Tuesday, March 19, 2013

Q: We were involved in a “bidding war” sort of deal with several offers on the same property.

We thought we had put in a really good offer at the asking price. We were even preapproved for our loan. Someone else got their bid accepted. We’re upset because we really liked that house. Do you think the people who got the house were friends of the seller or agent or something? Ours was also the first offer and should have been the one to get the deal, don’t you think.
A:  First, the seller has no responsibility to accept a particular offer over another no matter who was "first". It’s typical that they can collect offers and then decide which one gives them the best deal. It isn’t always about money. Some cash buyers, for instance, can close in a couple of weeks. Getting a loan requires more time.
I doubt that the seller or agent gave a special deal to friends or family. The most important thing to most sellers is that they get the best price and the best terms. It’s very possible that each of the buyers could have offered full price and had preapproval for their loan. One of them may have offered a faster closing and/or higher than the asking price.
Due to a very low inventory, our region is experiencing multiple offers on well priced homes. Some are selling in just a few days. Personally I hope that changes soon. We need more inventory and we don’t want to spiral upward into a bubble of quickly increasing prices. That wouldn’t be a good thing. Notice that I said well priced homes. The price is still the secret.
We have houses that have been on the market for a year or more and others that sell is a few weeks. Almost without exception that’s because of price. Sellers have to be realistic and it can be very hard to get that number right. They just have to watch what’s selling and for how much and adapt. Good luck on your next try.

Monday, March 18, 2013

Q: My wife and I are ready to buy a home but we keep hearing how hard it is to get a loan.

We’re almost afraid to apply in case we get turned down.  Can you tell us if we would qualify?
A:   I’m not a loan officer so I can’t prequalify you for a loan.  However, given the information you’ve provided to me I think you’ll be fine.  You have a good down payment, good credit and both have steady employment.  Those are the essential things that lenders look for. 
   The reason that people say it’s hard to get a loan is that the banks and lenders have tightened up the requirements to the level that they probably should have been years ago.  The real estate “bubble” was the result, in part, of loans being made to people who were not really qualified.  The basic question is; can you afford the payments?  Many people couldn’t and that was a problem. There are currently FHA loans and some other products that allow for very low down payments if you are otherwise qualified, so that’s not a limitation.  You would just have to pay mortgage insurance.   
  Interest rates continue to be extremely low.  That enables you to qualify for more money and gives you more flexibility in choosing a home.  You should interview several lenders, in my opinion.  Interest rates are one of the things you want to compare, but closing costs are another.  Do the math.  Sometimes a lower interest rate with higher closing costs ends up costing more in the long run. You also want a loan that can be paid off at anytime without a penalty.
   Look for hidden costs when you get a good faith estimate.  All lenders will have some of the same costs, but others have odd little administrative fees and processing fees that can add up.  Read all of the fine print and don’t be afraid to ask questions. This is good time to buy, before prices start to climb too much, and getting preapproved for a loan is an important first step.