(Some flowers are simple and exotic and fragrant all at once. That’s how I feel about the gardenia plant in my garden. And that’s how I feel about plumeria from Hawaii. This plumeria was a photo gift from Larry, who grew it in Palm Desert! If you’ve seen plumeria around Alameda, I’d love to know where so I might find out how to grow it here!)
Many of you know I am a huge fan of Project Runway. I think it’s an amazing show because it’s about talent, execution of concepts, unique people, and RESULTS! ‘Make it work’ is a phrase an advisor, Tim Gunn, uses to encourage the designers to step it up, get it going, pull it together.
The phrase ‘make it work’ certainly applies to all facets of life. And in real estate, this past year week has shown me how important it is to ‘make it work.’ I see it when I’m working with my own buyer clients and when I review offers submitted to my sellers.
Putting an offer together demands a fair amount of prep prior to even looking at properties. That involves figuring out what price the buyer can afford as well as be comfortable with. It also means getting a handle on the closing costs. I think a lot of agents don’t look closely at those figures and are afraid to find out what the costs mean, how they work. It takes time to explain some of those costs, and then check them and question them with the lender, on behalf of the buyer. But agents should be doing that…and you should expect them to.
It also means understanding if the type of property the buyer is considering can qualify for financing! The less money down (leverage with ‘other people’s money’ or OPM), the closer the lender looks at appraisals and condition. Properties with a lot of deferred maintenance will not qualify for financing in many instances….too much risk for the lender, sometimes even with loads of money down. The last thing a lender wants is to take back a fixer.
If agents don’t understand the underwriting standards the lender must follow such as for FHA loans then they may end up writing offers that will never come to fruition. I’ve seen this several times this year.
So I’ve found myself spending a fair amount of time with my buyers trying to make sure I understand the type of financing they qualify for and what a property in their price point can qualify for! Sometimes it’s super frustrating for the client…but not as much as if a transaction falls apart once it’s in escrow.
On the seller side of the offer, I am questioning the buyer’s agent more and more about the type of financing, asking permission to speak to their lender, and then more than once this year, killing off the offer before a counter-offer was even written, all because the nobody told the lender upfront what some of the challenges were with a particular property, yet the lender merrily wrote a pre-approval letter. The downside is buyers are disappointed, as they should be, because it was avoidable with some pre-planning. Another downside is what looks like a good offer to a seller, if accepted, gets blown out by items that show up on the appraisal which is reviewed by the underwriter(s). Then we’ve got a BOM (back on market) on our hands and marketing time lost.
An example: An offer was written on one of my listings using FHA financing. The property needed work. The minimum down payment of 3% was all good except that when I called the lender and asked if a loan could go through that program with certain obvious property conditions an appraiser would note, the lender said ‘somebody will have to do that work before the close.’ Well, the last thing either the buyer or seller wants to take on is that expense when other terms have been agreed on previously. Offer rejected. The lender would insist the seller do work, and at an ‘as is’ price…no way.
Then another offer shows up with the same type of financing on the same listing. This lender is saying ‘no problem’ to her agent and the buyers. What’s with the ‘no go’ from one lender and a ‘no problem’ from another? I expect it might be experience and taking the time to find out some basic underwriting requirements, understanding them, and then explaining it to the agent and the buyers. A lot of time wasted can be avoided when all the parties are on the same page.
Stay tuned, this saga continues. I hope we can ‘make it work.’
Alameda real estate this week….
Again, a busy week. Inventory is down….loads of pending sales, and closed sales (end of month). I have a buyer who got into contract on Friday and the Seller of the co-op on Cypress had two offers to look at last week and it went pending on Saturday.
Alameda real estate awards this week….remember this is only my perspective!
Gotta admit….I only saw one, just as it was getting staged. And I’m giving it the:
Carry on! Make it work! best, Marilyn