Category Archives: Buyers

Articles for Buyers

Finally Some Good News for the Condo Market

The demographics and financing policies of the past were stacked against the condo market. The demographics have changed with baby boomers retiring and downsizing and with millennials becoming first time home buyers, while still wanting the walk-able community life of their former apartments. Now the government in a fleeting and surprising moment of bipartisanship have helped to boost the condo market.

In years past the FHA had been a major player in condo financing. However, they have very strict guidelines for FHA approval of these condos. Over time the approved condos have dwindled to 14,000 of the 152,000 condo associations in the U.S. Every two years condo associations had to jump through hoops in the complicated process of FHA re-certification. Many associations just threw in the towel and decided not to play the game anymore.

dubai-real-estate

Along comes bill H.R. 3700 which should correct many of the key problems of the FHA certification process. The bill allows condo associations to have a 35% owner-occupancy ratio, down from the previous 50% benchmark. This is especially helpful as the housing bubble caused many condos to be underwater and many instead of taking a loss or going through a short sale elected to rent their condo, thus causing higher owner-investor ratios.

In many communities it makes good financial sense for the condo building to rent out space to commercial tenants. Not only does it give a good revenue stream, but also puts amenities within seconds of the residents. Previously FHA considered much of this commercial component excessive, but with the new bill they can judge on a case by case basis and allow for more commercial use.

The new law also prompts the FHA to streamline the now complicated certification process. This will very much help persuade condo associations to certify or re-certify.

Condo associations often charge a small transfer fee when new units are sold, which are spent to benefit all residents. These once disallowed fees to qualify for FHA financing will now be allowed.

It may take some time for FHA to put these updated procedures into use. Consequently, for condo associations to get back on board and become certified. Out comes the crystal ball, I do strongly feel that with time the condo market will see greater appreciation in prices and lower relative average interest rates once these changes get rolling.

Ask, comment, complain, share, etc. Always open and welcome to all interactions, whether through this public forum or one on one. Call or text to 301-221-4760 or email me at IGreathead@Outlook.com. Look forward to hearing from you.

Are You Ready to Buy a Home?

Many people ask me, “How do I know when it is a good time to buy a home?”. What they are generally asking is: what is the real estate market like now, what size loan would I qualify for, what can I get for that amount, and what would be my monthly payments? These are good questions and the answers are very subjective to what your life style is and what can be done going forward to get the best possible house for you for the best price with great financing.

There is no question that housing prices in most markets are appreciating. With low interest rates and houses bought 2004-2008 being at par with today’s prices or underwater, there is a lack of supply on the market. I have spoken with many appraisers who saying it is hard to justify many contract prices with purchase prices being well over recent comparable house prices. Of course there are many different markets and sub-markets where the speed of appreciation and depreciation varies greatly, even in a small geographic area. The best bet is to do an inventory of your current life and what you like or don’t like about places you have lived as well as places you have visited. Speaking with an agent can also help tease out great insights into things you may of not thought about and qualities and observations a third party may be able to add. I have a number of tools to help in the process if you aren’t afraid of a little homework. Then once your essential property qualities have been identified the state of the market for that location and the type of dwelling can be given to you.

Weekly average mortgage rates as of April 11, 2015 were 3.66% for a 30-year, 2.93% for a 15-year, and 2.83% for a 5-year ARM. The financing aspect is so important to the process, but many don’t spend enough time getting educated on the options and impact of different types of loan products. There are loan counselors, lenders, and real estate agents that can give you important information in getting the best loan for you. Some key aspects for planning is your debt to equity ratio, how much you have for a down payment and where it is coming from (savings, gift, etc.), how long you plan to own the property, what monthly payment you are comfortable with, and your credit score. Clients of mine have been pre-qualified or pre-approved in as little as an hour upon submitting some basic information and documents, but the important part going in is to know what you may be looking for. Some lenders don’t do FHA loans, some lenders are approved for programs that offer down payment assistance, some lenders can do low down payment loans with no mortgage insurance when certain criteria is met, etc. Also getting pre-qualified is a hard hit on your credit score and should be done with a select few lenders. For people with little money for a down payment, there are many programs that offer assistance with the down payment, some can be found at downpaymentresource.com.

I have done workshops on this very subject that take over an hour to convey all the factors that one should think about. Some more include your current living situation and how flexible it is, the time and effort to commit to spend each week looking at listings an agent sends and visiting properties, whether a standard move in ready home is your thing or would you want an alternative (tear down, land and new house, renovation project, etc.) and so many more factors.

Anyone even thinking about buying a home, please do not hesitate to contact me. Whether it is 3 years away or in a couple of months there are important things to know, plan for, and start to think about at any stage. Also others that have any type of experience about being ready or not for buying a home, please add to the discussion. Whatever you do, buying a home is the most important investment you will make in your life and please have someone working with you that you can trust and will make sure you get what is best for you.

Homeowner’s Assocation – What They Won’t Tell You

In many communities there exists a homeowner’s association (HOA) that has varying responsibilities.  Generally, at minimum they are responsible for common area maintenance, trash removal, etc. However, they could be maintaining playgrounds, a club room, a pool, tennis courts, and many other things. When under contract to buy a new home in a community with an HOA, the contract will specify how long the seller has to get you the HOA documents and how long you have to respond to them, if need be.

In a very litigious area like the DMV, these HOA’s could be in the middle of litigation with a developer, contractor, or HOA members. Normally, the HOA should be notifying it’s members of litigation and according to disclosure laws they are required to notify you (the Buyer).

This discovery whether by the seller’s disclosure, your agent’s investigation, your investigation or your lenders investigation will lead to many questions. Is it a serious suit (costly with a sound basis) or is it a frivolous suit? Does the HOA have adequate insurance to cover legal fees and any award? If not, what does the association’s reserves look like and will there be heavy assessments to cover the costs of the suit?

When searching for answers to these questions you will likely not get them from the HOA or seller. The HOA will not give it to you directly as you are not a member of the HOA, yet. The seller will likely not be given the information from the HOA to give to you, because the information is covered by the confidentiality rules known as “attorney-client privilege”, and the association not the members is the entity that is the client.

So what are you left to do to get this important information about the strategies, cost, prognosis and legal fees of this litigation? Well whatever is public record, such as pleadings, motions, orders, you can certainly read if available in your jurisdiction. Also, the amount and type of insurance the HOA has may be in the HOA documents or can be obtained through the seller. With research you may be able to take an educated guess to the severity of the litigation and the exposure an individual HOA member may have.

One of the biggest problems with this situation is that many lenders are weary of lending in these situations where there is a degree of uncertainty and where the HOA may have a large exposure that is not covered by insurance. One thing you can do when ready to submit an offer on a property is have your agent find out what is it’s  HOA’s legal name.Then you or your agent can do a search of the local courts about whether there is an active case. The more information you are armed with the better as this is your home or investment and the leg work on the front end helps shield you from potential financial exposure, wasted money and time, and headache on the back end.

Please let me know if you have been through a similar situation. Buyers, Sellers, Lenders other agents all have varied and fascinating stories and I would love to hear yours. As always, if you have comments, questions, need advise, or just want to reach out to me, please comment, email or call me. I hope everyone had a Happy Holidays and has a Happy New Year!

Make Your Offer Stand Out

Depending on the market you are in for real estate, there are some hot ones and relatively cold ones. Even in currently cold markets, there are sub-sections of the market that are hot. The home that is well taken care of and priced right will sell relatively quickly with less of a discount in most markets. There are ways to have your offer stand out above the others, so you can get your dream home.

First, you need to do the soul searching faze. There are many tools to aide in the process and a great real estate can be one of them. Sit down and write down your home priorities. Then come back to those priorities the next day and write down why they are important to you, in terms of your preferences and lifestyle in the past, currently and what you want in your future. Ask your real estate agent for tools to get you thinking about all the aspects of your new home that you should think about.

Once you have identified your likes and dislikes, have been educated about the market, and have seen first hand some properties, you should be ready and willing to make a great competitive offer for homes that have recently come on the market especially for hot markets that will be competitive. Your real estate agent should be able to help gauge how quickly a home may sell.

All the leg work is so you feel good about making a quick competitive offer. To sweeten the deal for the buyer there are a number of things you can do. If the seller/market is asking for 1% earnest money deposit, offer 1.5% or 2%, which displays your commitment to purchasing their property. Shortening the time of your contingencies and  possibly removing some put the seller more at ease, by removing or lessening hurdles for the home to be sold. Having a great mortgage brokerage that is trusted and will vouch for your good qualification status can be helpful. Limiting what you may be asking the seller to do in the initial contract, such as the removal of something from the house or yard, will make it more stress free and more attractive for the seller.

Also make sure your agent knows you well, why you love the property and encourage them to express that to the seller. A seller loves to hear positive feedback on their home and knowing more about who may occupy it after them may encourage them to pick one buyer over the other, when the offers are similar.

If you have stories about comparing offers, making offers, comments, questions, etc, please write below, send me an email, or give me a call. I would love to hear about your experiences and answer your questions. If you are thinking about getting started in your home search, contact me so I can send you information and questionnaires to get your started in the process.