Wednesday, February 29, 2012

Q: As you suggested, my wife and I made the effort to get preapproved for a home loan before seriously looking at houses.

Unfortunately, our credit scores were not as good as we expected them to be.  The two loan people we talked with said we would have to bring up the scores before we could qualify.  Do you think we would be better off burying a home where the seller will carry the contract?

A:   The short answer is no.  It's far more important to get your credit score up.  That allows you to qualify for any home in your price range that might suit you, rather than a very small selection of homes that offer seller financing.  We all learned some lessons from the recession.  One of those is not to go into debt for more than you can handle.  If you have too much debt now, or have made payments late, or a number of other problems, it wouldn't be prudent to rush into buying a house.

  Another important thing to know is that very few sellers can, or will carry a contract.  Most folks need the money from the sale of their current home to buy another one somewhere else.  It's a rare seller these days, that can afford to wait for a large down payment.  In my experience they also want higher interest rates than standard lenders are offering.  Most contracts held by sellers require a pay off in just a few years.  Three to five years.  three to five years is the most common.

  I would advise that you work with a lender to find out how to improve your credit score.  There are even non-profits that will give you helpful credit counseling.  These days credit scores are the primary way lenders judge the risk of lending.  I know it's hard to wait but you will be so much better off if you do.  I would add that you should order your own credit report and be sure there are no mistakes. 

Tuesday, February 21, 2012

Q: Can you recommend a more aggressive listing agent for me?

I've had the house on the market for over a year with no offers and very few showings.  My agent keeps telling me I have to drop the price and that just won't work for me.  I know what I need to get out of the place and I just need to find someone who can get it for me.

A:  I've addressed this in the past but this sort of question just keeps coming up.  There is nothing wrong with your listing broker.  It's all about price.  You have to keep in mind that virtually all buyers have to get a loan to buy a home and the lender will do an appraisal.  If your house doesn't appraise for what you're trying to sell it for, the buyer won't be able to buy it.  You will have to lower the price to match the appraisal.

  You can ask for a second appraisal and pay for it, but that may not result in a better outcome.  These days, more than ever before, the appraisers control the price.  If they can't find comparable sales that support that price you and the buyer are stuck. 

  Many brokers won't waste their time showing seriously over priced homes.  Particularly if they represent the buyer, they want to find that buyer a fair deal.  Over paying doesn't serve that purpose.  The price is never set by what the seller "needs" to get out of the sale.  It's set by what a "ready", willing and able "buyer" is willing to pay.  Add to that:  what an appraiser can support for the lender.

  This is never good news for sellers, but our market has continued to slip, particularly in the lowest price ranges, and you need to stay ahead of that, not a year behind it.  Ask your broker to give you the comparables that an appraiser would probably be using for your home.  It will be a real wake up call.  Then re-list with this hard working broker at a lower price.

Wednesday, February 08, 2012

Q: We've been looking for a home for some time now and haven't found anything that will work for us.

I think the problem is that my husband is stuck on having acreage for a garden and we both want a really nice, relatively new home.  All the homes that are nicer and newer that also have three to five acres are over our budget.  Do you think there will be something we can afford later in the spring that fits our requirements if we keep looking?

A:  We never know what houses or property will come on the market in the future.  I wish I could!  But all indications are, that we won't be seeing lower prices than what we have currently.  I think you should keep looking and I also think that what needs to change is your belief that you can't have a large garden except on acreage. 

  The Island is filled with fantastic gardens, many of them virtually feeding a family all year or even feeding several families.  Many of these gardens are found on a half acre or even smaller property.  If you read up on gardens a little more, you will find designs for gardens that can feed a family using raised beds, that cover a space no larger that a good sized garage.

  Many people buy acreage thinking they need more space for their hobbies and interests.  Often this means that after a few years of trying to keep up five acres they start looking for another property to buy that is smaller and less work.  It would be easier for you to start out on a smaller property and see how that goes. 

  We are fortunate to have many active and helpful Master Gardeners on Vashon as well as a Garden Club.  You can also ask advice from Vashon Island Growers Association.  I think they'll tell you that you can have all the garden you need and have time to take care of, on a smaller property.  Seek out these helpful folks.  They all love to talk about gardens!