Michael Walters' Blog | Realty World – Innovative Realty Service

Imagine shopping around, from dealer to dealer, for a second car and paying $6,450 for it.  Then, the following week you read on-line that there is a program for a person in your situation where such a car is FREE!  You would not have to pay even $1.00 for that car.  What would you do?  Do you really think that auto dealer is going to refund your money?  Do you think any of them will fess up to not knowing about such a program? 

This is what I deal with often – not in cars but Veteran’s Benefits.  Many so-called VA Lenders fail to ask one simple question of every Veteran. “Do you receive any disability pay from the VA?”  The failure to ask that question costs disabled Vets thousands of dollars unnecessarily.  

Let’s say a Vet buys a $300,000 home and uses their Eligibility for a no-down VA.  If that Vet  receives disability pay, he/she does NOT have to pay the “VA Funding Fee”.  A first time user of their VA Home Loan benefit has a Funding Fee of 2.15% of the VA Loan amount.  So, our $300,000 sales price and VA Loan amount would have a $6,450 Funding Fee as part of the Veteran’s costs.  HOWEVER, if the Lender asks that question and does the proper paperwork for the disabled Vet, the Veteran’s Administration will waive that $6,450 VA Funding Fee.  Good news for the 267,318 disabled CA vets (3,268,045 nationally).

“It’s who you know that makes all the difference in the world”.  That is true. But even if your Uncle Bob is an auto dealer, if he doesn’t know that your situation has benefits we have to tweak the slogan: “It’s not just who you know but what they know that counts”.  

Do you know of any such situations?  I’d love to hear from you.

‘Houston…the Eagle has landed’.  I enjoyed recently the celebration of the Lunar landing.  Let’s change the wording to fit our times: “Buyers, we’ve landed, and are now lifting off”. 

Home values in San Jose, Morgan Hill, Gilroy, Hollister and San Juan Bautista “have landed” at the bottom of their value slide and are beginning to “lift off” that bottom.  We are not going to see these prices again for a very, very long time, if ever again. 

Here’s the affect of waiting to buy a home: A home listed today for $350,000 and goes up 5.0% in value will then be worth $367,500.  A buyer who waited and then buys this home will need $985 MORE CASH and $268/mth MORE INCOME to qualify for this same home. 

If the  interest rate is at 6.0% (vs. the 5.0% used above) when the buyer decides to purchase this increased-value-home, their income will need to be $843/mth. HIGHER to qualify!

Some prospective home buyers may be calling out: “Houston, we’ve got a problem“.  The erosion of their purchasing power may make them permanent renters. 

My crystal ball recommends that those who want to buy a home climb on board NOW while they can.  What does yours forcast?

In a Hollister listing interview the inevitable question came up and I gave the answer I have heard myself offer more and more lately. 

     The question: “How much of a commission do you charge”? 

     The answer: “If your competing homes for sale are offering 2.5 or 3.0% to the selling office you should offer at least 3.0%.  The first sale you need to make is the Selling Agent’s interest in showing your home.  You want to do everything possible to encourage those agents to enthusiastically promote your home.  If you instruct me to collect a lower commission, half of which goes to the Selling Agent, they will see that lower commission when searching for homes to show their buyers.  We want to ENCOURAGE them to show your home.  A lower commission being offered by you while competing homes are offering more will be discouraging to them.

     “The home will sell itself – once the agent and their prospective buyers actually tour your home.  We just need to do all we can to make your home appealing to the prospective buyers AND their agent”.

This answer seems to resonate as a new thought with most sellers and typically the issue is settled.  Now!  If we could just find a buyer for this nice, upper-end home!  Anyone want a producing vineyard and nice home in the Spring Grove Area of Hollister?

When Ronald Reagan became president, Disco was hot, and home loan rates reached 19%!  Out of necessity agents became creative with financing for the few real estate sales being done.  One such tool was a “Wrap Around” or “Wrap”.  More home  sales closed because of  the development of “creative financing”; which typically turned out to be a Wrap.

Today, we again find ourselves in need of creative financing.  Up-scale homes, requiring ’jumbo loans’ are not experiencing the same resurgence as the lower cost, “conforming” group of homes.  In fact, homes with prices over $700,000 are selling at a much slower pace, if they sell at all.  Their prices are still falling while lower priced, ‘tract’ homes are rebounding.   It’s all about the financing or, lack of it.

Lenders are requiring at least 20% down from the buyer on prices above $463,300.  With the ‘Jumbo’ limit of $729,750 and minimum of 20% down many buyers simply don’t have enough cash.  Previously helpful, second loans offered by sellers must be over and above the minimum 20% cash from the buyer. ”Willing sellers and qualified buyers” (without 20%+ cash) for jumbo sales are being held at bay do to a significantly tightened lending atmosphere.

Even if an upper-end home finds a buyer with a large down payment good luck in the home appraising.  Lender’s are now being required to accept only those appraisals with 2 comparable sales within the last 90 days.  So, with fewer comparable sales, and dropping prices many higher priced home sales don’t close due to very low appraised values.

However, the “Wrap” is making a come back (more properly called an “All Inclusive Deed of Trust” or A.I.D.T.).  A willing and capable buyer can pay the seller’s price and avoid the lender limits and appraisal constrictions.  Additionally, since there are no lender fees the money normally spent on closing costs can be added to the down payment.

In the last 30 days I proposed 4 AIDTs for stagnant Hollister and San Juan Bautista up-scale homes.  Morgan Hill and Gilroy ‘Jumbo’ homes could also benefit form an AIDT sale.

When one of these AIDT sales records there will be a new comparable property appraisers can use to justify the higher prices nice homes should bring.  THEN, we’ll begin to see the ‘Jumbo’ home sales moving toward their earlier values.  I love problem solving!