What Every Agent Should Know About the Credit Markets April 25, 2008

In this ever changing lending environment, realtors will need to keep a few key things in mind:

 

Pre-approvals

 

Be sure your buyers update their pre-approval letters every 2 weeks. Loan program changes and rising rates may negatively affect how much they can buy.

 

Property

 

As lenders face loses to foreclosures, they are focusing more on the condition of the property, as well as, the comparable sales to support value.

 

Government loans such as VA and FHA have strict guidelines for wells, septic and overall condition of the home. No deferred maintenance such as peeling paint, missing railings, etc.

 

Foreclosed properties will need to have the utilities on, and all appliances.

 

Appraisal underwriters are taking more time reviewing appraisals. A few months ago, a report passed through underwriting in 2 days, it can now take 2 weeks!

 

Stay Positive

 

Remind yourself and your clients that we are not in a crisis. Lenders are just taking more time to make sure people can afford the home they are purchasing.

 

Allow at least 45 days for a loan to close to minimize stress.

Touching Testamonial April 17, 2008

Recently I emailed all my past clients to see if they would write a quick note on why they liked working with me.  This was one of the responses that really moved me.  I hate to brag, but I’m gonna anyway. 

Allyson,
 
What can I say, but you are a trusted person in my life.  You took on my personal needs in selling my home with the market crashing around home buying.  This alone was not an easy task for you or for me, you helped me with keeping faith in my ability to present my home to others as I had invisioned it completed.  And most of all to find the right fit, by having a family purchase the home and will have love in it is more than I can express in words. 
 
You also gave me sound financial advice when I was almost at the end of my rope with the burden of mortgage, taxes, etc.  You kept in constant contact with me regarding showings and worked around my schedule of working the graveyard shift while trying to get some shut eye to see me through another day.  I cannot give you more praise than to thank you for letting me see that letting go was the best thing to do and I was making the right choice by selling my home.  I really could not have afforded to spend another month with the financial burden that divorce and other bumps along life’s road had given me. 
 
Your e-mail with the lighter side of you gave me more insight into who you really are and more confidence in your ability to see things through.  You said to me the first meeting that I am here to help you and not just to make money.  I will always keep your best interest in mind and you honored your word in every manner.
 
The professionalism you showed, by not giving me the buyer’s letter until I had made my own decision gave me the respect I needed as the home owner.  I found this a touching letter as you did and was relieved to have you give it to me after we had crunched the numbers on what all of us could afford and live by.  You had patience when I could not comply with all the showings and worked around my unstable schedule. 
 
Again, my biggest dream was to have someone love the home I had worked so hard to create, and to have a wonderful family with so much love move into it and call it home was the greatest gift to lift my spirits.  Thank you again for being there as a professional and a trusted friend.
 
Suzan

Appraiser Reality Check April 15, 2008

Property appraisers are supposed to give fair and accurate appraisals of a home’s worth. To do that, they examine a home and its assets. They then compare that to other homes in the neighborhood and what those homes are worth. It’s similar to the process most real estate agents use to help the seller arrive at an asking price for a home.

However, the buyer, seller, and lender all want the appraisal to match or exceed the agreed upon selling price. This is where potential problems arise.

A 2007 study by October Research reported that nearly 90% of appraisers in the survey reported pressure to inflate values from lenders, real estate agents, mortgage brokers, borrowers and others. In fact, three-quarters of the appraisers stated they felt that if they didn’t cooperate, they expected negative ramifications from fewer referrals to total loss of business.

Taken on a home-by-home basis, a little fudging on the part of an appraiser to make the buyer, seller, lender, and agent for a home all happy, may not sound too terrible. However, according to a study cited in an article by Curtis Seltzer, in 2006 these over-appraised homes added up to approximately $135 billion in non-existent, additional value.

With the housing market struggling, these problems could very well increase. While a false appraisal makes everyone feel good about a home transaction, in the long run it can lead to more foreclosures and lower property values.

There are state and federal laws that appraisers must follow and ethical appraisers do just that. However, the pressure to over-appraise is strong, and unethical appraisers are the ones who benefit by giving in to that pressure.

The Fair Market Value for a property should be just that; pressuring appraisers to deliver anything else is bad business for everyone.

100% Financing April 13, 2008

My sources tell me that as of May 1st. VHFA will no longer offer 100% financing. I am not sure how that will affect loans currently in the pipeline that are scheduled to close after May 1st.
 
 Good news..I can still get 100% financing through Coldwell Banker Mortgage with a 3% gift from the seller and the rate is the same or less than VHFA (depending on credit). Credit scores can be as low as 580!

Tax Time Brings Up the Age Old Debate April 10, 2008

Renting vs. Owning

Unlike renting, homeowners get part of their monthly payments back at tax time. That’s because the mortgage interest they pay is (in most cases) fully tax deductible.

For a mortgage payment of $1,000 (principal and interest only), you could purchase a home for $151,426 if you put a 10% down payment on a 30-year loan at 8% (note: many can qualify for interest rates as low as 6%!).

If your payments started in January, your first-year mortgage-interest tax deduction would be $10,862.

Assuming you are in the 27.5% tax bracket, you would save $3,041 in taxes–that’s $249 per month. So the $1,000 payment mentioned earlier is really $751 when computing the homeowner’s tax advantage. +

Quick Plug for Smugglers’ Notch Cottages for Rent April 1, 2008

I’ve recently taken over property management for 2 cottages at Smugglers’ Notch, VT and we’re running some super specials through April 15th for Spring Skiing.  $199/night for the 2 bedroom and $249/night for the 3 bedroom. 

Check out our website www.greenviewcottages.com.

Also After Tax Special for $225/night from April 15th forward.

And coming this summer, fishing packages and bike tours, again, check out the webpage www.greenviewcottages.com.

And if you book a week from now until August 31st by April 15th, we’ll give you one night free!!