Real Estate Articles

If you have found a property you want to buy, you will need to make an offer. This will involve setting a price you wish to pay for the property. This can be tricky, since agents will often be reluctant to name a price first, wanting to maintain a good position for negotiating. There are many things that you can do, however, to ensure that you make the right offer on a property:

1) Try to find out why the seller wants to sell the property. This is generally easier to do if you are buying directly from the seller. If the seller is interested mainly in getting the best maximum price for the property, you know that your offer will have to be near the actual value of the property. If the seller needs cash fast, however, due to financial difficulty, he or she may be willing to accept a lower offer in exchange for a faster sale. If you cannot find out why the seller wants to sell, try to find out how much the seller paid for the property and how much mortgage is on the home. This can help you determine how motivated the seller is to sell.

2) Find out about the market. How much do other, similar homes in the area sell for and how long do they stay on the market? Do homes on the market tend to sit for a while and fall in price? If so, you might be able to quote a lower price and still make an attractive offer, since the seller may be very motivated.

3) Get a copy of a trend report covering the last six months. You can generally request this report from the real estate agent. The report tells you how much homes were listed for and how much they sold for. From the report, you can figure out by what percentage homes sold over or under list price and you can develop a nice offer based on this information.

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If you qualify for an FHA loan to buy a home, traditionally you should be prepared to come up with 3% of final sales price in out of pocket funds to put down on the transaction. It’s a requirement. You can’t really get around it in on a home loan purchase. You can finance 97.75% of the loan amount, but you still have to have the remaining 1.25% of the aforementioned to put toward closing costs. Anyway you look at it, you need 3%.

Well, all is not forsaken. There is another way to come up with the 3% that doesn’t require hawking grandma’s pearl necklace or selling your 2nd car. There are down payment assistance programs out there to lend a helping hand. They can be considered a “gift”, and they are available for FHA loans that are single family and 1-4 unit dwellings. The two big names are AmeriDream, Inc. and The Nehemiah Program, and they provide these gift funds to qualified homebuyers.

How much in gift funds can be made available to you? 1% to 6% of the final contract sales price or a flat gift amount not to exceed 6% of the final contract sales price. And, in addition to the gift from AmeriDream or Nehemiah, the seller can contribute between 1% and 6% of final sales price toward the borrower’s closing costs. So, here’s the big secret, you can basically obtain an FHA loan with little or no down payment if you qualify.

How is this scenario possible? Well, it all depends on the deal you’re getting on the house. Basically, the seller is financing the down payment gift by not netting as much on the sale of the home. The seller or the lender also must pay the “down payment processing fee”, so your closing costs are going to go up $350-500. But, if you are buying a home below the lender’s appraised value, it can work!

Here’s an example. Say John and Susie Homebuyer have excellent credit but no cash to put down on a property. They are working with a great realtor who finds a home for sale that’s worth $120,000, but it’s generally acknowledged the seller will accept around $100,000 for it. The closing costs will run about $4500 (including the gift processing fee) and John and Suzie must invest $3,000 (3% of $100K) of their own money in the transaction per FHA guidelines. So, John and Suzie offer the seller $107,500. The seller agrees to participate in the Down Payment Assistance program and contribute $3,000 toward the buyer’s closing costs. This contribution becomes the “gift.” In addition, the seller agrees to pay $4500 in closing costs. The seller nets $100,000 from the transaction as anticipated, and the buyers pay the 3% down payment via a “gift” from AmeriDream or Nehemiah. The appraisal comes in comfortably above asking price and everyone’s happy.

The down payment assistance programs mentioned are large and respected community development programs, and they are a great deal for homeowners if they qualify and the seller agrees to contribute. With sellers willing to make sales concessions lately, it’s an excellent market for AmeriDream or Nehemiah. It’s critical that your realtor understand that you want to utilize these programs when you negotiate. Make sure they are aware of it and if need be, have your loan officer and realtor communicate with one another prior to house hunting. It’s also useful to have your lender prepare a good faith estimate for you prior to making an offer on a specific home so you can make sure all your numbers work and the offer is worded correctly with all the proper forms attached. And the good news is the programs still work with some of the competitive first time homebuyer programs out there like Tennessee Housing Development Agency with below market rates (but you don’t have to be a first time homebuyer).

So, who says you can’t get 100% financing anymore?

Kristin’s articles on Home Loans are very practical, consumer friendly information written in PLAIN ENGLISH. Consumer education is critical to what is most often a family’s largest and only investment - their home.

Home loan Expert

Kristin Abouelata, Mortgage Specialist with Mortgage Investors Group
Let my experience work for you!

Toll Free (800) 489-8910
http://www.kristinmortgage.com

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For the past few months we have been communicating by email. While efficient and sometimes sufficient, email is a device to just start a relationship ( I know it is the beginning and could be the start of something bigger as I found my husband on-line).

Hopefully, our relationship is developing and you are beginning to trust me as a real estate professional and advisor. When you are ready to make a purchase, I expect that you will choose me to help you through the process and to complete the transaction and become your friend for life. When you are ready to buy, call me and set up an appointment to see property that meets your wants and needs.

The current trends that I am seeing include longer days on market for many homes, some “short sales” and “foreclosures” and some price improvements as properties remain on the market over 160 days with up to 20-25% reductions from last year’s prices.

In St Johns County, Florida, there is currently an absorption rate (how long it takes to completely sell the inventory of what is on the market for sale) of over 108 months for condominiums and 31 months for single family homes. Compare that to what was going on in 2004-2005 when the absorption rates were 2-6 months for condos and single family homes!

However, this month alone I have seen a significant jump in buyer activity which should significantly narrow that absorption rate.

What does that mean? Well, in my humble opinion, it’s safe to start buying again and people are feeling that the “bottom” of this market is close at hand. Some say once the Presidential Candidates are decided the country will be re-energized and that will spur price increases. We’ll have to see if that happens.

Many people have told me they are waiting until the “bottom” gets here to buy…….will you know when the bottom is here OR will you miss the bottom and kick yourself for waiting?

My answer to that is, if you see a house you like and would love to call home, make an offer. Base that offer on what you think the “bottom” price would be, but make the offer.

Appraisals seem to be only valid for 30 days or so. Historically, one would expect an appraisal to be at or above an offer price. But this is changing. For example, I had an appraisal report for a buyer today on a property that came in $40K less than the offer price…so, we lowered the offer price…now isn’t that cool? Appraisers, it is rumored, are providing value opinions not only on what the property is worth today but what it may be worth 3 months from now. In a declining market, that may be less than what is expected as in my case today.

So, take a chance, don’t wait too long. If you have to finance through a lender, get in touch with your preferred lender (or I can provide you names of my preferred lenders) and get qualified to purchase today. Lock in your rates (as the mortgage rates are still bouncing) and then call me to buy one of the houses that I have been sending to you by email these many months or you have seen on line at REALTOR.com or any other on-line search.

It’s a great time to buy….don’t miss the opportunity to “buy low and sell high”. You’ll be glad you did.

Expect the Best!

Kathleen Floryan
REALTOR, ABR
Fine Homes Specialist
Prudential Network Realty
(904) 687-5146
http://www.pontevedra-staugustinehomes.com
http://www.kathfloryan.com

Kathleen Floryan, REALTOR® with Prudential Network Realty, 1000 Sawgrass Village Drive, Ponte Vedra Beach, FL and 112 SeaGrove Main Street, St Augustine Beach, FL also a Registered Nurse, provides real estate services to buyers and sellers in the St Johns and Duval County area. My area of specialization is the Beaches area along the scenic A1A route including St Augustine downtown waterfront, oceanfront, riverfront, intracoastal waterway luxury homes and homes in communities nearby that include golf communities such as Ponte Vedra Golf and Country Club at Sawgrass, Marsh Landing, The Plantation at Ponte Vedra, Glen Kernan, Queens Harbour, Jacksonville Beach Golf Club, World Golf Village, Palencia, St Johns Golf and Country Club, Marsh Creek,Royal St Augustine, and Julington Creek Plantation.

My goal and mission is to help as many people get what they need and want in life and provide a service that is above the rest. Thus my motto “Expect the Best” is my guide for all that I do. I earn your business and your trust. Your appreciation and referrals is my ultimate gratification.

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