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Archives for October 2015

Mortgage Pre-Approval for Buyers “and” Sellers!

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Financing Ad
Photo credit: Everyspoon via Flicker

Some time ago, I received a link to a Forbes article that  pretty much debunks what most people think about obtaining mortgage preapproval: “The Mortgage Pre-Approval Con” The article explains how mortgage preapproval works, what information is requested and evaluated by a mortgage officer, and so on. It’s a good article and pretty much says it as it is.

However, one critical fact missing is that most experienced Broker/Agents (that’d be me!) also work with mortgage professionals we trust. That’s because we have experience with them; we know that when they issue a preapproval, they have the level of knowledge and experience to perform. They also meet deadlines — one of the most difficult challenges facing purchases at the moment.

When working with Sellers, I may ask the Buyer presenting an offer to also be preapproved through a lender I trust. Of course that buyer can work with whomever they want … I just want to assure my client, the seller, that by accepting an offer there’s a good chance the sale will actually be completed.

Working with loan officers that have been vetted through experience, minimizes the “con” in mortgage pre-approval! 

For a list of loan officers I trust and work with, visit my Lender Resource page.

Short Sale Documentation

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Perhaps the most significant part of handling short sale listings is gathering the appropriate documention from the Seller. While each lender / loan type tends to have slightly different requirements, overall the list is similar and must be presented to the Lender at the time short sale negotiations are begun.

Short sale documentation almost always includes at least:

  1. Authorization from the Seller(s) allowing the negotiator to contact lender(s) on their behalf.
  2. Hardship letter. This letter, written by the Seller, describes exactly why the Seller is in need of a short sale and why the lender should consider their request. Not a time for sugar coating, the letter should be heartfelt (I actually like handwritten letters the best).
  3. Financial Documents (duration varies by lender)
  • Pay Stubs (two months)
  • Bank Statements (last three months)
  • Tax Returns (last two years)
  • Financial worksheets (income and expense report for the past three months, and projecting forward for the next three months, or if self-employed, a profit & loss statement will be needed)

As a short sale listing agent, I like to have this documentation in my file at the time a listing is begun. Waiting to gather this all-important short sale document until an offer is received typically delays submission to the bank and the beginning of negotiation services.

For help listing your home and a more comprehensive list of the short sale documentation needed, be sure to consult with your lender, your attorney, and, of course, your trust real estate brokers.

 

15 Things Your Buyer’s Agent Should (Will!!) Do For You

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My daughter is currently shopping for a house outside of Washington State, where I’m licensed and practice. Although I cautioned her and her husband against making sign calls and suggesting (strongly!) that she work with a Realtor I interviewed on her behalf and recommend, they decided to make a sign call and then moved forward with that agent. And not happily so. When I spoke with her by phone yesterday, her comment to me was

“Oh Mom, the agent just opens the doors. We’re perfectly capable of finding houses on our own and we don’t need any other help.”

Yikes! Now this young lady, of whom I am very proud by the way, has been raised to think for herself. However, she’s also seen me work and, gee I would have thought, understood exactly how much work I really do on behalf of my clients. Needless to say, I was terribly disappointed with her assumption that all I do is “open doors!” For Pete’s Sake!

With that in mind, I set out this morning to create a list of what I typically do for most buyer transactions. Certainly not every buyer requires each item, and certainly these are done with an eye to the specific house, experience of the buyer, and so on. I know there’s more, but this is a good stepping off point.

1.    Find Houses

  • Help you identify areas, neighborhoods, commute options
  • Set up searches that narrow the list of “everything out there” into homes that more precisely fit your requirements
  • Keep an ear to the ground, coupled with hard research, to find homes that are just coming on the market, price reductions, those that have offers that may not have been reported in the MLS, and so on
  • Help you narrow down your choices
  • What about For Sale By Owner properties?

2.    Open Doors

  • Yes, there’s that elusive MLS keybox. And for that, you need me.
  • Help you assess any/every house you see with regard to its condition
  • Help you assess any/every house you see with regard to how it may fit your lifestyle / needs
  • Evaluate the Competition — research and assess your “choice” with regard to asking price, condition, availability, and issues

3.    Financing

  • Recommend proven lenders
  • Review and help you understand your Good Faith Estimate (GFE)
  • Review and help you understand your HUD Statement
  • Keep you up-to-date on financing options
  • Help you understand/evaluate those you’ve been offered; i.e., does FHA make more sense than Conventional loans … or how about a USDA option, etc.?
  • Help you understand how your financing choices may affect a home you are considering

4.    Write Your Offer

  • Believe it or not, there’s a lot of legal knowledge that goes behind writing a strong and safe offer for you … and a bit of an art, too. After all, what if you need to back out? Is your earnest money protected, or did you just give it away? And heavens, what if you change your mind?
  • Help you put together an offer that’s as strong as possible, identifying any strengths and/or sticking points and presenting them in the offer in the most favorable way.
  • What if the house is in a distressed situation? What if it’s a Short Sale? What if it’s Bank Owned?
  • Be sure your paperwork is complete and top notch at every step

5.    Open Escrow

  • Help you understand forms that escrow may send to you
  • Stay on top of the escrow process to be sure your everything is complete so that your home purchase will close on time

6.    Legal Documents

  • Be sure that you have copies of all legal paperwork regarding your home
  • Be sure that you have a complete copy of the title report
  • Read the title report with you to identify any tricky spots
  • Be sure that you have a copy of and have read and understand any CC&Rs
  • Be sure that you have access to and have read homeowner association documents, including minutes from meetings that might identify future issues with your purchase

7.    Recommend other proven professionals:

  • Inspectors
  • Roofers, electricians, painters, plumbers, landscapers, etc.
  • Attorneys, accountants, tax professionals
  • Testing services for wells, septics

8.    Help you identify, locate, and understand specific jurisdictional requirements

  • County septics, wells, etc.
  • Setbacks
  • Permits, etc.

9.    Be your representative

  • Present and negotiate on your behalf in a positive and professional manner
  • Present you in the best possible light
  • Be there for you at every event: all showings, inspections, repair trips, signings, builder meetings, septic inspections, well inspections, etc.

10.    Be the intermediary between yourself … and everyone else! (The listing agent, the seller, title reps, escrow officers, etc.)

  • Clarify and draft responses to all communications, being sure that each item is presented in a clear, precise, concise and professional manner
  • Schedule appointments to meet everyone’s schedules
  • Field endless phone calls and e-mail messages regarding the transaction

11.    Counsel

  • Help you remain objective throughout the homebuyer process
  • Appreciate your excitement and enthusiasm for the house you find … and help you evaluate that choice as a business decision
  • Offer suggestions when faced with difficult or complex decisions
  • Act as your sounding board when things just aren’t going smoothly

12.    Offer skillful & professional guidance

  • Suggest research you may want to undertake — what is the permit process, what about wetlands, property corners, schools, bus routes, etc.
  • Help you identify issues that could cause difficulty down the road, i.e., “lawsuits waiting to happen”

13.    Communicate, communicate, communicate

  • Do you know what’s going on?
  • Do you know when answers are due?
  • Do you know your deadlines?
  • Did you get it done?

14.    Be there for you after the purchase

  • Answer questions
  • Suggest solutions (how do I adjust the hot tub? — or … I love this one … “The alarm keeps going off, could you please call the Seller and see if this is normal?”)

and finally …

15.   Get it done!

  • Things fall apart at the most inopportune moments. We’re here to be sure your transaction stays on track and to help when things go sideways!

 

You Can Test Drive a Car … But Not a House!

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The last couple of weekends have included a few hours helping our son decide what car to buy. We’ve been to this dealer and that, had him prequalified … and have driven a number of cars, usually with the all-chatty salesman in the backseat telling us exactly why this car is THE one to buy. We’ve driven some brand new cars and are now taking a look at a few that a just a couple of years old (Mom insisting that maybe the payment will be a bit easier on his monthly budget.)

Now that we’ve graduated to the used car market, I’ve been busy reading CarFax reports, looking over my son’s shoulder and hanging onto the passenger “Lord Help Me!” strap conveniently located just above most of the passenger windows. (Word to the wise … don’t ever go on a test drive with a 21-year old male …. )

Now that I’m safely home, I’ve been able to reflect on the disparity between buying a car and buying a house. We’re out driving around in a $18,000 car, testing the brakes, going around corners, up steep hills, accelerating on the freeway–all with a eye on making sure that the vehicle seems safe, feels good, and is worth going to the step of taking it to our trusted mechanic before going down the buying path.

However, buying a house … many times more expensive, doesn’t include that same test drive. There’s no chance to sit in the house long enough to decide if it’s drafty, cook a meal in the kitchen and see if the layout really truly works or pack the closets to see if the clothes all fit. All of those things are a bit subjective. We think it’ll work. We walk through the house–maybe a few times–then begin the purchase process. With careful thought and due diligence, we hire a trusted inspector to test and prod the house to reveal its strengths and weaknesses. We measure the rooms, sometimes draw them out on paper and hope everything fits.

But test drive? Nope. That’s reserved for much smaller purchases … like cars, trucks, and RVs.

As Agents/Brokers, it’s important to provide as many opportunities for our Buyer clients to look at a house at their own pace. To figuratively kick the tires, lay on the floor of the empty bedroom to see if the bed fits and stand in the pantry to evaluate the food storage. Because buying a home is truly the largest purchase they’ll ever make. It’s the best we can do .. their test drive begins the day they move in.

*photo courtesy of egg on stilts via Flickr

A Great Lender Helps From Start to Finish, Especially in a Short Sale

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business meeting

One of the very first steps in the home buying process is determining how a Buyer will pay for their new home. Not only must a Buyer determine much they can afford, but how an offer must be structured–whether closing costs must be paid by a Seller, gift funds will be used for a down payment, how much of a down payment will be paid, and so on.

Having a great lender as part of the Buying team is critical, but especially so with short sale purchases.

It can be difficult for a lender to help a Buyer determine exactly how much they might need to close the sale. A good faith estimate on the front end of a short sale might not be appropriate; interest rates, dates of closing, and other terms may change before lender approval occurs several months later.

Will the Buyer have sufficient funds to close? Will they have sufficient reserves; will they be comfortable with their payment?

A GREAT lender prepares an estimate of costs at the beginning, then meets periodically with the Buyer throughout the process, updating them on the changes and making sure they understand the numbers. They help the transaction succeed – from start to finish.

Working with an agent experienced in both listing and assisting buyers with short sales … and considering their recommendations for a great short sale lender will ensure success and confidence as a buyer proceeds through the process.

Questions to Ask a Loan Officer

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Photo thanks to Scott Macleod Liddle via Flicker

From my own practice, I know that Buyers often believe that they have the knowledge to make an informed choice in choose a loan officer or mortgage. Buyers are smart folks — they’ve done their homework; they’ve formed a relationship with their own bank; they feel that they can compare apples-to-apples when shopping for a mortgage.

In addition to comparing rates and costs, however, Buyers need to also ask these important questions of a mortgage professional:

  • Can you really close this purchase?
  • Will you provide the loan documents to escrow 2-3 days ahead of the closing date so that my purchase can close on time?
  • What is the minimum number of days you need to close this on time?
  • Will you call me back within a hour (or so) when I have a question?
  • Will you be in close contact with my Broker/Agent so that she knows what’s going on?
  • Will you explain the numbers to me that I don’t understand?
  • How many new purchase mortgages have you completed in the last year? What types? (i.e., do you have experience with VA loans, FHA, rehab loans, etc)
  • Will you meet or beat the builder’s preferred lender’s rates or current offer?
  • If you’re not a bank, to whom do you anticipate that your company typically sell my mortgage?
  • Will you be my trusted advisor, not just for this purchase, but going forward from here so that I know when it might be wise to consider refinancing? (or whatever)

See, it’s not just about rates and closing costs. It’s about making a wise decision based on the knowledge of your loan officer. I have a short list of trusted mortgage folks with whom I’ve worked for years! It’s a short list, because it’s very hard to find excellent loan officers! Both of these mortgage professionals do what they say, when they say, with the terms they say. They stay in touch with me so I can be of service to you. They stay in touch with you so you know what’s going on. Click here to visit the page that contains the names of these two ladies.

There are only two names on the list at the moment because I’m very picky. These two are consistent, and they’re always there for my clients and for me. I like that … It’s all about trust.