Appraisals Get New Look – Are You Prepared to Explain Them to Your Clients?

Starting September 1^st, appraisals began looking a lot different…with a lot more information, including “codes” that will be entered into a national appraisal databank called Uniform Appraisal Datasets.

 

One set of codes has to do with “quality ratings” of the home and I wanted to share them with you because your clients will be asking you what it all means.

 

• C-1 – The entire structure is new, never been occupied and has no physical depreciation

 

• C-2 – Existing home, no deferred maintenance and requires no repairs.  This rating is given if property is “almost” new or has been totally renovated.

 

• C-3 – Existing home, well maintained but evidence of normal wear and tear

 

• C-4 – Existing home, minor deferred maintenance and requires only minimal repairs

 

• C-5 – Existing home, major deferred maintenance and in need of significant repairs but the home is still livable as a residence

 

• C-6 – Existing home, severe defects that affect safety, soundness and livability.  If property receives this rating, not eligible for conventional loan.

 

If the property is rated C6, it will require evidence of repairs.  If repairs are made, the appraiser must rate the home C5 or lower prior to the loan being closed.

5 Negative Things That Agents Say to Clients

I recently read a blog regarding negative statements that we, as sales people, say all the time but don’t realize what a negative effect it has when talking with prospects and clients and what they might be thinking when you utter these words…

 

“I can honestly say OR If I’m being honest with you…”

This phrase implies that you have not been honest before, but this time you’re being honest.  Using these words do not build trust—so don’t EVER use this phrase, ever.

 

“What do we have to do to get you on the dotted line today?”

Shades of car salesmen type pressure tactics.  Your clients will hesitate, tell you they’ll need to think about it, and never speak to you again.  You’re better off asking if they have any additional questions or concerns before moving forward.

 

“I’ll try to find the answer”

Saying the word “try” does not build client confidence in you.  It’s better to say, I’ll find the answer, I will let you know by tomorrow, even if I have not yet found the answer to your questions.

 

“It’s not my fault”

Even if it isn’t your fault, you are the only person they hired to help them thru the maze of buying or selling real estate—and they are blaming you! It’s better to apologize and talk about ways to fix the problem.

 

“What you need to do is…”

The client is thinking, “Who are YOU telling me what I need to do?”  The better approach is to say, here are several options to consider, which one do you think will work for you?    

 

One more thing, pay attention to what people say to you that makes you crazy—because if it upsets you, saying something like this to your clients will turn them off, too.

When Your Clients Want to Buy Extra Land: Conventional Mortgage Rules

If you have a listing where your seller wants to sell adjoining parcels of land—and a buyer who wants to buy it—Fannie Mae may provide financing based upon the following: 

• Each parcel must be conveyed in its entirety
• Parcels must be adjoining one another
• Each parcel must be zoned residential
• Only one parcel may have a dwelling unit (limited nonresidential improvements such as a garage are acceptable)

• No excessive value given to the land
• Appraisal comps not required, but suggested
• The mortgage must be a valid first lien on each parcel

A lot is riding on the appraisal. While it might cost extra, we can order an appraisal both with and without additional parcels to determine value.  Call me if you have a listing with extra parcels of land for sale to determine if we can offer additional financing. 

Should You Save Your Money or Pay Off Your Bills

This is a debate that has been going on for a long time, but in a National Foundation of Credit Counseling survey, 89% of those polled said they are working on paying off their debt first.

However, while paying debt is a good thing, it comes at the expense of not having savings to dip into in case of an emergency.

The advice given by my financial gurus is to find out what interest rate you are paying on all of your debt, and work on paying off the one with the highest interest rate first.

So, let’s say that you have a credit card with an interest rate of 13%; start paying extra money to eliminate that debt first.  When that has been paid off, make extra payments on the next debt with the highest interest rate.

Not everyone agrees with the concept of paying off your debt first.  While the survey indicates that most people want to get rid of the debt, there is another school of thought that says that at least some of your money needs to go into savings too.

First, figure out how much money you spend every month for food, mortgage payments, utilities, clothing, etc., and make sure you have at least 6 months’ worth of savings in case of an emergency, job loss, or illness.  Take care of your basic needs first.  Don’t set up a college fund UNLESS you have the extra money to do so.  Student loan interest rates are so low these days, it’s better to let them take out a loan than have your savings account suffer.

Basically, it’s up to you.

If you lose sleep over the money you owe, start paying down that debt.

If your savings are low and you freak out because you don’t have enough in case of an emergency, then start stashing that cash.

How to Avoid Moving Company Scams

Here are some “red flags” from www.ProtectYourMove.gov when you need to hire a moving company.

Rogue movers typically work like this: Without ever visiting your home or seeing the goods you want moved, they give a low-ball estimate over the phone or Internet. Once your goods are on their truck, they demand more money before they’ll deliver or unload them. They hold your goods hostage and force you to pay more—sometimes much more than you thought you had agreed to—if you want your possessions back.

No inspection

• The mover doesn’t offer or agree to an on-site inspection of your household goods and gives an estimate over the phone or Internet—sight-unseen. These estimates often sound too good to be true. They usually are.Payment first
  • The moving company demands cash or a large deposit before the move.

  Your rights and responsibilities when you move

  • The mover doesn’t provide you with a copy of “Your Rights and Responsibilities When You Move,” a booklet movers are required by Federal regulations to supply to their customers in the planning stages of interstate moves.

  No local address, license or insurance

  • The company’s web site has no local address and no information about licensing or insurance.

  Mover claims

  • The mover claims all goods are covered by their insurance.

  No company name

  • When you call the mover, the telephone is answered with a generic “Movers” or “Moving Company,” rather than the company’s name.

  Office conditions

  • Offices and warehouse are in poor condition or nonexistent.

  Generic rental truck

  • On moving day, a rental truck arrives rather than a company-owned and -marked fleet truck.

When You Buy a Home – Who’s Your Friend?

One of the most misunderstood aspects of buying a home is “does the real estate agent REALLY represent you, the home buyer?”

Yes, you do have the right to ask an agent to solely represent you. Here are some FAQs as to what’s involved and why you should consider it when buying your next home, second home or investment property.

1. What does Buyer Representation mean?  The real estate agent represents your interest.  They are required to be loyal, accountable and not disclose any information about you that you don’t want the seller or the other real estate agent to know.

 

1. Should you call the agent who listed the house for sale?  You may, but they are representing the seller—not you—and their responsibility is to get the highest price and the most money for the seller.  You will also have to sign a piece of paper stating that you are aware that the real estate agent will be representing both of you, and will do their best to be fair and honest.

1. Will you get a better deal if you work with the listing agent?  Some people think since the real estate agent would be getting all the commission when working with both the buyer and the seller, that the listing agent will negotiate a better deal.  The bottom line is that if the seller doesn’t accept the offer, or if you, the buyer, won’t counter with another price, it’s out of the agent’s control and the sale does not happen.

1. Will they only show you listings that are in the MLS?  An agent who represents buyers not only can show you properties listed for sale through the Multiple Listing Service, they can also contact For Sale by Owners.  If there is a home you’d like to buy, but it’s not for sale, they can knock on the door for you and ask if they would consider selling it to you.

1. How much does it cost?  Over 99% of the time, the seller still pays the real estate commission.  There are extremely rare times where the seller may not agree to pay the commission, but you will know ahead of time if there are any issues.

1. Do you need to sign anything?  Yes, there is an agreement called the Exclusive Right to Represent the Buyer, and it outlines what my duties are and my responsibility to you.  It lets the seller and the real estate agents know that we have an exclusive relationship and if they tell me something about the property, or the seller, or any other information, I have the duty to tell you.  You will usually have to sign it for a period of time—but that too is negotiable between you and the agent.

If you are thinking of selling your home, contact me and I’ll recommend several great listing agents.  If you are thinking of buying a home, I also know of many great buyers’ agents that I can recommend to you. Talk with you soon! http://www.utahsmortgageguy.com

The Mortgage Acts & Practices Rules are in effect as of August 19, 2011

When you run an ad, or even mention mortgage terms, you must not only comply with Reg Z rules, you must comply with these, too.First of all, here are the types of advertising/marketing that are outlined in the Act.  The Fed’s call it “commercial communications” and it means…

• Any written or oral statement
• Illustrations such as charts and graphs
• English or any other language
• Labels
• Packages
• Package inserts
• Radio
• Television
• Cable TV
• Brochures
• Newspaper
• Magazines
• Pamphlets,
• Leaflets
• Circulars
• Mailers
• Book inserts
• Free standing inserts
• Letters
• Catalogue
• Billboards
• Posters
• Public transit cards
• Point of purchase displays
• Film
• Power point slides
• Audio transmitted over the telephone
• Telemarketing scripts
• On hold scripts
• Upsell scripts
• Training materials provided to telemarketing firms
• Infomercials
• Internet
• Cellular phones/networks
• Webpages
• Email
• Direct mail
• In-person sales presentation

…anything else considered “commercial communication.

If you have mortgage questions, I am here to help. Simply contact me and I will be happy to get back to you with your mortgage questions and needs: http://www.utahsmortgageguy.com

Protect Your Clients From the Latest Loan Modification Scams!

You are the trusted real estate advisor so it’s likely that past clients will contact you when they are struggling with their mortgage payment or have received information in the mail on loan modification or avoiding foreclosure.  Here’s some information on the latest scams out there:

Phony Counselors – Scam artists present themselves as “counselors” who will negotiate a deal with the lender IF the borrower pays a fee first.  Some scammers even require that all the mortgage payments be made to them while they negotiate on the borrower’s behalf.

Fake “Government “ Modifications – Scammers will claim to be approved or affiliated with the government.  Their documents and website will use terms like “federal” and “TARP”.  They will claim a fee is necessary to use the modification program.  Borrowers should call their lenders directly to find out if they qualify for a government loan modification.

Bait and Switch – The scam artist tells borrowers that by signing loan modification documents the existing mortgage will become current.  What the borrower is really signing surrenders title to the scammer in exchange for a “rescue loan”.

Rent-to-Own or Leaseback Schemes  – Scammers tell borrowers that if they will surrender title to their home that they can stay there as a renter, and then buy the home back in a few years.  The scammer then raises the rent over time to the point they can’t pay.  The scammer evicts the borrower and sells the home.  Another variation is when the scammer has the borrower sign over title and move out.  They promise to find a buyer for the home and share part of the profit once the home is sold.  What really happens is that the scammer rents out the home, never making the mortgage payments and lets the lender eventually foreclose, while they walk away with all the rent money.

Bankruptcy to Avoid Foreclosure – The scammer promises to negotiate a refinance with the lender for a fee.  He pockets the fee and files a bankruptcy in the name of the borrower without the borrower’s knowledge to temporarily stop the foreclosure process.   The borrower thinks things are going well because the collection calls stop.

If you have mortgage questions and want to discuss them with a professional, contact me today so I can assist you with your mortgage questions and need: http://www.utahsmortgageguy.com

It’s the Little Things…

Often times it is the little things that can trip a deal up from time to time.  Sometimes understanding how these little things can impact a deal up front can either make a deal or break it.  Here are some recent updates from Freddie or Fannie that can impact your clients.

Deferred Student Loans – Fannie Mae will now allow lenders to use just 2% of the outstanding balance as the payment for qualifying the borrower.  In many cases, borrowers do not know what the payment will be or have difficulty obtaining the information; this should help to expedite the loan process.  On the flip side, 2% could be more than the actual payment.  In that case, it may benefit the client to document what the deferred student loan payment will be when repayment starts.

Non Applicant Debts – Fannie Mae will count this credit history and debt against the borrower unless documentation can be provided they are not responsible for the account.  This is one more reason that a pre-approval is essential to a successful transaction.

Using Assets to Qualify – Freddie Mac will now allow retirees to count a portion of the retirement assets as income to qualify for a mortgage.  In addition, clients who have received lump sum settlements from the sale of a business can use those assets as well provided certain conditions are met.  This is a small but important change that may benefit specific borrowers.

Repairs Not Completed Prior to Close – Freddie Mac will now allow borrowers to close with certain items on the home purchase being incomplete.  The repairs cannot affect safety, soundness or habitability.  The repairs cannot exceed 10% of the as completed value of the property either.  Call me for all of the specifics as this is may give some of your buyers the flexibility they need.

Manufactured Homes That Have Been Moved – Freddie Mac will no longer purchase loans when a manufactured home has been moved.  If the home was delivered to the site brand new, it remains eligible.  If the home was previously in a different location and was moved, it is no longer eligible.

Homes That Were Built Around a Manufactured Home – Freddie Mac also requires that homes that were built around an existing manufactured home structure meet all of the guidelines for a manufactured home, even if the appraiser is considering the home essentially a stick built home.

I don’t expect you to be the expert on all of these items.  You can count on us to keep up to date with all of the latest rules to insure you and your clients don’t get tripped up as part of the mortgage process.  Don’t hesitate to call me for details on how I can best assist you.

Market Condition Appraisals

What the New Market Condition Appraisal Is All About

 

It’s now required on every appraisal!

 

Conventional, FHA or VA appraisal…they all require this new form.

So what is it?

 

It’s a comprehensive worksheet created by Fannie Mae that supports an appraiser’s neighborhood market trend determination of Increasing, Stable or Declining.

PLUS

FHA has additional comparable requirements for a property in a

declining market:

• Two comparable sales closed within 90 days prior to the                                                                    effective date of the appraisal (or a detailed explanation if                                                                                   not possible) AND
• A minimum of 2 active listings or pending sales in addition                                                                           to the 3 sold comps normally required.

What does it all mean to you?

 

• Your accurate and timely MLS data input is more important than ever.

• Return appraiser calls promptly to assist them with verification.

• It’s a tough market for everyone – even appraisers are learning how to complete the new forms.