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Which offer should a San Diego home seller accept during the COVID shutdown crisis?

Q- Which offer to buy your home should you accept?

A- The highest net offer which is most likely to close.

 

That seems obvious, doesn't it, Let's consider the second part of the answer though. An old friend and Phoenix real estate broker Greg Swann, was promoting this new listing on his Facebook and asked me this question:

 

Q- Can you reflect on the current state of borrowers? I've never loved FHA-ish loans, especially not in cash-poor offers. Obviously, everyone loves cash, and 80/20 conventional is hard to turn down. Are government loans still doable? If so, are they more or less risky to close than they were two months ago?

 

My answer is:

 

Great questions. Government loans are fine and, based upon whom the buyers may be, might be preferable. Here is the biggest concern from a lender/servicer's point of view; will the new buyers start deferring mortgage payments under the blanket of COVID?

 

Lenders are going to verify employment before the loan is approved, right before the loan docs are drawn, and right before they fund the loan-- yes, three times.

 

How might a seller mitigate that risk? Consider the buyers' jobs as well as their qualification standards. "Essential" workers are good buyers but government-funded paychecks are the best buyers.

 

If presented with a VA offer, from a Staff Sergeant at MCAS Miramar, take it. If presented with a VA offer, from a Navy veteran working for a start up, scrutinize it.

 

If presented an FHA offer from a Law Enforcement Officer, take it. If presented an FHA offer from a security officer for an office building, scrutinize it.

 

If presented a 40% down conventional offer from a business owner, scrutinize it. If presented a 20% down conventional offer from a public school teacher, take it.

 

The old saw "money cures all problems" isnt applicable anymore if there is a loan involved.

Each acceptance should have an addendum and/or counter which states that the buyers lock their interest rate within 24 hours and order the appraisal within 48 hours of acceptance.

 

Unless you have a cash offer, there is ALWAYS going to some risk that the loan is declined. Most lenders are looking for a 680 minimum credit score for conventional loans and a 640 minimum credit score for VA/FHA loans. Downpayment matters only inasmuch it can mitigate a low appraisal. Ability to repay a loan, especially in a time when forebearances are handed out without much scrutiny, has underwrters worried about the continuity of the income and employment.

 

It's a whole new world in mortgage lending...AGAIN. As always, Debra and I can help you

 

Call or text Brian at 858-699-4590. Call or text Debra at 858-228-0617

San Diego REALTORS: Please pick up your phone !

I hate being stuck at home during this COVID crisis. I hate it but I see an incredible opportunity for me and for you, the professional REALTOR.

 

My friend Leigh Brown is a real estate broker/owner in North Carolina-- I have known her for close to 14 years now. Leigh was interviewed by Housing Wire about what she is doing during the COVID crisis. While you would benefit by reading the full interview, please look at this:

 

The other thing that I’m doing to encourage my team is I’m just reminding them who we have to call and that we all have to be making phone calls. It’s not just the sales staff. It’s the admin team, too, and there’s different things that they can say, but they can still be touching their neighbors and checking on their neighbors because a lot of what we’re doing right now, of course, has zero to do with sellers and buyers, and everything to do with neighbors and humans. How can we help? Who needs help? What could we be doing? And that’s where we’re finding our positivity, is finding things you can take action on.

 

Russell Shaw, one of Phoenix's top real estate brokers has always said that lead generation is a REALTOR's most important job .

 

Your most important job...

 

Now is not the time to cold call for listings nor is it the time to push showings on potential buyers . You have probably heard the old saw, " People don't care how much you know until they know how much you care ".

 

Show everyone you know that you care about them during this crisis; pick up the phone and call them.

 

By the way, if you see my number come through on your caller ID, please pick up the phone and talk to me. I care about you and I care about your customers. Debra and I are here to help.

Realtors losing listings to iBuyers

Guess what?  Zillow is entering the San Diego residential real estate market and Realtors should take it seriously:

Zillow Offers is continuing its expansion, announcing Monday it will be buying and selling homes in San Diego.  Through its iBuying service, Zillow seeks to provide a solution by enabling sellers to forget about the hassle of cleaning their home, forgoing home repairs, open houses, and the like. They can even choose the date they want to sell and move by. (For more on what, exactly, is an iBuyer, read this.)

I know.  I know.  Zillow is no competition for a professional, local expert...or is it?  What San Diego Realtors often miss is that, while iBuyers may "low-ball" sellers, looking for homes with cosmetic repairs needed, the simple fact is that the iBuyers end up negotiating with sellers long before an agent has a chance to prsent his/her services.  Here is my friend, Phoenix real estate broker Greg Swann:

As for iBuyers being nothing to worry about: Ahem.

If they’re in your town, they’re in your potential-seller’s head – and maybe in his email in-box, too. They’re in everyone’s net.world, on billboards, radio, TV. If your prospect hasn’t solicited an offer yet, you need to get out in front of that eventuality.

The iBuyers are the elephant in the room at your listing appointment. If the seller doesn’t bring them up, you had better. It could be that iBuyer offers are already in play, so you may already be smoked. Or the seller may want your help going that way, in which case you just made the easiest money in your real estate career – although the party to whom you owe fiduciary duty may have just pissed away half or more of his accrued equity in the home. Or, god help you, he may want to be sold on the value of listing traditionally.

But to go in to a listing appointment assuming the listing is your to lose is a mistake, I think. In the iBuyer world, the listing is theirs to lose, yours to win. You got the appointment because the seller wants your advice, not because he wants your sign in his yard for six months.

Greg has done extensive research on just how poorly iBuyers perform and you should follow what he's doing.  More importantly, read the emboldened statement Greg made. I'll parse it for you here:

You got the appointment because the seller wants your advice, not because he wants your sign in his yard for six months

Realtors need a strategy to position themselves as a trusted advisor so that their clients contact them before the iBuyers do.  Gary Keller said, some 15 years ago, that Realtors are either going to be fiduciaries enabled by technology or functionaries working for technology.  Thus, San Diego Realtors are going to have to examine the way they charge clients for the knowledge, advice, and expertise.  For too long, Realtors have relied on the commission model ad the only way to charge for their services.  Developing a "menu of services", which includes pre-MLS solicitation of iBuyer offers seems like the only way to get ahead of the curve.

Mexican Mortgages For American Citizens

In past years, we were able to fund mortgages for American citizens purchasing vacation property in Mexico.  The two financial conduits which provided the source of that capital were GMAC-RFC and GE Capital.  Both sources stopped funding those loans in 2006-7 and our offerings, for Americans purchasing vacation property in Mexico, have been discontinued indefinitely.

GE Capital just sold its Mexican subsidiary:

Banco Santander SA said its Mexican unit agreed to pay 2 billion pesos ($162 million) for the mortgage operations of General Electric Co. to become that country’s second-largest home lender. Santander will gain a portfolio of about 24 billion pesos in the deal, which will be completed in the first half of 2011, the Madrid-based bank said today in a statement to Mexico’s stock exchange. Santander agreed to pay undisclosed financing costs, according to the statement.

I am unaware of how GMAC-RFC is handling its portfolio but it is my understanding that they have discontinued the Mexican mortgage product for Americans.  Loans were also offered through New South Federal until its seizure by the FDIC, one year ago.

 

 

Mortgage Loans to IRAs Available For Real Estate Investors

Investors with money stuck in an IRA,or old employer's 401-k account, have traditionally shunned real estate as an investment.  Custodial fees were high and there was no way to leverage the property through an IRA.  There may be a solution.

Consider a non-recourse, loan to the IRA.  Real estate investors can get a commercial loan, directly to their Individual Retirement Account, through our IRA mortgage program.  A brief rundown:

• the mortgage is non-recourse
• down payment of 35% required (50% down payment in certain states)
• ARM products and fixed rate loans available
• rates are typically higher than conforming mortgage rates
• 25 year amortization only

Not all IRA custodians will be able to administer real property holdings.  A short list of custodians for real estate investments includes:

Lincoln Trust Company 
Trust Administration Services Corporation
PENSCO Trust Company
Sterling Trust Company
Equity Trust Company
Sunwest Trust Company
Self-Directed IRA Services, Inc.
Provident Group

Think The Mortgage Market Is Upside-Down?

Reuters News reports about the opening of an upside-down house, in Germany:

Upon entering the construction, visitors have reported feeling dizzy and disorientated. Although the house is safe, Mikiciuk said nobody would inhabit it permanently and it was meant purely as an exhibit.

If you're searching for a home loan, and find that the mortgage market completely opposite of what you experienced in 2005, maybe you won't feel so um...disoriented now. 

Photo Credit: AP Photo:        An upside down house is seen in Trassenheide, Germany, Thursday, Sept. 4, 2008.

European Investors: Real Estate In America Looks CHEAP

European investors have a double bonus with an investment in California real estate as the dollar sinks to an all-time low against the Euro.  I'm going to explain how a weakened US Dollar can benefit a foreign investor should they buy real estate in California.

Five years ago, $100,000 was equal to 100,000 Euro (the currency in Europe).  Today, that $100,000 is only worth 72,000 Euros.  A foreign investor can withdraw 72,000 Euros and convert it to $100,000 to use for a down payment on a Downtown Long Beach condomium.  That  property may have cost as much as $360,000 two years ago but is selling today for $300,000.

READ THE REST AT LONG BEACH REAL ESTATE HOME

European investors have a double bonus with an investment in California real estate as the dollar sinks to an all-time low against the Euro.  I'm going to explain how a weakened US Dollar can benefit a foreign investor should they buy real estate in California.

Five years ago, $100,000 was equal to 100,000 Euro (the currency in Europe).  Today, that $100,000 is only worth 72,000 Euros.  A foreign investor can withdraw 72,000 Euros and convert it to $100,000 to use for a down payment on a Downtown Long Beach condomium.  That  property may have cost as much as $360,000 two years ago but is selling today for $300,000.

READ THE REST AT LONG BEACH REAL ESTATE HOME

Mexico Lending: Hard money for Mexico

This hard money lender describes what they do as "situational lending" which is a true representation of what a traditional hard money lender does. 

Unique niches Kennedy Funding states that they will fund are raw land and properties in Mexico.  They are aggressive with large developments and commercial financing.  I have been contacted by them 2-3 times and have not funded a loan with them so I am unable to comment on the efficacy.

I posted this because many mortgage brokers on Active Rain look for vacant land loans.  I hope this helps.  Contact me at 858-699-4590 if you need financing for a Mexico property.

 

 

      

 

Red Sea Real Estate

Have you ever considered a home on the Red Sea?  Do you even know where the Red Sea is?

Sharm El Sheikh is located at the tip of the Sinai Peninsula, in Egypt,  where the Gulf of Suez and Gulf of Aqaba meet.  It is oft called the "City of Peace" because it was the site for many peace summits.  It was formerly a commercial fishing port but has morphed into the "green capital' of the Middle East.  The Red Sea has militant environmental laws and prohibits the taking of marine wildlife.

All is not peachy there.  In 2005, 64 people were killed by a suicide bomber in the "Old Market" section of the city.   Israel has issued a terrorism warning because of the bombings.Surprisingly, tourism has not dropped.  Sharm El Sheikh is considered the yachting and diving capital of the Red Sea.

Less than 3 hours away is Mount Sinai, the location where Moses was given the Ten Commandments.  I have to think that's a must see if you consider property there.  I mean, why not visit the original source for the legal system while you're there?

Red Sea Real Estate has a site that aggregates the property listings and new developments for you.  They claim that their real estate network is comprised of agents who are Graduates of the Realtor Institute (GRI), a prestigious designation in real estate brokerage.  They maintain a weblog highlighting these offerings and have started to become frequent commenters in the real estate weblog world.  Their office is on Neama Bay, near the KFC, McDonald's, Pizza Hut, and Hard Rock Cafe.

This article was cross-posted on The Active Rain Real Estate Network