Appraisals

TREND - articles suggest that today’s appraisals lack quality, are inaccurate, and are causing closings to fall apart. It is true that appraisals play a more central role in the home buying process. Lenders require more comps, require sales to be more current and prefer radius to be within 3-5 miles. Combine the demand of more precise data with the scrutiny of a third party review board and foreclosures driving prices down and we see why no buyer, seller, or home is insulated from the appraisal putting the brakes on closing a transaction.

ACTION - provide 18-21 days for appraisal contingency. It just takes longer to get appraisals these days. Lenders CANNOT have direct contact with appraisers. Agents,get the contract over to lender as soon as possible and insist they order appraisal upon receipt of sales contract and appraisal fee from borrower.

USDA

TREND - growing in popularity in North Georgia on this loan program formally known as Farmer’s Home. Rate is aggressive. Underwriting guidelines are similar to conventional on credit and FHA on ratios. Popularity growing as this program allows 100% financing and no monthly MI. I have closed 10 USDA loans in the last 60 days.

ACTION - allow 45 days to close. USDA loans must go to USDA for review before closing. Determine if buyer AND property are eligible for USDA financing. As listing agent please contact me to see if your property is eligible for USDA financing. If it is, advertise it as being eligible for 100% financing. If you have a buyer, get them prequalified at the beginning. USDA has an income limit.

Termite

TREND - seeing some contracts (especially relo contracts) mention termite letter.

ACTION - connect with your lender to see if they require termite for specific property. Typically lenders require termite if it is mentioned in contract, on appraisal, or if the buyer is obtaining VA financing. This is a small detail needs to be addressed upfront.

Short Sales/Foreclosures

TREND - it seems like 66% of my sellers are either selling short or the bank is the seller. Either way 2 out of 3 times, the seller is not emotionally attached to the house and a lending institution is calling the shots.

ACTION -

1. Prepare your buyer. The ride to home ownership can be a long, bumpy ride but the deep discount in price is well worth it…..down the road. Counsel your buyer to endure!
   
   
2. Connect your buyer with lender ASAP. Buyer, realtor, lender need to work even more closely together. All parties need to be on the same page about possible required repairs, does house need termite, is power and water on for appraiser, and when package must be to closing attorney’s office.

Communication is more crucial on these purchases because the potential curve balls and pitfalls are greater.