As a lender, I represent home buyers looking to get into homes. There are however lenders out there who represent sellers, usually in the form of an “LLC” or investment company that owns the property.

Most of these LLC’s exist to “flip” properties and turn a profit (See “FHA Flips Flipping Rule“). These types of sellers can be crucial in taking otherwise uninhabitable properties and refurbishing them into pretty nice homes.

This could translate into a profit for the investor as well as a deal for you, the buyer. It’s a “Win-Win” situation!

The quality of the refurbishment or “rehab” is up to the LLC and to the amount of profit they’re looking to make. That is why it is very important to do a thorough inspection beforehand. This will give you an idea of how good a job the seller’s crew did fixing up the home.

Now, as I mentioned earlier I represent you (the buyer) and sometimes these investment groups or “LLC” have their own lender who will represent them (the seller).

The purpose for this is usually to ensure that everything that I’ve done is accurate.  They will usually review credit (see “Bad Credit…Is It Really That Bad?“), financial documentation, and your reserve funds. After all, they are trying to protect their investment by looking at offers from serious people not window shoppers.

That is all well and good because again, good investors buying beat up properties is a good thing! However, we have to remember that not all investors are created equal. There are some, I know hold your breath, that are GREEDY.

A common, and might I add annoying, tactic is to have you apply through their lender for a loan. This is to again, verify that your information is solid and you have the means to purchase a loan, but also to outright steal your business from me (your lender) and increase their profits.

Now, I’m not writing this post to dissuade you from considering another offer. Actually, if my level of service hasn’t made you a loyal client then I don’t deserve your business. What I am trying to dissuade you from is being rash and not truly weighing out your options.

If the seller’s lender solicits a loan to you, here are some important things to consider:

1. Man cannot live on interest rates alone- there are so many more components that go into a loan besides your interest rate. Always look at the APR as well as other fees.
2. A lender is not always a lender- Personal cell phone number, email address, and quick follow up are not part of the “Lender’s Creed” as a whole. There are only a small number of us who are available outside the “9-5″ mindset.
3. Closing Times Are Crucial- You can incur per diem fees by not fulfilling your obligations as a home buyer. You want your lender to guarantee you will close within 30 days, IN WRITING.
4. Service- After everything is said and done, you will remember me by my service. You will recommend me to your friends because of my service. The difference between you being “satisfied” and “overjoyed” with your new home will be…you guessed it, MY SERVICE. With great service, why would you go anywhere else?

Bottom Line

The purpose of this post is to let you know that when you do get an accepted offer on a house, you should not be surprised by the fact that another lender will need to review and verify your information. It’s normal and usually pretty routine.

However, if there is an attempt to solicit business, remember me (the little guy) who has been holding your hand every step of the way. (See my Professional Biography and “A Cookie and a Mortgage: What They Have In Common“)

Related posts:

1. Communication is the Key to ANY Relationship…Especially with a Lender
2. Lender Documents: Why So Many?
3. FHA Flips Flipping Rule

I’m just an Average Joe, odds are if you’re reading this then you are too. The reason this site exists, in fact the reason I exist, is to educate people. Specifically those who have NO IDEA where to begin. That said, let’s go through a few helpful tips you can use when it comes to submitting/negotiating an offer that will help you stand out to the seller.

1. Secure financing BEFORE you submit an offer- This may seem like a no brainer, even for an Average Joe, however in the “heat of the moment” people will submit impulsive offers only to later find out they actually have to PROVE that they can pay for the house. Weird concept isn’t it?

You want to get pre-approved, NOT pre-qualified. A pre-approval is a guarantee of funds and allows you to begin submitting offers on homes the day you receive it. A pre-qualification is just an excuse to run your credit and is not worth its weight in paper (You can get a pre-approval online here).

YOU NEED FINANCING TO HAVE YOUR OFFER ACCEPTED!

2. Offer a cash incentive if they accept your offer- A bank will not finance more than what a property is worth.  Appraisers now-a-days are very conservative when it comes to the value of homes they evaluate.

This is advantageous because you can submit an offer for what a seller is asking for their property (which looks good) while at the same time offering to pay an incentive should the value come in lower.

For example, a seller is asking $125,000 for a house. After discussing with my real estate agent we believe it will appraise for $110,000. I submit an offer for $125,000 stating that if the property appraises for less than my offer, I will give them $2,000 above what the appraisal is in CASH. The property appraises for $115,000 (which is all the bank will finance) and I give a check for $2,000 as agreed.

There could be multiple offers on this property but the fact that I am offering CASH is hard to ignore.

Score another point for Average Joe.

3.  Don’t request seller concessions- Meaning, if you have a big enough nest egg to cover your own closing costs it would be wise to not ask the seller of the property to pay for them.

Additionally, there are programs such as CHDAP or other Down Payment Programs (See my Down Payment Assistance Programs page) that can help you make up the difference for paying your own closing costs.

4. Promise the seller their money FAST- As I mentioned in step 2, cash is hard to ignore. Make sure your lender can close escrow within 30 days. Something that I have found effective is writing “WILL CLOSE WITHIN 21 DAYS” on the offer.

Clear this with your lender first (See “Your Loan Is Like A Cookie“) and be sure that they can give you a written statement attesting to the fact that they can close within 21 days (FYI, it’s not impossible, most loans I process close within 21 days).

The Bottom Line is This: The more tools in your red Average Joe toolbox, the better equipped you’ll be to handle this market. Then again, tools are only as good as their handlers. Be sure you hire a good Realtor(R) and lender, they’re going to be crucial in taking you from “Average Joe” to “Expert Negotiator”.

Related posts:

1. The Lender Lure: Why Sellers Make You Talk to Their Lender

A few months ago I wrote a post on CalPETR.com entitled “Ray Homebuyer Had to Change His Last Name: An Introduction“. In that post I described an all to common occurrence for good willed home buyers.

In a nutshell, Ray believed he was going to buy a home and was let down by his home buying team. Ray found out 60 DAYS INTO ESCROW that he was not going to be able to buy his home because of an FHA requirement that was not met. So much for transparency in the banking industry (See “Brenda Borrower Gets Buffed by Big Bank“)

Ray Homebuyer trusted his real estate agent and his lender to keep him in the loop on everything that was happening. Not only did his Big Bank lender drop the ball by never returning his phone calls, but his real estate agent outright lied about the type of financing Ray was applying for.

That said, Ray Homebuyer got a hold of us and he signed his loan documents yesterday. He is now Ray Homeowner, middle name “Proud”. It wasn’t easy and it wasn’t an overnight resolution but it was worth it.

Not everyone is so lucky though, many people who find themselves in Ray’s situation simply give up. If you have a difficult loan situation please fill out the Loan Rescue Form and we’ll see what we can do to get your loan closed, no additional charge.

Have you been taken advantage of by Big Bank? Do you have a story you think needs to be published? Are you unsure about your current lender or real estate agent? Feel free to comment below or send me an email. We gladly give second opinions.

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This is good news and bad news, but mostly good news! House values are related to House sales. It’s Economics 101 really. There is a demand for houses, albeit cheap houses. The supply is very limited right now. When demand outweighs supply this means the price for that product go up.

For example, remember those little Razor scooters? When they first came out every kid in America wanted one and they just flew off the shelves! When they first came out those little suckers cost around $150 right out of the box (even more if you bought accessories).

As time went on the price went down because eventually the scooter market was flooded with alternative brands, cheaper quality Chinese knock-offs, and an over-all disinterest. Now you can get them for $20 almost anywhere. What’s my point? The demand went down because there was a high supply, as a result the price was reduced.

SO currently people are looking to buy, there is a demand for houses not only in Santa Clara County but nationwide. As a result of the housing crash many people are looking to get a good deal. This means that houses are like those Razor scooters, they’re FLYING off the shelves err…market. Unlike Razor scooters though, there is always a need for houses.

Values

In October and November of 2009 the median house price in Santa Clara County was said to be $550,000. In 2007, before the bubble burst, it was $805,500. The San Jose Mercury News reported today that house and condo sale prices for December 2009 are just over $550,000 as compared to $525,000 in December of 2008.

What do all these numbers mean? Well for starters it shows that home values in Santa Clara County have increased from 2008 to 2009, however they are still not what they once were. This can be interpreted by some as the real estate market stabilizing, man I sure hope so. Let’s see how this affects home purchases…

House Sales

What it comes down to for home buyers is this…if you’re thinking of buying a house, buy one. There are so many programs out there for first time home buyers it’s ridiculous (See my list of Government Down Payment Programs in the Bay Area). Ridiculously good that is.   In Silicon Vally this past December house sales were up 44% compared to the year before. Supply is going to start running low as the demand for a decently priced house starts to devour the Bay Area inventory.

Bottom Line

The demand seems like it is increasing, will it continue? You tell me!  BOTTOM LINE house prices are low right now and they’re showing a slow but steady increase. If this is the best time to buy, the window of opportunity may be slipping away. It does not mean that you won’t be able to buy a house in the future, it simply means that it may cost you more to get into the house you want.

This is just how I see it, these are the trends and I’m not the only one calling them out. What do you think? Any thoughts or challenges?

I just delivered the update, it’s up to you what you make of it.

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Fed Lifts No Flipping Ban for One Year Beginning February 1st, 2010

Before I begin, you need to know that flipping is basically buying a house that needs repair, repairing it and selling it for a profit. You can read Scott Schang’s post that goes more in depth “What Exactly is House Flipping?”

For example, Big Bank is selling an “As-Is” property for $2. Irwin Investor pays the $2, spends $3 fixing it up, and sells the house for $7. Irwin Investor made a $2 profit! This is a situation that truly is “win-win” for home buyers, investors, and Big Bank. Let’s break it down..

Big Bank’s Books

Big Bank has many properties that Ray Homebuyer can’t get financing on because they are trashed, literally TRASHED. They have holes in the wall, flooring ripped out, and  for some strange reason the kitchen sink is missing. Big Bank is looking to move these properties off their books but they aren’t willing to commit to investing thousands of dollars to fix up or “rehab” them. Enter the investor!

Irwin Investor Generates Income

Investors now have more properties that they can buy and fix up that otherwise would have just remained vacant/abandoned. In the example I used I mention that Irwin Investor spends $3 fixing up the home before selling it. Let’s focus on that for a second. Irwin Investor hires Carlos Contractor, Charlie Carpenter, Paul Painter, and Tony Tile Guy. All of which have families and mortgages of their own.

Are you following me? This one home is not only generating income for Irwin Investor but also for the people he hired to fix up the home. This is a good thing California! You might ask “well that’s all good and swell for Paul Painter and the crew, but what about me the simple home buyer?” Cue Ray Homebuyer!

Purchase Power

Ray Homebuyer would have loved to have paid $2 for that property Irwin Investor bought, but he does not have the money to bring it up to building code.  Irwin Investor is a seasoned pro at fixing up properties, it’s what he does for a living! Ray Homebuyer works in the healthcare field, not construction or real estate. Quite frankly, Ray Homebuyer just wants to move in to a home that is in good condition. What this “flips allowed” rule does is enable Irwin Investor to sell more homes at a lower price. Which in turn allows Ray Homebuyer to get a nice house at a lower price.

That house Irwin Investor sold for $7?  Well four years ago it would have sold for $10, but given the current market situation and the condition of the home, Ray Homebuyer can get it for $7. What will happen 10 years from now? What has happened every year since the Great Depression up till now, property values will go UP.

Bottom Line

This is a great way to close the loop on properties that are stagnant and not currently in livable condition. The flip rule waiver will remain in place until February, 2011. If you are a home buyer, purchase from an investor, they usually have “For Sale by Owner” sign on the property. If you are Big Bank and you are reading this, please give Irwin Investor a good deal on those trashed homes, the future of not only the state but our country is on the line here. If you are an investor purchase those damn homes and get this state back on track!

This is an exciting opportunity to get into a home, but all I can do is show you the door. I delivered the update, it’s up to you what to make of it.

If you have questions about how to take advantage of this exciting FHA rule you can give me a call directly on my cell phone at 714-244-7368.  Sometimes it’s much easier to reach me by email, so here it is: ChrisA@BroadviewMortgageCorp.com

Related posts:

1. The Lender Lure: Why Sellers Make You Talk to Their Lender

Image via Wikipedia

The median home price in Santa Clara County is $550,000, which is good for those selling homes but not too good for those looking to buy.

If this is a sign of things to come (which is still up for debate, way too early to tell), then the time to buy a home is quickly slipping away.

With so many perks to stimulate the housing market (Federal tax credit, proposed California tax credit, and record low interest rates) a quote from a friend comes to mind. “If you don’t buy a home right now you’re either dumb or broke.”

It is true that credit is harder to come by with a 45% DTI becoming standard (Debt-To-Income ratio) when lending, but with programs like the USDA, VA, and CalPERS out there, it’s not hard to get the financing.

The hardest part is staying disciplined long enough to bring your expenses down.

Here is an excerpt from the San Jose Mercury News:

The Bay Area overall showed a 10.6 percent jump in the median price of all homes sold, including condos and new homes — from $350,000 to $387,000 — and a nearly 20 percent pop in the number of homes sold. The real standout counties in terms of volume were Santa Clara (a 47.2 percent jump), Marin (52.9) and San Francisco (46.8).

There were several factors behind the encouraging numbers, experts say, including government help in the form of tax credits for first-time buyers; low down-payment FHA financing; and an easier overall access to financing, even in the nosebleed section where a borrower on Thursday could get a 30-year fixed loan for up to $2 million for 5.75 percent.

The full article can be read here

Is the worst over? Does the spike in home prices and home sales mean we’re out of the water? In my opinion, don’t bet on it. If you’d like some guidance on how this affects you as a home buyer, call me on my cell at (714)244-7368 or email me at ChrisA@BroadviewMortgageCorp.com.

I just delivered the update, it’s up to you what to make of it.

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Hello Northern California! We are proud to be in the beautiful bay area! If you’re looking for a web resource that offers the latest on current real estate market trends and information look no further. I will be partnering with my partner Scott Schang as well as many other industry leaders in real estate, social media, and technology in order to inform and empower the home buyer.

I live my life on three tenets that a wise friend from Santa Clara University told me my senior year. “Conduct everything you do with honesty, transparency, and courage.” Simple yet very profound because in this industry it’s not only “sink or swim” but it’s also “swim or be sunk!” There are so many wolves in sheep’s clothing, so why trust me? Anybody? Well like all things, it’ll take time but as you see expert after seasoned expert showcased here, many of which you will know some maybe not, you will come to trust the hyperlocal focus of this site within the Bay Area.

Remember, “Honesty, Transparency, and Courage is how we roll, so here comes good in order on evil to take its toll.”

A.M.D.G My fellow Santa Clarans!

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