Current Environment

TREND - More sellers are banks. Their response time on contract offers takes longer, perhaps up to three or four weeks. New lending regulations (Truth N Lending signed in advance), longer turn time on appraisals, and loan packages requiring more documentation, are all factors that reduce the likelihood of lenders closing loans inside 21 days. Expect the volume of offers on homes to pick up as the deadline nears for first time home buyers to take advantage of the tax credit (Federal and State).

ACTION 1 - Educate your buyers on the current environment and get them to ACT NOW. In lending days November 31st is fast approaching. Contracts need to be finalized by 10/31/09 to ensure closing by 11/30/09. Show your first time buyers the timeline. The days of writing a contract on a Thursday and getting it finalized by Monday and closing two weeks later are gone.

ACTION 2 - Educate your sellers on current environment. Homes must be priced competitively. If you have an individual seller instead of a bank advertise that fact. Your seller’s competitive edge (if home is priced accurately) is the response time they can counter thus ensuring buyer closes on or before 11/30/09, qualifying for tax credit.

FHA Addendum

TREND - More buyers are going FHA which means more contracts have the FHA addendum that needs to be attached. Also with more FHA lending brings FHA appraisals. Lenders must have completely executed contract in hand before FHA appraiser will release the completed appraisal.

ACTION - Know how to complete FHA addendum. Typically the buyer will finance their upfront MIP fee. The amount of the upfront MIP is 1.75%. Currently I am seeing the offer ask for seller to pay anywhere from $200 to $1000 in repairs. Also work as quickly as possible to get fully executed contract to lender to ensure appraisal can be completed and sent to lender to ensure closing date is not delayed.

Contracts

TREND - Seeing contracts with “bill of sale” attached. Some of the items are personal property (washer, dryer, lamps, yard equipment, etc). Some items are real property. Lenders are being stricter about “bill of sale” even if the value of items in bill of sale shows zero.  

ACTION - Do not have “bill of sale” in contract.