NEGOTIATE Your Offer: Hit Them Like a Freight Train!

 First Time Homebuyers, How-To Negotiate, Uncategorized, Veterans  Comments Off on NEGOTIATE Your Offer: Hit Them Like a Freight Train!
Jan 182017
 

I have a client making an Offer tomorrow on a multi-family house in The Bronx. This client—a First Time Buyer and a Veteran of the Armed Forces using VA financing—has been working very hard to find the right house.

Three weeks ago he was moments away from signing a contract to buy a home. He had done the home inspection and there were serious concerns about the property. He presented these concerns to the Seller through the Seller’s Agent, notably, a very bad roof and a serious water and mold problem in the basement. The Seller’s response: not gonna fix it. Have a nice day. Home inspection fee of $550 out the window; in the garbage; down the drain. Not really. “Money well spent,” I told my client. “You found out for minimal cost the potential money-pit-nightmare this house could become for you. Walk away.”

And walk away he did. Yesterday he saw another house he really likes. This time, I suggested we go at the Seller like a freight train bearing down on him.

Hit ’em hard. Provide a clear and concise layout of the price and terms of your Offer. Let me, the Mortgage Banker, speak to the Realtor about how well-qualified you are and the rapid timeline for an approval and closing. Put it all in writing. Have all your “ducks in a row” with the Offer spelled out with price and closing timeline, Attorney information, date for the home inspection, and your Prequalification Letter for VA mortgage financing.

As if that isn’t enough of a speeding train on the tracks, give the Seller a deadline: just over 24 hours to respond. Present your Offer mid-day Thursday; require a response by 3pm Friday. Tell the Seller’s Realtor you have appointments to look at other houses starting Saturday morning.

WOW. FREIGHT TRAIN!

Listen, anyone, any Buyer anywhere can do this. You need two things to see this through. One, have your Prequalification letter and your “team” lined up: Attorney, Home Inspector, Mortgage professional. Two, just DO IT. You have nothing to lose and everything to gain. You’ll find out if the Seller is serious; if they really want to have a constructive dialogue with a Buyer; if the Realtor is a serious professional.

Line ’em up on the tracks, make your Offer, run at them like a freight train and hit ’em hard. I promise you, this method WORKS.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

May 182015
 

inspector 1You definitely want to be present at the inspection; budget anywhere from 2 to 5 hours for the inspection. Dress as if you might get dirty; bring a flashlight. You’ll go through the house side by side with your Inspector. After the inspection, your Inspector will discuss with you any major issues you need be aware of to discuss with your Attorney. You’ll get a written report shortly after the inspection day.

Typically your Home Inspection will alert you to problems in five key areas, and these key areas directly relate to the contract of sale in a New York home purchase:

1. Foundation: sound and solid
2. Roof free of leaks
3. Plumbing working and leak-free
4. Heating system sufficient and operating
5. Electrical system sufficient and up to code

image w definitions

If there is a serious problem with any of these five items, typically the Seller has a responsibility under the terms of the contract of sale to repair the problem at their expense, not the Purchaser’s expense. Sometimes a Purchaser will receive a credit at closing to repair one of these items (assuming the home and the defective issue has not compromised the Lender’s appraisal). When the Purchaser receives a credit at closing, the amount of the credit is based upon legitimate estimates for repair and negotiations between the Attorneys representing each party.

Other items you discover are in need of repair/upgrade (i.e. dishwasher not operating properly; air conditioner on second floor inoperable, etc.) can be negotiated for a repair credit or replacement at the Seller’s expense. Again, these negotiations are typically handled by the Attorneys.

It is not as common as you might think that a purchase price is reduced due to repairs from a Home Inspection. Best to consult with your Attorney for more detailed information in this area.

 

 
Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

It’s Not Enough: 6 Months Reserves

 First Time Homebuyers  Comments Off on It’s Not Enough: 6 Months Reserves
Aug 272013
 

I’ve noticed a trend on the ‘net over the past two years or so where lots of folks advocate buying a home ONLY when you:

  • Have 20% Down payment
  • Have the cash for your closing costs (here in New York 4.5%-5% of purchase price!)
  • Have 6 to 12 months monthly budget in reserves

 

6-12 months reserves is NOT enough.

Look at the recent recession: many, many, MANY Americans were out of of work for several YEARS. Lots of folks tapped into their savings and retirement accounts to survive; lots of others lost their homes altogether. Clearly, having ONE Year in reserves wasn’t enough.

 

Granted, this recession was more severe than those in recent memory, but do you really believe 6 to 12 months reserves is enough?

 

I can understand a more conservative mindset; it’s a natural reaction to the excesses of the “Boom and Bust.”  Believe me, I really do understand because I lived and worked through that debacle.  I still cannot believe people’s behavior in those days.  Lunatic is a good way to describe it.  From the Account Rep’s at the Sub-Prime Lenders to the amateur real estate agents and loan officers to the barely qualified consumers who simply wanted “MORE” I’m still shaking my head to this day.

 

And so we’re left with a new consumer mentality that, when it comes to buying a home, you should almost pay cash for the house, never mind the mortgage loan.

 

I applaud such an attitude.  

The shame is it’s not based in reality.

Even were one to eliminate all unnecessary debt, never dine out, never rent a movie, brown bag your lunch, hand wash your business clothing, commute on public transportation, take a second (and maybe a third) job, the REALITY is that—for most folks—it would take years and years, not to mention incredible discipline, to achieve this perfect home-buying nirvana.

 

Again to the reserves.  Most definitely a commendable behavior.  Maybe worth postponing the purchase of a home and tightening up a family budget to aspire to this noble goal.   But many families want a backyard for their kids to play in today.   Many other folks are well and truly tired of paying rent to complacent landlords.

 

For those folks, there’s a mortgage loan and

the option to purchase a home sooner rather than later

with the available means.

 

Commendable though it may be, saving oodles of cash to put 20% down, pay all your own closing costs and be left with many months of emergency reserves just isn’t practical for many people.  And it doesn’t help those same folks achieve the goal of home ownership.

 

 
Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question

You Need To Build Credit: Where to Begin

 All You Need To Know About Credit, First Time Homebuyers  Comments Off on You Need To Build Credit: Where to Begin
Aug 232013
 

You need to build more good credit. I recommend opening the following accounts as a way to build credit:pile of cash

  • Sunoco http://www.gosunoco.com/ways-to-save/gas-credit-cards/
  • CareCredit: available at your Dentist. http://www.carecredit.com/apply/landing.html
  • CapitalONE secured credit card http://www.capitalone.com/creditcards/mastercard-secured-credit-card/

A secured credit card works like this: you deposit with the credit card company a pre-determined amount, say, $500. This amount is your credit limit. You swipe and use the card same as a regular credit card; the secured card activity gets reported on your credit report thus building your credit history. My advice: open the account and use no more than 50% of your “limit.” Then make MINIMUM monthly payments; don’t replenish the total amount! This type of activity gets much better results on a credit report.

  • Bank Debit/Credit Card: If your bank offers a card attached to your checking account that can be used as either credit or debit, then you should use the card as credit. Check with your bank to see if they offer this type of card AND if they report the activity to the credit bureaus when you use the card as a credit instead of debit.

Visit my Useful Links page for other great websites that provide accurate and honest advice on building credit.

 

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question

What Is The Future of the Real Estate Market?

 First Time Homebuyers  Comments Off on What Is The Future of the Real Estate Market?
Aug 232013
 

What Is the Future of the Real Estate Market:

Buy NOW with a 30yr Fixed Rate mortgage

I recently answered a question on TRULI.com  about the future of the real estate market.  Here’s what I had to say about that:

The future of the real estate market is the past: it is CYCLICAL. As with many other markets—commodities, stocks and bonds, comic books and baseball cards—prices, values and activity go UP and they go DOWN.

If you seek to buy a home to live in and to reap the intangible benefits of homeownership, then the LAST thing you should be thinking is about market peaks and valleys. Create your “dream list” of location and features you want in a home. Get prequalified for mortgage financing so you know your limits in terms of the monthly payment for a mortgage loan. Then jump in the water, so to speak, and buy your home.

 

If, on the other hand you’re attempting to “time the market” well,

Good Luck with that.

In my nearly 24 years working in this field, I’ve seen many different “markets” come and go. But one thing has been constant: many people want to live in a home of their own. To them it doesn’t matter what the “market” is doing.

 

 

I welcome Comments for all my blog entries

but they must be approved.

I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk.

If you wish to Comment on any entry, please do so and I will quickly review and approve.

Thanks for reading tcurranmortgage.com.

Hope that helps!

Definitions: Short Sale

 Definitions, First Time Homebuyers, Veterans  Comments Off on Definitions: Short Sale
Aug 162013
 

Definitions: Short Sale

The definition of a short sale is when a homeowner owes more to their current mortgage lender than they can sell the house for on the open market and sells the house for the market price
after negotiating with their lender to accept less.

For example, Henrietta and John own a single family house. The balance on their current mortgage is $267,000. John lost his job and they wish to sell the house to relocate to another state for better employment opportunities. They invite local Realtors to make a “Listing Presentation” as to how much Henrietta and John’s house could sell for under current market conditions. The consensus among these Realtors is a price range of $195,000-$220,000.

Henrietta and John owe more than the house can be sold for. They retain the services of a local attorney who specializes in negotiating short sales. Their attorney then negotiates with their existing Lender to accept less than the $267,000 owed on the house and basically to accept payment based on whatever Henrietta and John can sell the house for.

The negotiating of the short sale is a complicated and difficult process. Henrietta and John’s attorney will need to present comprehensive income documentation to their Lender. The Lender will in turn conduct it’s own analysis of the value of the house and the merits of accepting Henrietta and John’s offer of less money rather than conducting a foreclosure proceeding.

Thanks to recent Federal Government initiatives, the process to negotiate a short sale has become easier. What used to take nearly a year to accomplish can now be negotiated in as little as 45 days, although the average processing time for a short sale approval is probably closer to six months.

When Henrietta and John receive the approval for their short sale, there will be some fundamental conditions in place.

1. Their Lender will receive ALL proceeds of the sale AFTER Henrietta and John have paid customary closing fees for their locale and real estate commissions and legal fees to their attorney.

2. They will not be allowed to receive any funds in their pocket.

3. Their Lender may reserve the right to obtain a “deficiency judgment” against Henrietta and John for the amount of the mortgage loan left unpaid by the approved short sale.

What does a short sale mean for a Homebuyer?

1. Be PATIENT. You may have a considerable waiting period from the time you sign a contract of sale to the point when the short sale is approved on the house you are buying.

2. Get your Mortgage Approval and MAINTAIN your financial status. Once your mortgage loan application is approved and your Lender issues a loan commitment, be sure your Income, Assets, and Credit stay the same as when you made your loan application. Because it may be some time before you close, your Lender will update your documentation used for the loan approval. If your financial situation changes, you may lose your approval altogether.

3. You can’t get Something For Nothing. Don’t think you can get a house in a short sale situation for “fire sale” prices. After all, the house didn’t get burned in a fire, the Homeowner simply owes more than current market prices will bear. If you offer substantially below the market price, chances are the Lender approving the short sale for the homeowner may counter your offer to a higher price. This is based on their independent analysis of market prices for similar homes in close proximity to the house you are buying.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question
Nov 222011
 

Wow, 27+ years as a Mortgage Banker! I have seen the occasional short appraisal! I started in November 1989 because I wanted to become a Homeowner so I chose a path which would get me there: Mortgage Professional.

Times were tough back in that market.  Interest rates were high and property values had dropped dramatically.  The employment picture for many Americans wasn’t very promising.  There were a lot of foreclosures and homeowners had a hard time refinancing their mortgages due to lost equity.  Sounds very similar to our recent post-meltdown market with the exception of the interest rates (11% in 1989!!!).

I received a valuable part of my education early on in my career as I dealt with purchase transactions where the appraisal came in for less than the purchase price.  Buyers, Sellers and their respective Realtors are all “IN IT TO WIN IT” and make the deal happen.

How you see your house!

I carry that education with me to this day when my HomeBuyer clients ask me at application time, “What happens if the appraisal comes in for less than the Purchase Price?”   I know many HomeBuyers may think it’s a NO-BRAINER: the Seller will automatically reduce the price.  But that is NOT the case right out of the gate.  Here’s what I learned all those years ago about appraisals that come in short:

How the Appraiser sees your house

When the bank appraisal comes in for less than the contract price

there are FOUR ways to proceed with the transaction.

 

  1. The Purchaser comes up with the difference in cash. If the appraisal is less than the Purchase price, the Seller basically assumes the Purchaser wishes to buy the house according to the terms of the contract, including the agreed upon Purchase Price. Therefore, the Seller assumes the Purchaser will come up with the cash necessary to complete the transaction.
  2. The Purchaser and the Seller meet in the middle. The Purchaser comes up with some cash but the Seller also agrees to reduce the price enough to meet the Purchaser somewhere “in the middle.”  Both sides want to complete the transaction and so they work it out.  This is compromise at its best.
  3. The Seller reduces the Purchase Price to equal the Appraised value. This is the least likely scenario, but not an impossible one.  Sellers often want to complete the purchase transaction on the original terms of the contract, including the price. But a determined Purchaser working with a great Realtor, by digging in and working hard to negotiate can often make it happen.
  4. Nothing happens and the deal is cancelled. The Purchaser either cannot or will not come up with the extra cash and the Seller refuses to reduce the price completely or even a little bit to meet the Purchaser.  In this case the transaction is cancelled, the Down Payment is returned, and everyone goes home unhappy.  The Purchaser has to begin all over again and the Seller has to put the house on the market and try to find a new Purchaser.

In the end, the motivations of all parties to make the deal happen and close the transaction rule the day.  Those motivations drive everyone to find a solution and get the deal closed.  Or not.

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!