Maria Rogers...REO, Foreclosure and Short Sale Expert: April 2009

With all the homes on the market, especially foreclosed homes, you would think there would be five great deals for every buyer today.

Although the market is full of homes for sale, with just a quick scan of the inventory available it's obvious that not everything is a steal! Of every ten or fifteen homes I show, there may be one that really wows me. The rest are either overpriced, need too much work for your typical owner occupant buyer, or have some location flaw or oddity.

This means that there are a limited number of homes that will appeal to the masses in each price range of each market, especially when it comes to a home in a desirable location or school district. Because there are many people looking for that gold nugget, there are bound to be multiple offers on certain properties, especially foreclosure deals.

There are a number of things to keep in mind if you are told you are in a multiple offer situation...

1. Don't panic! Remember your first crush? If you don't get this home, you will learn to love again :-) There will be other homes, but you might have to be patient,

2. If you are in multiple offers and the seller asks for your "highest and best" give it to them. With foreclosed properties, the lender will often just choose one offer from among the highest and best offers rather than make a counter offer to a potential buyer. In other words, this may be your last shot before this property is gone!

3. Know when to fold 'em. Set a limit and don't go above it, no matter how tempted you are. Just like attending an auction or a poker game, it's easy to get caught up in the excitement and end up paying more than you bargained for. Only pay the top price you would have been willing to pay if you were the only bidder.

4. Don't get discouraged if you don't get the first couple of homes you bid on. If you end up in multiple offers more than once, you know you are on the right path. You know how to pick a good deal!

I just got an email that HMS is offering home warranties to land contract and lease option buyers. This is interesting because I have never seen home warranties advertised that way- the ones my brokerage sells are all for traditional buyers as far as I know. Anyway, if it helps anyone who has a seller trying to sell on terms like that or a buyer worried about potential repairs.

HMS writes  "The market is producing situations that are forcing buyers and sellers who previously would have gone after conventional financing and a traditional sales contract to become more creative.  Lease Options, Rentals and Land Contracts are becoming more prevalent.  At HMS, we recognize that the buyers and sellers in these situations still see the value in a home warranty, and want to cover the property. "

The contact person on the email is Kathleen I. Oetgen at koetgen@hmsmw.com.

Hope that helps someone!

This is information I received from our company's loan officer, Shawn  Bowling, which I think has some great information in it. Shawn's website is www.shawnbowling.com and he has an online application there if you are an interested buyer!

WHY BUY A HOUSE NOW?

• First-time homebuyers can take advantage of the $8000 tax credit!  If you have NOT owned a home in the past 3 years, you're a first-time homebuyer.  The credit is 10% of the purchase price or $8000, whichever is less.

Example:  You bought a home by 12-31-09 and the purchase price was $100k.  The tax credit you'd qualify for would be $8000-($8000 is less than 10% or the purchase price).  When you do your taxes next January, if you owed zero and your refund was zero, you would receive a check for $8000!  The catch is, you must STAY in the home you purchased for 3 years or the $8000 must be paid back upon the sale of that home.

•·        Aggressive loan programs are still available!  FHA:  requires a 3.5% down payment, which can be a gift from a family member.  FHA has loan limits by county.  Simply Google FHA loan limits and you will get the website where you can punch in your county and get the loan limit.  FHA loans can also be approved with HIGHER debt-to-income ratios if the borrower has high credit scores and reserves.  Borrowers also have access to the FHA 203k Streamline purchase, which enables them to obtain up to $35,000-(with a 10% contingency) ON TOP OF the loan amount to "update" the property-(no STRUCTURAL repairs allowed).  They can even use this program to buy new appliances!  USDA:  offers a buyer with 100% financing and NO monthly PMI!  Properties must be located in Eligible areas to qualify-(hence the name...Rural Development).  There is also an income maximum as well.  Click on this link below to go to the USDA Eligibility website.  It's very self-explanatory, but you can call me if you need help navigating the site. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do      VA:  offers Veterans 100% financing with NO monthly PMI!  Loan amounts up $417,000 and there are NO income restrictions!  Conventional:  minimum down payment required is 5%.  20% down = NO PMI!

•·        RATES ARE STILL LOW!  Rates are still in the mid 5's.  These LOW rates will NOT last forever.  If someone is going to buy, they need to do so NOW!  Rates haven't been this low in years and buyers CAN receive FREE money through the tax credit for being a first-time homebuyer, which can be used to payoff other debt, fix up the home or sock into the bank! 

 Late last year was the first time I have ever run into a buyer being approved by a lender for a conventional loan then having the deal killed because PMI insurance wouldn't back the loan.

I live in an area where bad credit is common so I have had buyers get approved for a loan before the credit crisis only to be unable to get homeowner's insurance through anything but Ohio Fair Plan because their credit was bad.

However, 2008 was the first time I have seen this PMI phenomenon.

Today I had a buyer with a great credit score and good income who wanted to buy a home FHA. The house would not go FHA because of a FHA guideline that states the house is too close to a high voltage tower (this is the info on that.... http://www.hud.gov/offices/hsg/sfh/ref/sfh1-18f.cfm).

So this buyer now has to go conventional. For the realtors out there who can't remember what conventional means since it's been so long since we've done one in this market, those are the loans that aren't FHA or VA or USDA (heehee).

Of course, now we run into the problem of needing more money down than the typical 3.5 percent needed for FHA or FHA203K etc.

So, we go out to the search for the least amount down. Yes, some lenders will still do 5 percent down conventional. However, you can't get the PMI on those loans since we're in a declining market (Ohio, and probably everywhere else in the world).

So, we found someone who would do it with ten percent down since the credit score is high.

If you haven't run into this problem... bank will do the loan but PMI won't go for it... be aware that it's something all of us in declining markets will now be facing.