Many people look at homes that are short sale or bank owned and are worried about having the money to make some of the repairs to the home after purchase.  There may be a solution for you with the 203K streamlined rehab loan.

The 203K Streamlined loan follows FHA guidelines and gives potential homeowners an affordable solution to purchasing a home that requires from $1000 to $35,000 in repairs by financing the cost of the repairs.  Here is an idea of items that can be repaired with the 203k streamline loan:

  • Repair gutters, and downspouts.
  • Replace Roof (if it’s a tear off)
  • Weatherize (insulation, windows, doors, weather-stripping)
  • Interior and Exterior Painting
  • Repair or Replace existing heating, ventilation and air conditioning systems
  • Minor remodeling (no structural repairs)
  • Repair or replace flooring
  • Repair or replace plumbing and electrical systems

So if you are looking at homes that need repair, don’t rule a home out just because it needs some repairs that may be out of your budget after close.  Talk to your lender about the 203K Streamline loan.  It could be a great option for you.

If you don’t have a lender, email me!  I can give you a name.

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The media has done a good job about talking about the number of short sale and bank owned properties are on the market.  In some areas of the Treasure Valley we do have quite a few of these properties active on the market.  As a buyer what does that mean to you when you are looking for a home how long will you wait for a response?

Bank owned properties can be offered on and closed usually within 30 to 45 days.  This is good for the buyer who wants to get in a home quick.  What to remember with a bank owned:

  1. If the property is priced competitively, we are seeing multiple offers on the same property OR an offer comes in quickly on a property (within the first two days of the listing becoming active).  You will need to act fast to be considered for the home.  Don’t wait to view a home.
  2.  Most banks give people who are going to be occupying the home the first look.
  3. Homes are sold “as is”.  Spend some time when viewing the home to get an idea of the obvious repairs that are needed.  When making an offer, make sure it is contingent on a home inspection.
  4. Remember that you will have to follow the bank rules on the offer.  They may have their own addendum, contract or other forms to fill out and they usually do not deviate from them.

Short sale properties still take some patience when purchasing.  The bank does not own the property yet, but the seller is asking the bank to accept an offer that is less than the amount that the seller owes on the property.  Many banks have streamlined their short sale process and we are seeing some approvals come through 30 to 45 days after submitting an offer.  BUT – most short sale still take a minimum of 90 days from offer submission to close so patience on the buyers part is required.  What to remember when purchasing a short sale:

  1. Some areas are getting offers quickly on short sales.  If you want to be the first offer in, don’t wait to view a home.
  2. If there is a first offer already on the property, make a back up offer.  Many buyers realize that they do not want to wait through the short sale process and they terminate their offer.  You will be next in line to be considered by the bank.
  3. Make sure the agent representing you asks a lot of questions of the listing agent so that you know who the bank (s) are, where they are in the process and what the expected time frame is on this particular home.  If you know you will be waiting 3 weeks for an update from the bank, it helps reduce your anxiety.
  4. Homes are sold “as is”.  Spend some time when viewing the home to get an idea of the obvious repairs that are needed.  When making an offer, make sure it is contingent on a home inspection.  Most sellers are not in a position to fix anything.
  5. Many banks are pretty firm on items that they will and will not pay for.  If your agent finds this out ahead of time, you will have fewer surprises and fewer expenses later in the game.
  6. Expect that you will not have an answer on a short sale for 90 days minimum.  If you get an answer before that, it is a bonus.  It is truly an exercise in patience.

Real estate negotiation is different when purchasing a short sale or bank owned property.  If you are educated on the process and know what to expect you can find some great properties at very good prices.

I would be happy to answer any questions about purchasing distressed properties.

Have a great week-end.

 

Why is it so important as a buyer to be pre-approved by a lender prior to looking for homes? 

One of the biggest reasons is that you want to make sure that you are looking in the proper price range for your home.  You may have a price set in your head that is too high or too low based on your debt to income ratio and the interest rates.   Get the facts ahead of time so you are not disappointed when you are ready to make an offer. 

 Another reason to get pre-approved is that you may not get the home you want if you cannot put your offer in quickly!  In this market, short sale properties and bank owned properties require a pre-approval letter with offer submission.  If you are ready to look for a home, you need to be pre-approved.  The banks require it.  You don’t want to have another offer come in at the same time with a pre-approval letter and beat your offer out. 

Is it hard to get pre-approved for a loan?  NO!  That is what is so great.  You can talk to most lenders on the phone and complete a telephone application or an online application.  They will analyze your information and pre-approve subject to submission of documents ( in most cases you will get a pre-approval letter while you are gathering your documents).  The lender will also typically pull your credit so they can get a clear picture of your debt to income ratio as well as your credit score.  This will tell them what kind of interest rate they can offer so you can make a decision on the price range of homes to look at.  The counseling session with your loan officer will help you work together so that you are looking at homes that fit in your budget and loans that are the best fit for you and your situation.

If you are thinking about purchasing a home and do not have a lender, let me know and I will send you some names.  A good loan officer will walk you through this process quickly and efficiently.

Be a confident pre-approved buyer and be ready to make an offer on the home you want!

In the Treasure Valley area we have many distressed properties available for sale. Bank owned properties represent an opportunity to purchase a home at a great price, but what are the risks? What are the pros and cons of purchasing a bank owned property?

I think the biggest pros are:
1. Getting a home at a great price.
2. The bank can usually close in 30 to 60 days (or sooner in some cases).

The biggest cons are:
1. You often have homes that have not been maintained so you have to repair things (cost $$).
2. The bank has never lived there so there is no disclosure on the history of the home (are there big items that need repair?).
3. You have to follow the bank’s rules on contracts, verbiage, and addendum’s.

How do you combat the cons? DUE DILIGENCE! If you are considering purchasing a bank owned home, you will need to be very thorough in conducting inspections and due diligence on the home, the area, and the neighborhood:
1. Get an inspection. Hire a reputable inspector to do a complete inspection. If that person doesn’t inspect certain items like roofs, well, septic – hire another inspector to complete those. If questions arise with the inspection, hire professionals to give you bids on what repairs need to be made and the cost of the repairs. This must all take place within your inspection time period on the contract.
2. View public documents on the neighborhood. Is the neighborhood healthy? Talk to the homeowner association. If there is an addition you want to make sure is legal, investigate the city’s building permit process.
3. Knock on neighbor’s doors or visit with them if they are outside. If you have submitted a contract and you want to know about the neighborhood, HOA and things the previous owner may have complained about; neighbors are a great source.
4. Know what the fair market value is on the home and know what kind of money you will be putting back into the property to bring it up to your standards. Does it still make sense to purchase the home?

If you conduct your due diligence, following the bank rules on contracts and addendums is not as painful and you can feel good about your transaction.