Does Your Type of Mortgage Give You an Advantage When Buying a Home?

Home buyers in today’s market where homes in good areas, in great condition and are priced properly are drawing in multiple offers. They want to know if they have a better chance in getting the home if they pay with cash, or if, if they are using financing what kind of financing is best, where can they get an advantage.  What makes any one purchaser better than another when compared against each other by type of financing. These buyers would be astonished if they knew how unfairly some purchase offers are ranked due to their choice of financing. 

You would be wise to consider how your offer may be perceived by the sellers. Since most of us can’t pay all cash for a home the type of mortgage you intend to use may greatly affect that perception. If you are in a seller’s market like in the Plano real estate market you would also likely to be competing against multiple offers from various types of buyers. If this is the case your offer will be even more closely judged and scrutinized. 

 

There are Fair Housing Laws that prohibit discrimination based on protective classes but other types of discrimination are not restricted like “source of funds”.  Most sellers and their Realtors don't make it a practice of telling buyers why their offer was rejected. They are not required to explain why. It is common practice to judge a purchase offer by the type of financing the buyer chooses to obtain to complete the purchase. Purchase offers for DFW homes are often ranked as follows. The best type of offer is listed first, with the least attractive offer ranked in last place:

Cash: This is cash on hand that the buyer has in a savings account for example. A cash offer is typically accompanied by proof of fund. Because cash is so highly rated, sometimes cash buyers are able to negotiate a discount, a price less than that of a buyer who is going to obtain a mortgage. But don't count on that being the case every time. Remember that all offers, except owner financing, result in cash to the seller at closing. The main benefit to a cash offer is that there are no underwriting restrictions to deal with.

·         Conventional Mortgages: A buyer’s FICO score requirements for a conventional mortgage are higher than those for an FHA mortgage. You can still get a conventional mortgage buy Collin County homes if your FICO score is the same as the minimum required for FHA but you will pay a little bit higher interest rate. Preferred interest rates are available to borrowers who put down 20% or more in cash, resulting in an 80% loan to value ratio or less. The lower the ratio, the lower the risk is to the lender. If the appraisal comes in lower, often the lender will let a borrower pay the difference in cash but on if the loan to value is less than 80%. Another advantage to using a conventional mortgage is that lender funding requirements are much less stringent.

·          

·         FHA Mortgages: Many first time home buyers go for an FHA mortgage because the initial down payment is generally less than the amount required for a conventional mortgage. Also, the FICO score requirement is much more lenient. The minimum down payment for an FHA loan is 3.5% of the purchase price. FHA repair guidelines are not as strict as some sellers and Realtors believe. But some older homes tend to need more repairs. Peeling paint is a huge issue if the home was built prior to 1979 due to lead based paint concerns. The home can have a concrete floor without carpeting, but it better not have peeling paint. FHA loans are sometimes held up from closing due to funding conditions. A termite report and clearance may be required by the FHA appraiser.

·          

·         VA Mortgages: Unfortunately, military veterans get the short end of the stick when it comes to competing for a home. VA borrowers are generally a better credit risk than an FHA buyer because the requirements to buy without a down payment are much more stringent. A mortgage borrower retains the option to put a down payment into the home or buy without a down payment. Most VA borrowers choose the zero down payment option. The downside to a VA mortgage is that termite reports are required. Due to the mortgage hierarchy and misconceptions, VA buyers many times fall to the bottom of the offers even when they might be the most qualified. Realtors who handle a lot of short sale transaction usually to prefer VA buyers because they know these buyers will get turned down elsewhere, which makes them a committed candidate for a short sale home.

Home Sellers Talking to Buyers - Not a Good Idea

Many times a home seller will tell their Realtor that they do not want to have a lockbox on their home. No lockbox means much fewer showings and it is a red flag that trouble may lie ahead with these sellers.

 

When a seller talks to buyer’s agent and the buyers, trouble is usually the end result. Sellers many times will say the wrong thing. Buyer's agents are there to gather information and use it against the seller when it comes to negotiation time. Buyers agents who are Realtors are not supposed to talk to the seller in an esthetical manner or a manner that would be deemed unethical. It is important to note that not every agent is a Realtor. Even an smilingly simple question could turn into a complicated answer, which could affect the seller in a bad way.

Questions a Seller Should Not Talk About With a Buyer’s Agent.

Regardless if you are selling Collin County homes or Denton County homes sellers never think that they are saying something that could come back and bite them. They want to be informative and helpful. They can be told to keep their mouths shut but it doesn't do any good. Instead, I would suggest they say something like, “Please discuss that with my agent," as a way to deflect and defuse questions. They can also let the buyer and their buyer's agent know that they are not being impolite but that their listing agent has advised them to not answer any questions. When it comes to Tarrant County homes here are questions that can cause problems in a transaction if the seller talks to the buyer about them:

·         How many offers have you received on the home?

If you have received more than one offer and your home is not sold, buyers will be wonder if there is something wrong with you or the home. If you haven't received any offers, they will also think that something may be wrong.

·         How long have you lived in this home?

If you've lived in the home for only a couple of years or so, the buyers might think you're selling because the home isn't what you thought it would be when you bought it. If you've lived in the home for a long time, buyers may think you have a lot of equity that you don't know what to do with it.

·         How much was the highest offer?

That's the thinking behind this question. Sometimes, it is slipped in so quickly that a seller will respond without realizing it. You don't ever want to show your hand.

·         How fast do you need to move?

If you tell the buyer that your husband’s job has been transferred out of state and you wished you had sold last month, you are telling the buyers that you are desperate for an offer. Usually, desperate sellers often get hit with lowball offers.

·         Where are you moving to?

If you're moving into a less expensive area, there are buyers that will think they don't have to pay the list price because they might decide you don't need the money. If you're moving to a higher priced community, buyers could be afraid to make an offer on your home because they worry it won't meet your monetary requirements.

·         Why are you selling your home?

To avoid a lowball offer don’t even think about answering this question. Even joking about it can backfire. Agents and buyers will judge you on this question and try to use the information against you. Don't answer it.

·         What are your neighbors like?

People can be very judgmental. Don't give a prospective buyer a reason to eliminate your home from their list. If they want to know about the neighbors, let them go talk to them without your input. Unless there’s something about your neighbors that may be construed as a material fact just don’t talk about them.

What repairs have you made to the house?

When selling your home most jurisdictions require you to fill out and sign a seller’s disclosure that you must make available to prospective buyers. This disclosure will list the repairs you have made to the home so there is no reason to discuss them prior to an offer. Sellers often remember repairs as costing more than the repairs really cost. In many cases, the cost of a repair does not add much to the value of the home. You don't want a buyer to wonder if your home is falling apart at its seams. This is why sellers should not be home when a buyer comes through to view it. Not only does a seller's absence allow the buyer privacy and time to consider the home as their own, which they can't do if a seller is present during the showing, but it also prevents the buyer from talking to the seller and it stops the buyers' agent from talking to the seller. Let your agent talk to the buyer's agent. That's why you have hired the agent to represent you in your transaction. Let your agent do their job.

Mortgage Companies and Dallas Foreclosures

Mortgage Companies and Banks own Dallas real estate because they have acquired these properties through the foreclosure process. Properties on the bank's books are called REOs, which stands for "real estate owned." When banks receive property through a Dallas foreclosure, it's because no one bid the minimum amount of the existing mortgages at the courthouse steps. These foreclosures may not seem like a good value, especially if the bank wants to sell these properties for the amount that was owed to the bank by the previous property owner. With all that said, here are at least two reasons why an REO can be a great Dallas home value for you:

If there were two mortgages on the property the second lender may not want to foreclose on the property. If the second lender does not make up the back payments and cost to the first lender and that first lender goes forward with its own foreclosure, the second lender will get wiped out in the foreclosure, a devastating loss to that lender.

The bank does not, and cannot sit on its foreclosed property. Since the bank did not receive its minimum bid from a buyer during the foreclosure sale at the courthouse, the bank is likely to price that REO property for less than what is owed to them just to get that property of its books.

Negotiating for REO Properties

If the DFW home listing is new to the market, it is very likely that the bank will not come off much from its listed price. You will have better negotiating power if you go after properties that have been on the market for more than 30 days. Here are a few more tips:

Many banks will not paying typical closing cost for the property buyers. Some fees such as title policies, county and state fees, are paid by the buyers and not the bank. Banks generally will not pay for termite inspections, repairs or home warranties.

Banks often negotiate bulk-rate discounts with title and escrow companies. If you choose to use the bank's title/escrow company, check the fees of those companies. Typically, fees not paid by the bank but paid by the buyers will be higher because title and escrow companies often make up those discounts by charging the buyers more.

Some banks will not sign a counter offer until all the terms are mutually agreed upon between all the parties verbally.

Expect that the bank will require you to sign its own addendum to your standard purchase contract. Read it thoroughly and ask a real estate attorney for advice if you do not understand everything in it. You can bet the bank's lawyers drew up that addendum, and it's not in your favor.

If the bank won't budge on its price and you receive a rejection, wait 30 days and then resubmit your original offer.

You might wait 10 days, or more, for a response to your offer from the bank: be patient.

The bank may ask for you to submit a loan application to them so they can prequalify you so they will be sure you can close on the property. You will not be obligated to obtain your mortgage from that bank.

If you cannot close by the closing date listed in the contract, the bank may charge you a penalty for each day you don't close pass that date. Make sure you have get a mortgage pre-approval from your own lender before submitting an offer to the bank so you will have assurance that you will receive the financing from your lender without running into unexpected delays.

There are some drawbacks to buying a foreclosure property. In almost every case you will likely be required to buy the property in "as is" condition. You still have the right to make your offer subject to a home inspection though.

It is in your best interest to retain the services of a professional Dallas Realtor to guide you through the ins and outs of the Dallas foreclosure market. The best thing is that you get 100% representation and it cost you nothing because the bank pays the Realtors commission. You Win!

Safety and Privacy During a Plano Home Showing

Is your private information safe? Before a Plano home goes on the market and home buyers begin to come through the door, smart sellers will put away confidential and sensitive information. You might be astonished to learn what “home buyers” can learn about you as they are looking at your home.
Your Private Documents
• Some potential home buyers will open your drawers and cabinets.
Buyers can innocently, or on purpose, pull open a drawer or cabinet to inspect its construction, or size and come across important personal documents that you might not intend for anyone to see.
• Don't leave mail sitting out where a potential buyer can find it.
Many sellers leave piles of opened mail stacked on their kitchen counter. A potential buyer could find out how much you owe on your mortgage or how much money you have in the bank and other information you may not want them to know. These sellers must believe that buyers, and their agent, will not read their personal mail, even when that mail is taped to the front of the refrigerator door.
Remove Photos and Diplomas from your Walls Notwithstanding that all personal items should be removed before the home is shown in the first place, sometimes sellers leave diplomas on the wall. People may form biases and can carry a bias a little too far. As an example, the seller might be a lawyer, and there are buyers who might not feel comfortable buying a home from a lawyer. For whatever reason. Wedding photos may give away the seller's religion or the fact that it is a mixed race marriage, as will certain religious artifacts left in the home. Sometime buyers can be prejudiced. Don't give buyers a way to form any opinion about you at all. It serves no purpose to let buyers form ideas, opinions and prejudice about you from the type of music you like or the type of books that you read.
The Contents of your Closets
Many time sellers who are separating or getting divorced feel pressure to sell their home quickly, especially if the partner who remains in the home cannot afford to stay in it. But that is not information sellers will want to share with potential buyers. Yet they do so by making simple mistakes like these. They may as well toss their wallet out the car window going down the highway for just anyone to find. Don't leave any telltale clues around that could give away your motivation to sell. Before you put your Plano homes for sale on the market, get the home ready to show making it safe and secure by empting out your drawers, cabinets and closets and pack up all of your personal items away. If your house speaks to a buyer about you, it's probably saying the wrong thing. I have seen Dallas foreclosures properties for sale that had many embarrassing items in the property that had once belonged to the owner. So before your home shows as a DFW MLS Listing make sure your safety and privacy are protected.

Has The DFW Real Estate Market Returned To Normalcy?

As the DFW real estate market continues to recover, developments throughout the area point to new trends within the DFW Metroplex and throughout the nation. Specifically, the economic crisis of the great recession and all the developments related to the rise and fall of real estate prices in the last several years are now showing a return to normalcy. Meaning, the push by real estate investors to buy foreclosed homes and distressed properties which are resulting in purchases at the expected listing price, now has home owners in a holding pattern. This is not necessarily a bad thing for the market as a whole.

This market condition which unveils a more conservative buy and hold strategy among many investors, is good for just about everyone, Dallas Realtors have qualified buyers who want to own real estate and prices had a chance to stabilize. The market as a whole, the criteria we use measure real estate appreciation are reverting to more predictable standards. These events offer all DFW real estate agents a good example of how to respond to increased demand in the market.

To the extent that investors view the housing market as an inviting opportunity they believe that we are in a new era in the real estate industry, a more attractive environment, where investment speculation is much less common and the focus on growth is back. Realtors welcome this news because it gives them a strong argument with their clients about buying real estate, that a home is an investment, something that can appreciate, provide income (rental properties) and remain whether or not the economy is in expansion or contraction mode. Realtors should work more enthusiastically with their investors, their We Buy Houses clients, their assets, knowledge and analysis about long term investment performance for real estate within a certain areas and neighborhoods. Are these areas and neighborhoods the key to transforming a house from a commodity into a tangible source of investing success?

Real estate agents and investors can and should work together, so that the outcome is a positive one. Both parties can identify potential investment properties where, despite the aggressive competitive bidding by other investors, the price for a property and its relative value among similar houses in the same area can foster a sense of partnership. The one thing that the real estate market does not need is an agent responsible for distorting the values of property and created wild speculation. This, fueled with easy credit, and accelerated by inexperienced investors who buy with unrealistic expectations, these factors are a recipe for financial disaster. This highlights the importance for Realtors and seasoned investors to collaborate with each other and creating a climate of economic vitality and responsibility.

If all of these principles are followed then the great DFW Metroplex can go from a city with excess housing inventory and foreclosures to a place where the real estate market is strong and sales are brisk. Realtors in other cities across the Nation can replicate the success of the DFW real estate market, and bring all of its communities back to life. This period may in fact, become a new era, a golden age of sustained recovery, stability and ultimate success. This duty rests on the shoulders of real estate investors and Realtors to create a plan that distances its self away from speculation and towards stability. Both of these groups are already close to that point. They just need to continue working with each other, for their own mutual benefit and the good of the community in which they live and work.

Don't Lose Your Home to a Fire

Thousands of homeowners experience devastation due to fires every year according to the US Fire Administration, more than 3,500 Americans die and another 18,000 are injured in fires every year. Some of these fires originate in the home itself while others are in the form of wildfires, which run rampant when conditions are dry and windy. Many of these fires could have been avoided if the proper safeguards were in place. Let's take a look at some of the main causes of a fire in homes and what can be done to safeguard both your home and your family.

A surprise? The leading cause of fire related deaths is from smoking. Cigarette fires kill more than 1,000 Americans each year and injure another 4,000. Moreover, cigarettes, or more accurately smokers. start a quarter of all fires each year. USA Today has reported that "cigarette fires have been the top cause of U.S. fire fatalities for decades, killing tens of thousands of people in the past 30 years, according to the National Fire Protection Association (NFPA), a research group that provides data for state and federal fire codes."  These national averages apply to DFW homes and Plano homes as well.

Smoker; keep your cigarette butts in one spot and not littered them around your yard and your neighborhood.. Never throw them along roadways, or in dumpsters, trash cans or next to buildings. Another leading cause of fires is children playing with matches and lighters.  Make sure you have a serious talk with your children, no matter their age, about the dangers of fires. More than 100,000 fires are started by children each year and over 30% of those fires end up killing the same children that started them. It can take less than 30 seconds for a small flame to turn into a major fire. Make sure you carry the proper insurance in case your home is the victim of a fire. If not you may end up selling your home to one of those "We Buy Homes" companies.

Be responsible and create a no fire plan for your home.

1. Have smoke detectors on each and every level of your home
2. Never leave a fire, candle, cigarette or cigar unattended.
3. Make sure you have a fire extinguisher, as well as a garden hose at your home.
4. Never build fires or burn brush near your home or during dry and windy conditions
5. Remove dead leaves from gutters and your roof and around the base of your home.
6. If you live on top of a hill, beware that fires spread quickly as they spread uphill. Patios and stone walls can help deflect the flames.
7. Avoid the use of bark chips or mulch around your home, which are highly flammable.

FEMA gives homeowners tips that are valuable about creating a 30 foot safe zone around their DFW homes to help safeguard their property during wildfires. First, fire feeds on vegetation both live and dead. Keep your shrubs at a minimum, remove vines from the walls of your home, and consider pruning branches so that none are within 15 feet of the ground. Also, always keep your firewood stacked at least 100 feet from any building structure.

1. Use fire-resistant building materials when possible.
2. Cover your homes vents with wire mesh to keep embers from entering the home.
3. Prepare to store water and have an external water supply, such as a small pond, well, or pool.
4. Avoid flammable roofing materials and instead choose single ply membranes, slate, fiberglass shingles, metal, clay or concrete tile.

Sometimes there's no matter what you do there are times when nothing that can be done to prevent a fire.  A thoughtful and responsible homeowner takes all possible precautions to safeguard their home and loved ones in the event that a fire does occur.

&nbsp

DFW Home Marketing Bloopers

When real estate markets slow down, usually the inventory of DFW homes increases and the number of home buyers decrease. These market conditions make it more difficult to sell homes, yet some homes still continue to sell. Why do some homes sell and others seemingly sit on the market forever? The answer has little to do with the home itself, although many agents will claim such. More than likely the problem lies within poor marketing. Below are some mistakes I see sellers and their agents make time and time again.

Bad Marketing

Uploading Poor Quality Photographs Online

The old cliché is true and pictures speak volumes and are noticed before the written word. Since it's the first thing a potential buyer will see, why leave a bad first impression when it comes to selling Dallas homes or Plano Homes? The job of a photo is to entice the buyer to want to see more of the home in person. It should not give the buyer a reason to cross the home off her list. Don't publish photos like these:

• Uncropped photos
• Pictures too dark with blinds closed
• Photos turned sideways
• Photos zoomed in on one item, like the kitchen sink.
• Photos of cluttered rooms
• Not submitting enough photos or uploading only one photo of the front of the house
• High resolution photos without adjusting pixels for Internet use

Withholding Important Descriptive Comments

When there are tons of homes on the market, just giving out a property address while noting the numbers of bedrooms and baths is insufficient information for today's home buyer. It doesn't tell a buyer why she should schedule a time to see the home. Good marketing tells a buyer why this particular home is better than the dozens of other homes on the market. Sellers should focus on:

Restricting Access for Showings

If an agent can't easily show your home, he is going to show another listing instead. Don't give an agent a reason to pass up your home. Any of these can hamper showings:

• By appointment only
• No lockbox on the property
• Restricted hours to show
• 24-hour notice

How can you expect to sell the home if perspective buyers can't see it?

BAD MARKETING: Offering Less Commission Than Other Listings

It's not that agents are greedy creatures who show only high-fee listings--which is against the law, although some are highly motivated solely by income--but agents tend to view lower-commissioned listings as those in which the seller isn't very motivated to sell.

• If the seller isn't motivated, it could mean the seller isn't willing to negotiate on price.
• In slow moving markets, buyers expect to negotiate.
• Agents whose buyers want to negotiate will show only listings where negotiation is possible.

Not Offering Buyer Incentives

On some million dollar listings sellers offer a car as a home buyer incentive, but it doesn't have to be anything that expensive. An incentive doesn't even need to cost the seller if the home price is structured to account for the discount. Here are some typical incentives:

• How can a negative factor be addressed that will accentuate its positive attributes?
• What makes this home unique?
• What was the motivating factor that made the seller buy this home in the first place?

BAD MARKETING: Underestimating the Importance of Broker / Agent Previews

Just like buyers, agents don't have the time to look at every home on the market. So, what can you do to entice them to come see yours? Because agents are more likely to sell a house they have toured, sellers need to attract selling agents.

Not Having a Virtual Tour

Almost all buyers today begin their home searches online. There is no better way to initially view a home than in the comfort of one's own pajamas at home in front of the computer, looking at a 360-degree tour. Some buyers won't even consider a property listing if it doesn't include a virtual tour.

GOOD MARKETING

• Catered lunches. Go beyond the ordinary sandwiches and bottled water. Food motivates, and don't let anybody kid you about this. Be creative with culinary selections.
• Offer drawings for small gifts or gift certificates.
• Give online certificatesthat can be immediately e-mailed.

• Call first, lock box
• $$ credit toward the buyer's closing costs
• Home protection plan
• Pre-paid homeowner association fees for a year
• Buy-down mortgage interest rate
• Weekend getaway for two

• Sunday classifieds in daily newspaper
• Picture classifieds, if offered during the week
• Local weekly or bi-weekly newspaper

• High resolution photos that buyers can print themselves.
• Ability to download photos so buyers can e-mail the pictures to friends and family.