What's a good timeline?

Asked by Halli, 48084 Mon Jun 9, 2008

I am a first time buyer looking to buy a house in Ferndale, most likely a foreclosure. I am leaning towards an FHA loan. I will have a buyer's agent and have done lots of research about home buying.

Okay, I planned to get pre-approved in July and then start actively searching. I expect to find a suitable house(s) by the end of July based on the MLS postings and my realistic expectations of the house I will purchase. I'd like to finish closing between Sept. 15th - Oct. 15th (depending on the condition of the house). I do not want to close any earlier because I am under a lease until Nov. 30th. When should I start to submit offers? How much control will I have when it comes to the closing date? Any other recommendations? Thanks

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Tari, , Galt, CA
Tue Jul 1, 2008
First of all, everyone is used to hearing that its either a 'buyers market' or a 'sellers market'. What we have here is a 'bankers market'. In my office, we say that more like it is a joke, but it's the cold, hard truth. Banks do not have to sign most disclosures, they are very picky about which offers they take and they have no problem dumping a deal and taking the deposit if the buyer tries to back out for any reason less than believable.
Secondly, I am suprised that Paula suggested going after homes that are not foreclosures. I am also in the Sacramento area, and I would be hard pressed to find a house that isn't an REO or a short sale home. (and short sales are twice the nightmare REO's are)
I work in an office that has about 80 REO's on the market so in essence, our clients are the banks. Banks are good for clients in that they can be reasoned with about price...if you have comps to back it up. It is very tough to get repairs, inspections or even home warranties paid by them. Most of the time, though, they will offer Buyer Closing Cost Assistance. Make sure your agent includes them in the offer though. Just because it is offered, does not make it an automatic thing...you have to ask for it in the offer.
Timelines are going to be tough. Most banks want to close in 30 to 45 days. Here, we make it a policy to put 45 days just to cover if there is a delay and the buyer can't pay the $100 per diem fee. Most deals do not close in 30 days or even on time. Cover yourself by adding a couple weeks...but not more than that.
This is a vicious market people. We have clients lining up at our properties with prefilled out contracts. Sometimes we get 10, 15 and sometimes up to 20 offers at a time. The thing that hurts offers the most is being incomplete. Make sure your agent sends a copy of the earnest money (if your agent doesn't know what that is, dump them now) they need a lender approval letter (forget pre-qual's, they are meaningless) and you need verification of down payment. Some banks are even requiring a direct lender letter if you are using a broker for your loan. You can still use your lender, but a major lender must verify your loan.
Lastly, expect to put in offer, after offer, after offer, after offer. Expect to get rejected and out bid...a lot. We have buyers who are putting in 20% over list, not asking for anything to be fixed and still getting beat out because of terms. You need thick skin, lots of patience and a fantastic agent who really knows how to write offers on REO properties.
Web Reference:  http://www.BruceSlaton.com
2 votes
CG, Home Buyer, Michigan
Wed Jun 18, 2008
I'm a buyer just about to close on my first home. It's been quite a rollercoaster ride, and I had to learn a lot quickly. First thing to know, this is a very poorly regulated industry. So you're going to have a hard time sorting out the bs if you don't do extensive amounts of research. With research, which is easy to do via the internet, you can get a pretty good handle on what you can afford, what a house should be worth to you, and what your rates should be. After you do your homework, don't believe the "professionals" that try to tell you otherwise. In this market, the buyer holds all the cards. If you're looking at foreclosures, sure there is less flexibility because you're dealing with a bank, but everything is much more straight forward too. The bank will issues the rules by which you will have to play. However, it is very true that you'll have a hard time getting an FHA program approval on a foreclosure, unless you find the perfect scenario. If you have decent credit and a down payment, you may wish to go conventional. Get pre-approved early. It should be free for pre-approval. Don't agree to pay any fees for it, and you don't have to use that lender for the mortgage either. You should shop at least 3 lenders before choosing one, and you should avoid mortgage brokers, they can't save you nearly what they claim especially after their fees. If you look outside of foreclosures, be VERY aggressive. Prices do not yet reflect the declines they should (if they did, there would be more houses selling). If you get pre-approved now, you'll have lots of time to look and be very picky. However, if you find something you like, it may mess up your timeline. Whatever you do, don't be in a hurry. Don't believe that the market can or will turn around any time too soon. Most recent projections figure that the downward trend will continue through 2009, possibly bottoming late in '09 and then remaining stagnant for 2-3 years following. You have to figure if that's a national figure, MI will only be worse. As for us, why did we buy now given what I just said, b/c it was right time for us, not b/c we're trying to time the market. We got a good deal, but still likely overpaid.
2 votes
smith3gary, Agent, White Lake, MI
Mon Jun 9, 2008
Halli, Glad to see you have a plan. Because lenders tend to be the current pinch point in obtaining a home, I suggest taking a look at your credit record for descrepancies (sp). http://annualcreditreport.com is a site maintained for consumers. There is no cost, once every 12 months. If there are no blemishes (credit scores are also offered at a cost) to dispute, then you should contact at least 3 lenders. Some require a fee for pre-approval and others will work with you through pre-approval for free. If you can't find a free one, let me know, I know two companies offering free pre-approval.

Sonya makes a very good point, banks will use their own addendums and will require a per diem fee so one of the questions for your lender is will they pay the fee if THEY do not fund your loan in time. This needs to be in writing. If none of the lenders will put this in writing, your agent needs to know so they can ask for additional time or to have the fee waved in your offer.

Jim's idea about your lease is also a great suggestion. It's better to know ahead of time so you can make arrangements if you cannot move in either because the loan didn't close, or work needs to be done on the home to pass an occupancy inspection.

How much control will you have? Everything in an offer on a home is negotiable. Your Buyer's Agent should be informed and place the appropriate language in your offer(s). Sample real estate forms and Ferndale homes are available on the website below. Forms will be changing before July first to be compliant with new minimum service laws.
Web Reference:  http://www.mi-living.com
1 vote
Sonya Loose, Agent, Beaverton, MI
Mon Jun 9, 2008
Halli - Sounds like you are a very informed home buyer....congratulations! Good job on taking advantage of the great home deals to be had right now as well! If you want to find a house by the end of July most lenders and sellers (being the bank in this case it sounds like) will expect you to close before Sept 15th. Banks as sellers typically like to see things closed just as quick as possible with a no later than date that they establish, which is usually 30 days from purchase agreement date. If you miss that they will begin to charge a per diem fee of anywhere from $50-200 per day. You may want to begin looking in July but not submit offers until August or be set to close sooner if you do want to look in July. Hope this helps you and good luck!
1 vote
Devinsdad, Home Buyer,
Tue Sep 20, 2011
Im a buyer as well. As to not be confused with the pros. I just wanted to add a couple that may save you time. Ask your realtor rather they have any work relationships that will make things smoother and faster. I have found that the realty people are a community of sorts. And that if they do not know anyone you will suffer.
0 votes
Fred Poehlman, , Oakland County, MI
Wed Jul 2, 2008
Hi again Halli,
I don't know if you are still reading the answers, but just in case you are here are some things to know about. First, look at the area the realtor is from when answering. Tom has several designations, but is not in our area. So his answers are no doubt true in his area.
We are in Michigan and 3 of the last 4 houses I have helped buyers buy in the last month have been bank owned. The offers were responded to within about 1 week, one took only 2 days. All closed within 45 days of the accepted offer, and one bank did some major plumbing repairs.
The biggest problem right now, in this area, is that when the bank finally drops the price to a good figure we wind up getting in a multiple offer situation. I have had three of those and we were sucessful in two. The old real estate slogan about Location, location, location can be added to by Timing, timing, timing.
You have to monitor the market and be ready to move when the right deal comes up.
The best advice I can give you is to repeat some previous advice, find a Realtor to be your buyer's agent. Don't be affraid to ask them if they have worked with foreclosed homes and short sales. When you find the right agent, make them sign a buyer's agent contract with you which binds them to work for your best interests.
Good Luck, Fred
If you want to search the MLS you can go to my website. You do not have to register, unless you want to save the search. I will not hound you or add you to any email lists. Go to "Property Search", then the third option "Search for a property in your area"
Web Reference:  http://FredPoehlman.com
0 votes
Tom Inglesby, Agent, Portland, OR
Wed Jul 2, 2008
Hi Halli, you are smart to get into the house hunting mode now that rates are down almost 1% from last summer but they are starting to going up. Most banks/ sellers want you to close in 30+ days from the time you have an accepted offer so the seller has a closing date that they can work with on their next purchase. If you are going to submit an offer on a forclosure then it is a different story. It is taking from 2-4 months to close a transaction. You will not get an accepted signed offer agreement when you submit the offer. You might be one of a number of offers and never know. You are left out there waiting for a reponse and you will only get one if you are the accepted offer. It is impossible to know when you will close. Also the seller will do no repairs and you are buying the house as is. Some times you might have to do an inspection on a house that you might not buy just to protect your self if the house has problems. Good luck to you.

Tom Inglesby, Broker
RE/MAX Equity Group Inc
0 votes
Dave Muti, , 07054
Wed Jul 2, 2008
It looks like you have received a lot of helpful information but I would like to add a couple of more points that should help you along your way. First, before you provide your S.S. number to anyone or authorize your credit you need to “opt out” of the trigger lists. If you don’t know what this is please click this FTC link http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre17.shtm to read up on it and then visit http://www.optoutprescreen.com to have your name removed from these lists. In short, the major credit bureaus will sell your information the day after a firm runs your credit and you will get inundated with calls from mortgage brokers. The “opt out” service is kind of like the do not call list but for social security numbers.

Then as you are looking for a qualified mortgage planner you should ask the following questions: Is this your full-time or part-time job? How long have you been in the mortgage business? How do you get most of your clients? Do you have any information I can read about your background and experience?

You should also Google the mortgage planner’s name and company to see what you uncover. If good stuff comes up, then proceed. If bad information pops up, then I suggest that you look for another planner. If no information then you have a decision to make.

Now, when you ask the above questions, the planner doesn’t have to come through with shinning results on every question. These questions are simply provided to give you a basis to form an opinion. Lastly, once you have found a mortgage professional and you are working with them I suggest that you use this form http://www.mortgageswhatyouneedtoknow.com/assets/Questions%2… to continue asking the right questions so you can ensure the mortgage you will eventually be signing is exactly what you think it should be. Slow down and enjoy this process and you should be able to Take Control of your future. Make Life Happen.
0 votes
Randy Ballard, , 30076
Tue Jul 1, 2008
Congratulations. The above are good answers all. Best thing I can add is to find an excellent Realtor. One that knows the area and market. Also an excellent Mortgage Broker.

Do not rule out properties listed in the Multiple Listing Services. Often these are the best deals. For many reasons. Particularly if you are a 1st time homebuyer and want to do a FHA loan. The foreclosed / bank owned properties and short sales are sold as is, with no disclosures. Many of these will not be in a condition to obtain an FHA loan. The Banks are closing out the lower end of the market in Atlanta. However many of the banks are asking for inspections to be done before making an offer and they prefer cash.
Web Reference:  http://www.randyballard.com
0 votes
Fred Poehlman, , Oakland County, MI
Tue Jul 1, 2008
Lots of good advice below. The biggest delay in closing is your mortgage company, so you want a preapproval, not a prequalification.
One thing about foreclosures, they usually need repair. Note that some are move in condition, you never know until you actually see them. Do not concentrate on foreclosures only. There are some sellers that are desparate and you may get a good deal without the repair cost and headache. Find an agent who you are comfortable with. You have a solid idea of what you want, they should listen to your input and not force their ideas on you.
You are leaning to an FHA loan, that is great. There are several programs that can be used, and if you find a house that needs repair, the repairs can be rolled into the loan (FHA 203K). Like with everything there are rules and limitations. Make sure you find an agent and mortgage broker who can explain all your options to you, so you can make an intelligent decision.
The time line with a bank owned is 30 days from acceptance of the offer. There is some give in that, but that is what they want. A short sale could take much longer, most of the extra time is the bank approving the short sale. A house listed by a "real person" is very negotiable and may allow you to move when you want. This is a buyer's market, so your agent should not be affraid to represent you aggressively, worst that can happen is the other side says no.
Good luck, this is a great time to buy.
0 votes
Tue Jul 1, 2008
you could conceivably submit offers as early as mid July with a 60 day escrow. Many of the foreclosures in our area usually are sold within the first 30 days of posting on my website. Most lenders are pretty flexible whe it comes to closing times. There are some lenders who will charge a fee for every day you are late in closing escrow. You have to make sure your Buyer's Agent is knowledgable about this and can follow the minute details of the foreclosure timelines.
If they slipped, it could cost you money.
Finding a foreclosure in humboldt County that will fit YOUR criteria will be tough. There aren't that many. Our market does not follow the national trends as we are behind what is called "The Redwood Curtain."
It costs more per square foot in Ferndale and Arcata than it does in most of Humboldt County.
Your best bet is to zero in on homes that are not yet in foreclosure, but close. We refer to those as short sales. The owner doesn't wnat to go into foreclosure but the lender is willing to sell the property at a loss and the owner can just 'walk away". I hope this answers your questions. I agree wholeheartedly with Sonya and Gary.
0 votes
Paula Swayne, , Sacramento, CA
Sat Jun 28, 2008
Because you are zeroing in on foreclosure property, you are giving up on any control regarding the close date. Are you focusing in on foreclosures because you think you will get a better deal, or because you comfort level regarding the loan amount you are willing to take on limits you to foreclosures? I would suggest that you not limit yourself to foreclosed properties. They are difficult to get (most have multiple offers and go over asking price), and your agent will have very little control regarding the close date or anything else. Just a thought...while foreclosure properties are a good deal, you will not get a "steal". I wish you the best of luck and congratulations on your first home..it is very exciting!
0 votes
Tony Grech, Mortgage Broker Or Lender, Southfield, MI
Tue Jun 10, 2008
Hi Halli,
Congratulations on your decision to buy a home. I agree with what the others have said, but I have a couple points to add as well.

From a standpoint of getting approved, you'd be well served to begin working on that now. I can provide you a free pre-approval that comes along with a free copy of your credit report from all three bureaus. This way you can identify early if there are any snags or discrepancies in info and you can work on them now instead of waiting and having to deal with them when you should be looking at homes or packing :) It's not so important you finalize a lender yet, just talk to someone to make sure you are in good shape.

If you are looking at foreclosures and leaning towards an FHA loan, you need to be aware of a couple things. Mainly that when dealing with a foreclosure, the sellers and the property itself are almost as important as the qualifications of the buyer. There are a couple things I mean by that. First off, you are dealing with a bank. No emotions there, it's just a matter of business to them and their business right now is moving these homes quickly and also minimizing their losses. As a result, several things can happen. Some banks are hesitant to deal with FHA buyers because their is more "red tape" than on a good old 20% down conforming loan. Also, most banks want to close quickly (within 30-45 days) so you may get some resistance there. Finally, on a lot of these foreclosures the sellers have trashed the place so the home may not be a good candidate for FHA financing since HUD has minimum property requirements that must be met prior to closing. Most banks will not make the repairs or pay for them.

Banks are going out of their way to control the process, because they don't want to get burned twice on homes. So if a foreclosure is what you have your mind set on, then be prepared to be patient, because there are a number of things that can come up that you never read about on the internet. I'd also recommend looking at some non-foreclosures too because there are a lot of good deals all around.

So in summary, I applaud you for all the research you've done. You need to be armed with as much knowledge as possible. But since you're close to taking that plunge I'd recommend you talk to a buyer's agent and lender soon so they can inform you of what's going on "in the trenches" because the internet can only get you so far. Good luck with your home purchase!
0 votes
Jim Johnson, , 78233
Mon Jun 9, 2008
Depending on your market, it could take several weeks to find a property that is in good enough condition that you decide to submit an offer on it. It can then take several months to close. It would not hurt to start now.

Another alternative would be to ask your landlord if you could lease on a month-to-month basis after your lease expires, and wait a bit to get started home hunting. Now would be a good time to do this.
0 votes
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