A Home of Your Own

Home buyers trying to time the bottom of the market may be missing the train.

Check out this interesting take by Bankrate.com.

http://www.bankrate.com/brm/news/realestateguide2008/first-time-home-buyers-a1.asp

Here is a GREAT way for some of you to attract qualified buyers. So good, they can't ignore your home.

One of the keys to marketing and selling anything is to identify, and acknowledge a buyers objection and then giving him/her the solution.

One of the biggest objections I hear is the lack of financing available. Many loan program want large downpayments - even for well qualified buyers.

But advertising your home with a little known government mortgage program gives your buyers the solution to their financing woes. (and helps you sell your home)

The USDA's 502 Guaranteed loan program rewards hard working, bill paying Americans with 102% financing. This well established, but little known program offers buyers in qualified areas:

102% Financing- No Minimum Down Payment
No Private Mortgage Insurance
30 Year Low Fixed Rates
Flexible Credit and Qualifying Guidelines
No Maximum Purchase Price
Closing Costs, Legal Fees, and other eligible costs may be rolled into the loan.

No other loan program even comes close!

So here is how to use this knowledge to give you an almost unfair advantage when selling your home.

1) Find out if your home is in an eligible area for this program. An easy way is to go to the USDA website or www.USDAlender.com. Click on the area eligibilty, follow the prompts and enter your address. A map will pull up that shows whether or not the property is in an eligible area.

2) Find a local lender or mortgage broker who knows and offers this program and work with them to create some yard signs. ie "This Home Eligible for 102% Financing". Signs cost me about $4 to $35 depending on how fancy you want to get. The simple Coruplast ones are just fine.

3) Work together with the lender/broker to market and advertise your home. They'l be happy to do so as they will be first in line to get the financing deal. You may want to include their phone number on the signs and in your ads. Or have the lender/broker prepare flyers and prequalification forms. Have them prequalify any potential buyers. This way you can weed out the lookie-looks, and only show your home to real buyers.

Then just sit back and watch the action pick up like mad.

Bottom line is to do a little research (local USDA office or www.USDAlender.com) see if you home fits, find a lender/broker partner, market and advertise with the program,and....

SELL YOUR HOME!

Hope that helps some of you.

A pending change in the way appraisals will be ordered, could have an adverse effect on buyers, appraisers, lenders, and even Realtors.

A good critique of the agreement was written by one of my good friends, who happens to be an experienced appraiser in Florida. I wanted to post this as I could not have said it better myself.

"In case anyone has missed it, there is a large regulatory move to promote real estate appraisers “independence” this year, and many Realtors are unaware how this drastically affects them.

They appear to be to removing all communication between lenders, mortgage brokers or originators and the appraiser. They plan to accomplish this by using “appraisal management companies” as a third party for regulating appraisal assignments. Since each lender (bank) basically has their own contracted management company, appraisers now must face the challenge of aligning themselves with several different management companies in order to receive the usual amount of assignments.

Instead of being on approved lists for several major lenders, appraisers now must try to obtain registration for several of these companies or, more often, increase the geographic areas they cover to make up for the lost business. Appraisers must either pay an upfront fee, a per-assignment fee or discount their current appraisal fees (with the remainder going to the management company as profit).

Don’t be surprised when you have a pending sale ready for the appraisal, and the appraiser comes from two counties away instead of within your zip code! Are these appraisers familiar with your market? Do they have the data available to them to complete a competent appraisal report? Probably not. Fair to the seller? No way. Servicing and maintaining the public trust? Nope!

Management companies also dictate the terms of an appraisal assignment. No comparables over one mile; must describe market as “declining” because the bank’s software says so; use foreclosure sales so that the banks can see their downside risk, etc., etc.

Lenders were faced with heavy regulations during the course of this “mortgage crisis,” which included verifying the quality of the valuations attached to the loans they had made. Instead of using the vast profits they made during the boom years, they decided to outsource this regulatory “additional overhead” to appraisal management companies. Its not the first time big banking has dodged regulation. Those of us who are old enough remember the S&L bailout.

The worst thing is what these management companies do with the appraisal reports. Upon submission, the data contained in the appraisal report is “stripped” or “lifted,” and the contents sent to a large database of real estate information, which is then sold back to the lenders in the form of an “Automated Valuation” software subscription service. The sole purpose of that is to look to the future when big banking will have their computer generated value of a property and through computer generated “Automated Underwriting” (which is currently in place and has been for many years) – add the two together to generate a loan score. Add that to the borrowers credit score, and you reach an overall score, which will determine the rate and terms of the loan to the advantage of the bank.

Listed prices, contract negotiation skills, marketing skills not needed or wanted here. Soon banking will control the whole process of a real estate transaction, and with no human involvement, little overhead and increased profits. Currently, banks and lenders own a large portion of properties, and they are getting used to disposing of them efficiently without paying much for marketing services. At what point will banking determine that it can be a “one stop shop”? Deposit your paycheck, place your home on the bank’s Web site of properties, check on the activity of a home you have been considering, obtain the value of that home, and find out what your approved loan would be if you decided to buy that house. Close in five business days and, in that time, perhaps talk to one human.

It’s probably time to go back to school or update your resume folks!"

Timothy K. Goessman
Florida Appraiser
Deltona

I do have to be honest and say that she was not a pottymouth, but probably one of the sweetest ladies I've ever met- and also one of the happiest.

After all, she had just closed on her first home, and only needed to bring $500.91 to the closing table. All this by using a USDA loan.

To find out for yourself how this program works, please contact me for details.