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Ever since the real estate market took a turn for the worst(or better depending upon who you are), we have seen a huge influx in cash buyers/investors. While cash can be enticing for many reasons, it is not as powerful a negotiating point as some buyers believe.
True, the mortgage market is less guaranteed and there is a chance a loan could fall apart. Adversely, there are no concerns about that with a cash offer. However, if the list agent and/or seller do their due diligence, you can often times be 99% sure that a potential buyer obtaining a loan will make it to closing and obtain the financing. So, if the seller is confident in the financing of a buyer, why would they want to take significantly less just because another buyer has cash?
I speak with a lot of of investors who would like to offer sometimes six figures less than the actual list price and market value just because they are making a cash offer. Low cash offers still must be reasonable because the seller will get the money one way or the other. The only time an extremely low cash offer is even relevant is if the property is in a total state of dis-repair and would not be approved for financing. Still, due to the large number of distressed properties, the “renovation loan” has become very popular again. A renovation loan is when a distressed property has an estimate done by a contractor for repairs needed and the scope of that work is included in the actual loan. Thus, allowing a non-cash buyer to purchase a property that would typically not be approved for a standard loan. This has made the low cash offers even less respectable or considerable.
In conclusion, if you’re an investor with cash or a buyer with a loan, you need to understand the actual bottom line for the seller. This is usually when can settlement occur and how much money will they net from the sale? A cash buyer may try to entice the seller with a fast settlement, but most sellers already need or want 30-45 days to settle. Which is the same amount of time a loan will take to close. If a seller and their agent review a buyers financial information and speaks to the loan officer for the buyer than you should be able to determine whether or not the loan application/pre-approval is strong or not. This is especially true if the property is in decent shape and would not have any inspection and/or appraisal issues. If you’re considering a cash offer keep all of this in mind and have a Realtor investigate the situation on the property and if there are competing offers. Cash is not as enticing as some see to think.
Ben White Montgomery County Realtor
Category : Blog
As a Realtor® who receives many inquiries from potential buyers, I often speak with people who have no knowledge of the home buying process or what it takes to buy a home. This is not a bad thing at all, for we all must be taught and educated on the process at some point.
If you are somebody who has never bought a home or obtained a home loan then you may not know how much money you might need to obtain a loan. You probably know that you need a “good” credit score and have to make a certain amount of money. Both are true, even if you don’t know the specifics. However, most people who are just getting started don’t know the down payment that will be required. Some still think a 100% loan or zero down payment is attainable. Due to the sub-prime mess and tighter oversight of the mortgage market that is now near impossible. There are some programs that may offer a zero down situation, but they have strict requirements. The most common zero down loan is a VA loan which is only attainable by past or present military personnel.
Now a days, the least amount of money you will need for a down payment is 3.5% of the sales price. This loan is a FHA (Federal Housing Administration) loan. That is why it is so common now when it was pretty much ignored during the housing bubble. It also explains why you might have heard how the Federal Housing Administrations funds were so low. It’s not just the foreclosures, but the extremely high amount of money being borrowed by home buyers. Other than the FHA loan you can obtain a conventional loan which will require 10 or 20% down. Usually the latter.
Yes we have extremely low rates right now, but your application and buying power is more scrutinized than ever. No investors want to purchase a loan that would be considered a risky loan. Your credit scores need to be higher, your down payment needs to be higher, and you must have a good “debt-to-income ratio”.
240-848-3322
Category : Blog
Throughout the years the winter season has been looked at as a slow time for real estate, new purchases, and refinances. The cold weather, school schedule, and holidays typically deter many home buyers. Most of the buyers and sellers decide to hold off until the spring. However, tis the season, because homes are still selling at a fast pace and low interest rates continue to influence more refinances.
On the real estate side, there are a number of factors that are helping the market stay active and strong. The largest still being the tax credit for first time home buyers which was extended from November 3oth, 2009 to April 30th, 2010. For any first timers who missed out on the opportunity the initially, they now have a second chance at free money and are taking it! The credit was also expanded to include move-up/repeat buyers. The Worker, Home ownership, and Business Assistance Act of 2009 has established a tax credit of up to $6,500 for qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010). Those two incentives alone are an extra push to influence buyers to make the move now, despite the season. Consequently, sellers know this and more homes are being listed. The number of foreclosures and short sales are still high too so many people want to get the good deal and tax credit.
On the lending side, the rates still remain incredibly low and attainable. Obviously that is another incentive to buy now, but it also keeps people refinancing their current loans in to more affordable loans where the lower rate will save them money on a monthly basis. Loan officers and lenders have not seen a winter like this since the housing bubble and the feeling is mutual from Realtors.
So, while usually many buyers and sellers would hold off until the spring, thus is not the case this year. Tis the season to buy or sell your home!
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Ben White — search Rockville MD homes — 240-848-3322
Category : Blog
New home builders have slowed down substantially over the last few years following the housing bubble. Still, new home sales have been on the rise as of late and there will always be a market for new homes. Modern amenities, sparkling counter tops, and shiny hardwoods continue to draw buyers into their sales office. However, is it best to stroll into a new home sales office without a Realtor to assist you in your process?
Many buyers feel they can get a better deal without a buyers agent. This idea is similar to buyers attempt to avoid an agent altogether on re-sales, but is much more prevalent because it appears to be more “cut and dry” when buying a new home. True, they have a friendly and knowledgeable sales agent there to walk the buyer through every step, but you should never forget who they represent and what their motives are. To sell you the home at the highest price possible! Buyers may feel that there is no haggling and that everything they choose during the upgrade process is a flat rate, but that is often times untrue. New builders can negotiate and without your own representation they will feel less inclined and try to to the job given to them. Again, to sell the home at the highest price.
Adversely, when you use a buyers agent, you have someone reviewing all the recent accessible sales, talking to other builders, having a background of other new homes, and they may have previously worked with the particular builder. Most importantly, professionally negotiating the purchase. I suppose the argument made is that the builder saves money because they do not have to pay a buyers agent commission. Valid point, but it will surely offset in other areas where your agent would have benefited you. Not to mention all the work that is needed to be done. If your buying pre-construction than you have to pick everything out and all the terms are changing as you go. This can be very time consuming and stressful when you are already trying to juggle your everyday life.
New home builders will also try to entice you to work with their financing company in order to obtain the loan. They will offer incentives and closing cost help, but this is completely attainable without using their affiliated business relationship with a certain bank. You should always shop your rates with multiple loan officers and should always have a buyers agent to represent you when buying a new home. In the end, you will save more money and have someone who actually has YOUR BEST INTEREST in mind rather than theirs.
Ben White – Montgomery County Realtor® – 240-848-3322
Category : Blog
Wednesday, November 25, 2009
Buying a home can be one of the most exhilarating and exciting times in ones life. It can also be a very emotional, difficult, & stressful time if you do not have the correct advice and process explained. The first step should always be to know where you stand financially if you are obtaining a loan in order to purchase the property. Getting a pre-approval and looking over a GFE(Good Faith Estimate) is increasingly important due to the strict loan approvals and all costs that are included in your monthly payment outside of just the principle & interest. A new buyer or even an experienced buyer, should speak to a loan officer as soon as they start to consider a purchase.
The Internet has made it easier and pretty much fun to look for homes. As a result buyers are looking at homes and wanting to shop before they even know what they are fully approved for, if they have the sufficient down payment, and if they would be comfortable with the monthly payment. Loans are more difficult to obtain, rates change regularly, there is no longer 100% financing options(Outside of VA loans & Rare Unorthodox Programs), and you must think about the other factors that make up the monthly payment. This includes not only the mortgage payment(Principle & Interest), but a few other important and often costly factors. First, if you’re putting less than 20% down you will need mortgage insurance. Home Owners Insurance will be required as well. Second, you have property taxes. Last, you have to consider home Owners and condominium association fees.
All of this can be broken down and illustrated by a loan officer on the Good Faith Estimate.If you’re thinking about buying, first see what loan amount you are approved for. Then have a loan officer run a GFE at that amount on a specific property that reflects what you desire. After that, you’ll be fully aware of your buying power and it will make the process a lot smoother.
Ben White, Montgomery County Realtor
Specializing in first time home buyers in Rockville
240-848-3322
Category : Blog
As an agent who uses the internet to interact and meet clients I consistently receive phone calls or e-mails from a potential buyer who is interested in a particular property. As always, I eagerly pull up the information and offer my assistance.
However, I often times run into the same question: “So, you’re not the list agent?” I explain the nature of the marketing and that I can help them even more than the list agent. Still, there seems to be a misconception about buyer agency and agency in general. People seem to feel as if they can possibly get a better deal or save themselves money if they contact and/or work the list agent directly. The misunderstanding extends further because buyers may not know that they do not need to pay a buyer agent for their assistance. Buyer agents are paid out of the seller’s proceeds and only if the agent can find you a home and successfully reach settlement.
It is imperative for an active buyer to obtain a sole Buyer’s Agent (like me) and have the agent committed to working for them. Especially in this very competitive buyers market, which is still the case even with the change of seasons.
Without that full level of service the buyer will lose out on opportunities and have nobody representing them or their best interest. When the list agent is contacted they may try to work both sides of the deal (leaving the buyer with no representation) or they may refer you to a buyer’s agent who already works with the list agent.
This can leave the potential buyer in a situation where they do not have full representation because that particular buyer’s agent and the list agent whom made the referral will have extra incentive to sell the initial property. Furthermore, the idea that a better deal can be had is entirely untrue. The list agent will be the only one getting a “deal”, for they will get both sides of the commission (buyer & seller agents). If you’re a serious and active buyer, obtain a buyers agent ASAP!
Maryland Buyer’s Agent, Ben White
240-848-3322 — Get pre-approved
Category : Blog
Time and time again, buyers are contacting me and instantly informing me that they want to buy a short sale or foreclosure. I fully understand everyone’s desire to get a good deal on a home, but not every foreclosure is a great deal and short sales often times only hinder a buyer’s chance to obtain that goal.
When writing an offer or perusing a short sale the buyer must understand that once the owner/seller signs off on the offer and sends it to the lien holder for final approval, they are typically under contract for a certain amount of time depending on how the offer was written.
The list agent may ask for 30, 60, 90, or even 120 days to obtain “third party approval”. Anything less than that would be near impossible unless there had already been an offer that did the initial waiting. That commitment is negotiable, but it has been my experience that agents will request 60 days for approval. Meaning for 60 days you cannot write on any other properties. You are legally bound by a contract until that time expires.
Not to mention, majority of the time, the approval never comes and if it does you may be shocked to learn that the bank actually wants a higher sales price than what it was listed at. The list price is set by the agent and they may have no idea what the bank is looking for unless they have already had a buyer submit an offer who did the waiting.
There are many other negative variables that weigh against short sales, but the main issue is YOU NEVER REALLY KNOW how long it will take and if it will be approved.
Montgomery County MD Realtor, Ben White
240-848-3322
Category : Blog
First-Time home buyers continue to thrive in this market. Historically low interest rates, new tax credits, large inventory, and aggressive pricing by sellers has attracted many people to the thrill of home buying and ownership. Recently, I have been working with a very large number of first-timers. I have found that most of these buyers are looking within a price range of $250,000 and less. Between 2004 and 2007 it would have been almost unheard of to find a detached home or even a town-home in Montgomery County within this price range. However, due to the reasons stated above, I am helping more and more people accomplish this dream and goal.
Of course, many of these homes are bank owned or are selling through the short sale process, but not all. Even “normal/conventional” sellers must compete with the aggressive pricing caused by the high number of foreclosure or distressed sellers. Not only are buyers getting great deals, but they are also finding out that they can purchase a home while having the sellers pay their closing costs. While it has become harder to find down payment assistance, it has become almost standard to have the seller pay all of the buyers closing costs. In some cases, buyers can get a seller subsidy even greater then their required cash to close. Usually, closing costs are about 3% of the sales price. Lately, I have helped buyers get up to a 6% seller subsidy and use the additional funds to buy down their already historically low interest rate.
As a friendly reminder to my readers and any first time home buyer it is imperative that you speak with a loan officer first and complete a loan application. The fun part of shopping for homes with a realtor cannot begin until you know what you are approved for and what you are comfortable on a monthly basis.
Category : Blog