortgage professional to the Listing Agent is a home run. When the Listing Agent hears from the mortgage person directly how eminently qualified you are, imagine how that raises your profile to the agent and the Seller!

STEP 4. Engineer ready to go. When you sign your offer, be sure to tell your Realtor that you’ve already spoken with your Home Inspector and you can have the inspection done tomorrow. Whoa, that’s really the mark of a serious Buyer!

STEP 5. Get ready with your counteroffer. If you offered less than the asking price, then you need be prepared with your counter offer if the Seller either declines or counters your opening offer. All of the steps above should be repeated with the new price replacing the original number. Organization and swift responses rule the day! Oh, you may not want to counter offer. That’s okay, too.

Trevor Curran
NMLS #40140
0 votes
Gregorio Den…, , San Diego, CA
Thu Jul 5, 2012
Actually, I believe you should make sure your client works with an experienced FHA loan officer that will draft an approval letter that makes their qualifications clear. Most sellers don't have hesitations about FHA because they think their property is defective, they have hesitations about FHA because they believe the borrower is defective. A skillfully drafted and accurate approval letter goes a long way to put aside these hesitations.

When you get an approval that is 4 pages long that includes the loan product, the DTI, the trimerged mid credit score, bank statements showing sourced and seasoned funds to close and the DU/LP findings; any quality agent should be able to properly represent the strength of their offer.

If you are a listing agent and encouraging your sellers to avoid FHA, you are losing money.
If you are a buyer's agent and you don't receive a pre-approval as I just described, your clients have the wrong loan officer.
0 votes
D'Adrea Davie, Agent, Stockton, CA
Wed Jul 4, 2012
Hello Darren,

I would first suggest to pick your real estate agent wisely. It would be wise to choose an agent that is familiar with purchasing with FHA financing. The market has changed and is more competitive for any buyer, let alone a FHA recipient. First, your agent needs to be familiar with the FHA rules and regulations when choosing a home, to assure that you have a fair chance in competing for the home. Secondly, there is more to writing an offer then the offer price. Be certain that the terms are reasonable and be flexible. If you are asking for closing costs you may need to reduce the amount or eliminate them altogether (if possible).

If you are interested in purchasing...I work with my mother, Rosemary Brooks as the Mother & Daughter Realty Team. I am a buyer's agent and enjoy working with First-time Home buyers and we would be more than happy to assist you and your family purchase a home.

Like us at http://www.facebook.com/motheranddaughterrealtyteam for updated market and purchasing information. Contact us at 866-543-0462 for additional questions about purchasing a home!
0 votes
Sarah Goulart…, Agent, Plymouth, MA
Mon Jul 2, 2012
You have gotten some good advice. I am not sure about your area, but the market where I am is changing. This is a multiple offer market and we see a lot of cash buyers. Honestly? The way an FHA buyer might push out a cash buyer comes down to the offer itself. Your conditions (price and other contingencies) need to make it worthwhile to a seller to turn down a cash buyer.
0 votes
Stephanie Le…, Agent, Miami Lakes, FL
Mon Jul 2, 2012
This is a great question? FHA buyers have it so hard in this market. With all the cash offers out there it is hard to compete. The secret is to work with an agent who knows FHA and can present your offer in a manner that will it leaves the competition behind.. FHA buyers need to work with agents who know the process and will be able to make your offer solid.
Web Reference:  http://www.StephanieLeon.net
0 votes
Rocky G.H. H…, Agent, Ripon, CA
Sat Jun 23, 2012
I agree this is and has been a "multiple offer market" which makes it a sellers market. It is not a buyers market. A buyers market is when buyers are in control and can offer lower than market offers and get them accepted.

To answer your questions, it all starts with the selection of your agent. Agents like lawyers, doctors and for that matter any other profession have different skills sets and levels of expertise. It's not a matter of filling out the paperwork. Some agents are bad, ok, some better and few are truly great at what they do. Selecting an agent is not as easy as opening up the phone book or calling somebody on the internet or working with the first agent that calls you back. Look for their credentials & designations. As mentioned, there are thousands of agents but very few good ones.

After all you wouldn’t want a non-certified person to pack your parachute or a surgeon right out of university working on you child - would you?

I hope this helps,


Rocky G.H. Hawrysz
Prudential California Realty
(209) 444-6610 Direct
(209) 915-6209
(209) 433-2000 Fax
License No. 01468373
0 votes
Christy John…, Agent, Stockton, CA
Sat Jun 23, 2012
I start by showing the home to my clients as soon as possible after it comes on the market because the best homes have multiple offers in very few days. Also, when writing offers I make sure my offer is as "clean" as possible, which means I ask for as few concessions as possible from the seller. If my clients absolutely must have help with closing costs I will ask for them, however if they don't need them to close I recommend that we don't ask for them. Last, I counsel my clients that the process may be longer than they would like and we need to be tenacious and not give up. It is a buyer's market, because the prices of homes and interest rates are so low BUT there is a lot of competition for the homes in good enough condition to go FHA.
0 votes
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