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





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





Showing in the dark

1 02 2014

It is winter time and therefore the sun sets earlier than in the summer time. Because buyers have jobs often during the day, Realtors show after 5 or 6pm a lot. By this time the sun is setting and it is getting dark. Often times it is cold and I am fumbling with my keys, lockbox mechanism, papers on the house and my business card all while trying to say hi to my clients. The house is dark, the sellers have left so we can have a look at the property and the lockbox is not opening on the first try.  So in an attempt to help me the clients have their phones out turning on the flashlights so I can see what I am doing.  Just a note: this is the first impression of the seller’s house.  Next the key is not cut correctly and is hard to get the door open after which the key gets stuck in the dead bolt.  Entering the property we find the light switch. The seller has low wattage bulbs in many fixtures and several lights are out. The buyer comments that the rooms look small. Actually it is hard to tell in the light.

Sellers if you want to help sell your house, please help me to get into the door and make a good first impression.

1. Leave the lights on–especially the porch light.  It isn’t going to change the bill that much but it will help the showing realtor.

2. Change out low voltage bulbs for at least 75 watt bulbs. If you are using the bulbs that take a little bit to warm up (CFLs) then please leave them on for us so they look bright when the realtor shows.

3.Please make sure the key works easily in the door. Often times sellers will have a key made and it is not cut correctly so it is sticking.  Do you really want to have gone to all the trouble to clean and prepare and not have a buyer be able to see your house or wonder why the door is tricky.  This is a frustration and sometimes a turn off.

4. If you have a storm door and the lockbox is between it and the front door, make sure the storm door is unlocked.

Making the home easy to access for showings will definately help you to get the house sold. Remember first impressions are important.  If you are thinking of selling your house and would like my help or know someone who does please contact me at 405-213-2992 or visit me website at www.sandiwalker.net

 





Paint is cheap

30 01 2014

Sprucing up the paint in your house with a nurtral color can help it to sell faster and for more money. 

Owner occupant buyers looking for homes generally fall into two catagories–those wanting a a deal and are willing to paint, carpet, and make some repairs and those wanting a move in ready home.  Most sellers want the maximum value for their home but also want to outlay the minimum cost, which is understandable. Generally, the buyers looking for a move in ready home are willing to pay a little more than those willing to do some repairs and updating.

In order to get the maximum value for the house, it should be clean and decluttered. Freshly painted homes look cleaner and fresher. In addition, sellers will want to take personal pictures off their walls and minimize the number of art work on the wall. In doing so, sellers need to pull nails and picture hangers, putty the holes, and touch up the paint as needed. If it has been awhile since the walls were painted the touch up paint will most likely not match. You don’t want the wall to look spotchy. So go ahead and paint the wall.

Wild colors of paint can make buyers cringe thinking of the number of coats of paint it is going to take to cover the purple or red rooms. In addition, white walls show all types of dirt and imperfections that otherwise might not be seen. White walls are also cold and feel like you are in a rent house.  I suggest that sellers paint a taupe or beige color. This way it is nuetral for the next buyer and yet makes the room warm and inviting.

A gallon of paint is about $25 and is well worth buying if you are trying to sell your house.  For other tips and questions, please feel free to contact me at 405-213-229 or visit my websit www.sandiwalker.net.

 

 





Are you looking for Down payment assistance?

26 01 2014

In Oklahoma City, we have an organization, Neighborhood Housing Services, LLC.,  that provides grant money to first time home buyers who meet certain income guidelines. This program allows up to $14,999 in grant money depending on purchase price of the property.  This money can be used for down payment, up front mortgage insurance, closing costs, and principle reduction.  The buyer does need to have some personal investment in the home—FHA loans will require a 1.75% investment while all other loan products will require a 1% investment. Meaning the buyer will need to have some of their own money. Example on a $100,000 house—$1750 with a FHA loan.

The grant allow the buyer to obtain a 90% to value loan. FHA guidelines state that if the original loan amount is 90% or less of the sales price then the mortgage insurance stays on the loan for 11 years rather than the life of the loan. Also if the buyer is able to do a 15 year note rather than a 30 year note, the monthly MI drops greatly but that is the subject for another blog. 

The amount of down payment assistance will be calculated as follows:

  • 10% of purchase price+UPMIP+closing costs——less seller or lender credits, additional DPA such as OCHFA, tax proration’s, etc. up to $14,999.  Attached is a calculation scenario.

The minimum required investment the DPA recipient is 1% of the purchase price but will increase to 1.75% when the lender requires 3.5% down payment on FHA loans.

  • DPA recipients must meet the First Time Homebuyer definition–could not have owned a house in the past 3 years.
  • Front & Back end ratios cannot exceed 30%/41% using NHSOKC’s income calculation
  • Maximum purchase price cannot exceed 95% median purchase price limits- $126,000 existing-$195,000 new construction
  • Loan Discount fee, Lender’s inspection fee and Underwriter fees are no longer allowed
  • Household income limits of 80% median income will remain the same
  • Five year (affordability) period will remain the same. Meaning you need to live in the home for 5 years or will need to pay back a proration amount of the DPA.

The current down payment contract expires July 31, 2014.  There may be additional changes to the program.

If you have questions regarding down payment assistance or real estate in general, please contact me, Sandi Walker.  I would love to discuss helping you buy your first home.  www.sandiwalker.net  or 405-213-2992








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