What does the HUD List Price mean?

25 03 2014

All HUD properties are foreclosures where the original loan was a FHA loan backed by the government. The properties are owned by the federal government and managed by Housing and Urban Development. These properties come in a variety of conditions but are always sold “as is”. In order to get a list price, HUD hires an appraiser to determine value in “as is” condition. This is done in consideration of a new FHA loan.  If there are certain deficiencies like no carpet, broken windows, plumbing issues and such; the FHA appraiser will determine a value to repair those items.  If the amount is over approximately $5000 then the house will be listed as uninsurable and will not be eligible for a new FHA loan.  The exception would be a FHA 203K loan provided there is no structural issues. If the repair amount is less than about $5000, the appraiser will list those items and require an escrow amount equal to the repairs.

The list price is the FHA appraisal amount. This is important to note, because if the buyer bids above the list price and is obtaining FHA financing, they will need to bring the difference to the table. If the buyer is obtaining conventional of VA financing, then a new appraisal will be ordered. Provided the conventional or VA appraiser can find comps to justify a higher sales price the sale will continue as normal. 

In a strong seller’s market like we are in today it is not uncommon to see buyer bid above the asking price. If a lot of buyers are interested in a certain property, it may very well sell above list price by several thousand dollars.

HUD always looks at the net to seller amount so if the buyer is asking for closing costs this will lower their net bid by that amount. I have had buyers ask if they can raise the sales price and then ask for closing costs—making their net bid higher. Remember, if the buyer is going to obtain a FHA loan then the buyer will need to bring the amount above the list price to the table. Why not just have the buyer pay their own closing costs and write a clean contract.

If you are thinking about buying a HUD property, please contact me. I specialize in these types of properties and know how to get them closed. Sandi Walker 405-213-2992 or visit my website, www.sandiwalker.com





Good-bye to a Star in my life

5 09 2014

This pass month a couple celebrities who have been part of our lives for my entire lifetime have passed away. We love them for their work and feel like we know them because they are on our t.v.s and in our homes. They have made us laugh and cry. Sometimes we wonder how they could have said that—not mincing words or just being mean. Famous as they were they get a lot of t.v press and are memorialized before us for days.
This got me to thinking about the people in my life who were not popular enough to get that sort of send off. It made me think about how they made a difference in my personal life far more than a popular comedian or entertainer. And while I will not deny that I will miss my favorite Mork from Ork, the laughs I received from an entertainer are nowhere as important to me as the love of a Grandparent, friend, or confidant.
One such person, my maternal grandmother passed away more than 10 years ago. She was a shining light in my youth. She taught me so many things. She was witty and hard working. She liked to sew and made me many dresses when I was young. After my parents divorced, my Mom, brother, and I lived with her for a few years. She would cook for us and take us to school, make sure our homework was done, and play games with us. My prize possession to this day is the backgammon board set that she bought me for Christmas one year. It always reminds me of her when I play it.
Here are some of my memories and experiences:
She wanted to learn Spanish and so she would listen to Spanish tapes in her car. I would attempt to learn some words with her as she drove me to school. Since Abuela is the Spanish word for Grandmother, I started calling her that. One day she said, “Sandi, if you are not going to learn the language and speak it, stop calling me Abuela, you look stupid. And so I learn, never do things half way.
My Grandmother loved to garden. She had a big garden in the backyard. It has snails that would eat the leaves on her plants. So my Grandmother said that she would pay us a penny a snail. Such a deal-it was the late 70s and a penny still had a little value. So my brother and I picked lots and lots of snails. She paid us from time to time as we filled our bags. One time I had a few snails (I don’t remember how many but probably 10 or so) I wanted my money. I kept badgering her for the few cents. She finally paid and then told me the job was done. I was fired. I learned patience and timing are good things.
My Grandmother also taught me that you can say almost anything you want if you say it correctly but using words incorrectly can get you in a lot of trouble. My Dad had bought my brother and I a big box of fireworks. Something my Mother would never waste her money on—she was a single mom and let’s face it there were free shows put on by the city. So the fireworks were put up with the promise that we would shoot them off on the 4th. I really don’t remember shooting them off but what I do remember was asking Grandma for the sparklers earlier that day. She said she had looked in the box and there weren’t any. I said, Grandma I know we bought them. They are in the box you didn’t see them. She said are you calling me a liar. I said, Yes. The next thing I knew I was picking myself up from across the room. Then she said, Do you still think I am a liar. I said NO but I think you might be mistaken. I was never good at backing down. She smiled and said we would take another look. We did and the sparklers were in the box. I just took them and left. I learn that you can be correct and still not get the results you want.
I remember the gas embargo and Grandma parking in line to get gas after she sent us to make sure the flag at the station was truly green.
I remember playing cards and backgammon every night after dinner was over and dishes were washed while the tv played the Jokers Wild or Wheel of Fortune. To this day I still love tv game shows and cards, perhaps this is why.
So many other memories of a woman who lost her Mother (she died of a stroke) when she was only 5 years old and was shipped off to her Aunts home in Nebraska to be raised. In the 1920s men just didn’t raise girls without a woman in the home or so I am told. After my parent’s divorce, she helped with many of the daily parenting chores for a time. She was always my cheerleader in my adventures as I grew into adulthood. After attending my first year of college, she suffered a stroke. My Grandmother survived for another 16 years in a wheelchair. I visited with her on the phone and in person. She was able to see all my children before she passed. She is most likely the reason I have always had a soft spot in my heart for children, for my desire to become a foster parent years ago and to always try to help children who are less fortunate. I would like to hope that she is proud of me as she looks down from heaven.
I am grateful I got to know this amazing woman. She passed away in 2003. We had a funeral and many came to pay respects. As I sit and listen to the news talk about the stars that we have lost I think about the star I lost more than a decade ago who embedded into my heart and mind—honestly, integrity, hard work, patience, and love.
I would challenge everyone who reads this to think of a true star in your life and write a memory, tribute of them such as this.





HUD will no longer provide an appraisal on their properties

21 08 2014

HUD has changed the rules again on the repo properties. For as long as I can remember HUD has had an appraisal on the property that they are selling and used the appraisal price as the list price. They would also state if it was insurable or non- insurable. Meaning that it would be allowed to go FHA with some repairs or not (see a previous blog). Now HUD is no longer providing their appraisals to the buyer. The buyer must obtain their own appraisal.
HUD has not explained why the change in procedure nor have they explained some of the ramifications that can now occur under these new guidelines. The following are some questions that persist.
What if the appraisal comes in low? Will HUD change the price to the buyer to match the new appraisal price or will the consumer need to bring additional funds to closing?
What if the escrows are vastly different?
What if the new appraiser will no longer allow the property to go FHA?
Does the old standard of insured vs non-insured still apply?
Having spoken with various people including asset managers and listing agents, the facts are still very unclear. It seems most agree that if the appraisal comes in low that the property will need to be put back on the market, unless the buyer will pay the difference between the new appraised price and the contract price. Although I do not know if it will go back at the same price or the new appraisal price. The HUD asset manager was not sure when I asked.
Please know that two appraisers can have two different opinions of price and condition. This may result in a buyer paying for an appraisal on a property that they cannot get financing. This creates an issue for my buyers attempting to purchase a repo in order to save money. They will need to look at the condition of the property more carefully and decide if they are willing to risk the cost of an appraisal to learn if the property will indeed finance.
This may scare off owner occupant buyers and cause more HUD properties to be sold to investors. Only time will tell.
My personal thought is that HUD will try this approach for 6 months or so and then review the facts and determine if they are going to continue to sell property this way or not.
If you are looking to purchase or sell a home in the Oklahoma City area, I would love to help you. If you have questions regarding real estate, please call me. 405-213-2992 or visit my website http://www.sandiwalker.com





Buying in a good market

30 04 2014

Low inventories and low interest rates make for an interesting buying season.

After years of a down market, buyers entering the market are learning quickly that we are in a seller’s market. Many homes are having multiple offers and are selling in only a few days or weeks on the market. Homes that are clean with some updates and are priced correctly are being snatched up as quickly as the sign is going into the ground. So what should a buyer do in order to find their dream home and buy it before someone else does?

  1. Get preapproved with a local lender.
  2. Work with a realtor who is familiar with the neighborhoods where you are wanting to buy, also make sure this person is a full time realtor. If the realtor is working another job, they may have time restraints on when they can show you property.
  3. Be realistic in your asking price. If the house just came on the market, chances are the seller is not going to take a low offer. In fact, if the house is priced well and several people are interested in the property the list price may become irrelevant as the market bids the price significantly over the original list price.
  4. If you are going to ask for closing costs, you may want to limit the dollar amount of the closing costs. I made an offer the other day where the buyer wanted all of her closing costs paid.  I advised her to maybe ask for $3000 rather than $4250 but she wanted the larger number. We lost the offer on the house. The listing Realtor told me it was close. Afterward I learned had we gone in with only $3000 in closing costs we would have had the house. Unfortunately there is no way to know this at the time of bid.
  5. Limit the amount of the repair cap.  A seller may be more interested in an offer that doesn’t require a bunch of repairs. It may be wiser to ask for a home warranty and no repairs.
  6. Be flexible with your closing date. A seller with a vacant house will probably be more anxious for a short closing while a family with lots of stuff may need a longer period of time to move.

If you need help buying a home, I would love to help you. Sandi Walker-405-213-2992





Appraisals are just opinions

31 03 2014

Currently there is not a lot of inventory available and many homes are having multiple offers on them. After viewing several homes, my buyers decided to place an offer on a house for the list price and request closing costs. They felt the list price was fair and if they received the closing costs then they would have a good deal.

The offer was accepted and the inspections and the appraisal were ordered. The inspector found only minimal items wrong with the property. The appraiser measured the house and discovered it was slightly bigger than the county records. He also found only a few comps and called me to ask if I had other comps. I shared what I had but he was not satisfied, so he called the listing agent. This sometimes occurs in an appreciating market.

The appraiser told me he was coming in several thousand dollars low and I wanted to cry. Then the strange thing happened. The listing agent got a call from another appraiser wanting to do an appraisal on the same house. We called the first appraiser back. He said, yes he had been out to the property and couldn’t get the value or didn’t feel comfortable with the comps he had to use, so he rejected the appraisal. There would be no charge to the buyer.

A new appraiser came out and was able to substantiate value for the sales price and we were able to close.

Once again I reiterate an appraisal is an opinion of a third party as to value and condition so the bank knows that the collateral they are lending against has merit. A property like anything else is only worth what someone is willing to pay for it. I do not believe that the buyer overpaid for this property. I do believe that there were few comps to review to make a decision on whether the bank was loaning on a property that had the value to use as collateral.

Some may ask why the disparity between appraisers. Appraisers determine value of the property based upon the contract and the other properties in the immediate area.  Appraisals are always comparing properties looking backwards for homes that have sold within the past several months. If inventories are low then the market may be appreciating and the comps from a few months ago will be lower. In a market that is increasing or decreasing in value, this can always be a little tricky especially if there is limited inventory.

If you are interested in buying or selling a home, please feel free to contact me at 405-213-2992 or http://www.sandiwalker.net





Why are we experiencing multiple offers?

28 03 2014

Supply and Demand is at work in real estate like normal. The market has turned and there are fewer homes on the market than what buyers are demanding.

In a balanced market we like to see a six month supply of homes. This means that if no other homes came on the market, all of the current inventory would be sold in six months. If the number of homes falls below the six month supply, we say we have a sellers market and if the supply is above the six month supply, we have a buyer market.

The supply amount differs between location within the city and the price point. Properties in our market below $200,000 are currently experiencing a drastic seller’s market with many properties on the market a very short time. And since there are more buyers than sellers the prices have been increasing. In an effort to get a home, buyers have to compete with other buyers in multiple offers. Multiple offers tend to drive the market price upward.

Why do we have so many more buyers than sellers?  In my professional opinion it is because buyers believe the market is improving and want to buy before prices increase dramatically or interest rates increase. In addition, we have several people who decided to rent after last years storm, their leases are coming do and they may be ready to reenter the market. Rents have been going up and it makes more sense to buy than pay high rent. In addition, unemployment is low and jobs have been moving into the metroplex which increases demand for housing.

As sellers become aware of the market turn, more sellers will enter the market. With more homes for sale, the market will even out somewhat over time. However if you are ready to sell your property, the time is now. Take advantage of the buyer demand before more sellers enter the market and get your home sold fast.

If you have questions about selling your home, please call me today at 405-213-2992 or visit my website at www.sandiwalker.com.





Do you have termites?

18 02 2014

Don’t get excited.  I always say, in Oklahoma there are two types of homes: The houses that have termites and the houses that are going to get termites.  Termites are very prevalent in our area. When purchasing a home, the buyer will have a termite inspector inspect the home to see if there are active termites in the house. Most home loans will require a clear inspection. If active termites are found then they will need to be treated. The purchase agreement will usually be written (with the exception of foreclosures) that the seller will treat for termites if found.

What about the damage that termites cause? Most of the time I see sheetrock damage however if termites are left untreated for long periods of time, they will eat through the studs. A termite inspector is not going to tear into the wall to see if the termites have eaten the studs, but an experienced termite inspector ought to be able to tell you if it is superficial or structural.

After you have purchased your home you will want to continue to monitor your home. If you see a swarm of what looks like flying ants, dirt in window sills or along the walls of your home, or dirt tunnels going up the side of the stem wall, you need to call a termite inspector to re-inspect your home and get it treated. 

There are some things you can do to help avoid termites. Do not stack firewood next to your house or store in your garage. Avoid having wood to ground contact in decks, fences that attach to your house. Trim bushes away from your house. Be sure to change out wood chips in the flower beds every couple years.

 

 

If you are thinking about selling your home or know someone who is, please give them my name and number. And visit my website at www.sandiwalker.net for additional information. 405-213-2992








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