How to Write a Great Offer on Bank Owned Homes (post foreclosure)

Point Blank – Writing a good offer is writing a good offer.  Price is most important, then close of escrow, contingency terms and then buyer qualifications.  Just about in that order.  So when a buyer is faced with writing an offer on a Bank Owned home – it is just about as easy as writing an offer on a home where the buyer is working directly with the seller.

The Caton Team Realtors, will provide the buyer with comparable market information – homes of similar condition and size – and what they are selling for.  Armed with this info, the buyer can decide a fair market price to offer.  Since the home is bank owned – the bank is very aware of the homes market value and has elected to sell the property in the open market instead of an auction – most likely because the bank will get more money in a normal sale versus an auction.  So our advise to a buyer – be realistic in your offer price.  Too low and the bank will move on, there can be some back and forth counter offers – but generally it is cut and dry or the bank will hold onto an offer till a better one comes along.  (At least that is how it feels to the waiting buyer.)

Next are the terms.  A bank owned home can move MUCH faster than a short sale.  A buyer will want to keep their property and loan contingencies tight – 10 – 17 days and generally a 30 days close of escrow is acceptable – if not shorter since the home is already vacant.

The downside bank owned homes – no disclosures except for the CA State Mandatory Disclosures – but those pertain more to the area than the actually home.  Why?  The bank has NEVER lived in the home and cannot disclose if there are neighborhood nuisances, or if the downstairs bathroom floods every years.  So it is more buyer beware – however – once a buyers offer is accepted, they will have their contingency time frames (stated in the offer) to conduct any and all inspections they want and to make sure the home appraisals for their loan.

Sounds like any offer right?  Right.  Bank Owned homes are like normal sellers.  The turn around time for an offer response in a couple of days – a week max.  Meaning, when the buyer get’s the offer accepted phone call – the clock starts ticking for contingencies and in 30 days I hand them the keys 🙂

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

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Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

Interested in Investing in Real Estate? Great article link from the WSJ

Great article for Investors from the Wall Street Journal:

http://online.wsj.com/article/SB10001424053111904103404576558484074477822.html?mod=WSJ_RealEstate_LeftTopNews

 

 

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp me at: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

What Costs of Home Ownership is Tax Deductible?

I just came across this great article that I thought I’d forward along.  It talks about what is and is not tax deductible in home ownership.

http://lowes.inman.com/newsletter/2011/09/13/news/152084

 

 

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp me at: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

How Much Insurance Do I Really Need?

How Much Insurance Do I Really Need?  It’s a great question that I get often.  Found this great article and thought I would pass it along:

http://www.washingtonpost.com/realestate/if-you-arent-sure-what-your-homeowners-insurance-covers-ask

 

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp me at: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

A Cinderella Story… Jake and Sophia

It was 2008.  Jake and Sophia had been working hard and saving their money to buy their first place.  The market had fallen enough to make a home a reasonable dream.  Armed with their pre-approval from Melanie Flynn, we took a look at homes in San Carlos and Redwood City.  It didn’t take long for us to find a darling place in Redwood City.  It was a short sale.  Two loans on the property with two different banks.  We knew it would be a tricky deal, but the home was well worth the work.

We wrote an offer and the sellers accepted right away.  The offer was sent to both banks and together we waited on pins and needles to hear back. Weeks passed.  Each Wednesday I’d call the Listing Agent to get the scoop.  And each week she told me she hadn’t heard back.  Months passed.  Six – I think – could have been more.  Finally I get some answers.  The two banks were at a stand still.  Neither would budge.

Now during these six months when everyone was in the dark – Jake wanted to propose to Sophia and wanted to do so in their future home.  At the time – The Caton Team didn’t know the shenanigans going on with the bank – so we arranged to show them the home again and hang out in the car so Jake could properly propose.  It was super cute and of course, Sophia said yes.  (They are high-school sweethearts.)

We all went home with hearts and stars in our eyes – that lasted until I got the phone call.  You see,  a short sale with one home loan is easy compared to a home with two loans.  One loan, means one bank decides their bottom line.  Two loan, and now we have a fight.  Technically, the 1st loan has precedence over the 2nd loan, so much so, the 1st loan could foreclose on the home and own it – wiping the 2nd loan off the face of the earth – the 2nd loan would have no recourse and just take the loss.  But since the 1st loan was trying to work with the sellers to avoid foreclosures – the fight is over how much the 2nd loan would accept in the short sale and walk away.  Typically, the 1st loan gives about $1000 – $3000 to the 2nd loan as a courtesy since the 1st loan is not foreclosing.  Generally the 2nd loan is happy to get anything – and accepts what the 1st loan gives them.  Well not this time.  The 2nd loan was demanding more money – the 1st loan wasn’t going to give it to them.  Both Realtors tried every which way to put the deal together, but in the end, nobody had enough money to satisfy this 2nd loan.

After a long talk with Jake and Sophia we knew it was time to walk away.

Thankfully, since we saw the writing on the wall – we started looking for other homes.  Seems like everything that would work was already pending or sold.  Except for one.

The trick to being a great Realtor is also being a great detective.  Combing through the pending listings, Susan saw a cute home which was pending but in the agent comment section – it was begging for a back-up offer – it appears the current buyer was threatening to walk away since they were tired of waiting for the short sale bank to respond.  The Listing Agent knew she was so close to a short sale approval – but the buyer had enough.

We called right away and showed the home that night.  Jake and Sophia loved it.  Sadly, the home was priced about $50,000 over their budget.  That didn’t stop the Caton Team.  We knew the buyer was going to walk, the bank was ready to sell and we knew to strike when the iron was hot.  We wrote the offer right away.  The seller accepted the offer and sent it to the bank.  In the mean time, the other buyer rescinded their offer and suddenly we were the only offer on the table.  It was the banks call – wait another 356569546 days or sell it now…

With bated breath we waited.  Two offers on two short sales – it was like roulette.

Before we knew it, the bank accepted our $50,000 below price offer and we were in the home stretch.  We rescinded our offer on the 1st house and about 25 days later handed the keys to Sophia & Jake.  They couldn’t be happier.

Just so you know – the original house – the two banks fought for over 1 year and in the end the 1st foreclosed on the 2nd.  It wasn’t the best solution for the seller, but thankfully they were finally able to move forward.

In the end – Jake & Sophia got a home that was far better than the first place.  It’s why I tell each buyer upfront – we’re going to see a lot of homes, we’re going to write a bunch of offers, some will be accepted or rejected, some homes will move faster than other – but in the end – what’s meant to be is meant to be.

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp me at: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

WHAT YOU NEED TO KNOW ABOUT UPCOMING CHANGES TO FHA LOANS

WHAT YOU NEED TO KNOW ABOUT UPCOMING CHANGES TO FHA LOANS

As you may know, unless Congress extends the expiration deadline, Federal Housing Administration (FHA) loan limits set in 2008 will drop significantly beginning October 1. Congress raised the loan limit amount in response to the housing crisis to help spur the homebuying market. FHA loans offer borrowers very competitive rates and terms, and they only require a 3.5% down payment. Allowable debt ratios are higher than the typical debt-ratio limits imposed for conventional loans, and there are no income limit qualifications, so more people can qualify for them.

If the loan limit drops on October 1, many California homebuyers will face higher down payments, higher mortgage rates and stricter loan qualification requirements. Borrowers seeking larger mortgages will have to apply for conventional loans or jumbo loans, which may be subject to higher interest rates and down payments. Here are four things you should know to help your clients now.

1. LOWER LOAN LIMITS. The conforming loan limit determines the maximum mortgage amount that FHA, Fannie Mae and Freddie Mac can buy or guarantee. If your client wants to stay under the current loan limits, then encourage them to purchase now and close by September 30th.

2. DROPS BY COUNTY. Under the new FHA loan limits, some counties will see significant drops in their loan limits. San Diego County will experience a $151,250 drop, Sonoma County a $141,550 reduction, while Orange and Los Angeles Counties will drop by $104,250. To see a full, county-by-county list of changes, click here.

3. JUMBO LOANS. The current FHA loan limit is $729,750. After October 1, that limit may drop to $625,500. Mortgage loans higher than that amount will be considered non-conforming jumbo loans, which typically have rates that are 0.875% to 1.5% higher than conforming rates, depending on the loan product, and require higher down payments.

4. MORE STRINGENT REQUIREMENTS. FHA loan requirements may allow for lower credit scores. So an applicant with a lower FICO score can still qualify for an FHA loan, even if they can’t for a conventional loan. Your clients may be able to obtain an FHA loan three years after defaulting or having a loan foreclosed.

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

Visit our website at:   http://thecatonteam.com/

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp me at: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/