Orange Ca, First Time Home Buyer Tips- Part 4: All About Sellers

Orange Ca, First Time Home Buyer Tips- Part 4: All About Sellers

So you are a First Time Home Buyer looking to buy a home In Orange California. You are a unique individual and your search will vary in most respects from others who are looking to buy. There is always one constant though: you will be buying your home from a seller. Although all sellers vary just like buyers vary, there are 4 main types of seller. Knowing the difference between these sellers can help make your search more productive.

First Time Home Buyer Tips- Seller #1- The Short Sale: A seller who has listed their home as a short sale is usually a seller who does not necessarily want to sell but they have no other choice. They have run into hard times. Perhaps there was a divorce, a job loss, or family illness. Whatever their hardship may be, they can no longer afford their mortgage. On top of this, they are underwater with their mortgage/s. This means they owe more on their home than it is worth. Here are some First Time Home Buyer Tips you should know when working with a short sale.

First Time Home Buyer Tip 1: Patience is a virtue. Because the homeowner's lender/s must approve the sale, you will have to be patient and wait for your home during the process. This process can take anywhere from 1-5 months depending on the lender. As a rule of thumb smaller lenders such as Wachovia or SPS are usually quickest at approving the sale. Bigger lenders such as Bank Of America and Indymac usually take the longest. If the home owner has more than one lender, this can also complicate things and cause delays.

First Time Home Buyer Tip 2: Don't let short sales scare you off if you have the time. Most of the time short sales are the best deals. This is not to say that you are going to get the house at a deep discount, but a lot of lenders will usually approve the sale as long as the offer is within 10 % of the value of the home. On top of this, because of the delays, short sales attract less buyers than other types of sales so you will be less likely to get caught up in bidding wars against other buyers.

First Time Home Buyer Tip3: If you are going to make an offer on a short sale, make sure that both agents know what they are doing. Not every Realtor is educated enough to represent a seller or buyer in a short sale transaction. The seller's agent needs to know how to qualify the seller as not every seller will qualify for a short sale. They also must negotiate with the seller's lender to get a good result. Your agent needs to understand short sales so they can ask the listing agent the right questions so she can ensure you are not wasting time on an unqualified short sale.

First Time Home Buyer Tips- Seller #2- The Bank Owned or REO: A bank owned home is another form of distressed sale. This home gets put on the market after a home goes to foreclosure and it is now owned by a bank. Because homeowners who are losing their home often begin to neglect the home, these homes often need some work sometimes just cosmetic and other times they are complete fiver uppers. Here are some First Time Home Buyer Tips to keep in mind when looking at bank owned homes.

First Time Home Buyer Tip 4: Bank owned are very popular. Because every buyer wants a home at a great price, REO homes often gets several if not dozens of offers within a few days. The nicest and best price homes usually get the most offers. Because of bidding wars between buyers, many REO homes end up selling for thousands more than the list price.

First Time Home Buyer Tip5: Bank Owned Homes are usually sold "as is." What you see is what you get. Bank owned also come without seller disclosures which means you, the buyer, will not be given a history of the home and its defects. Remember, the seller, the bank, has never lived in the home so they cannot properly disclose much information on the home. Once you get your offer accepted, a thorough property inspection by a licensed inspector is essential.

First Time Home Buyer Tip 6: You might have to put in a few offers before getting one excepted. Because REO homes get so much attention, you may have to put in some offers before you become a home owner. Be patient and make sure to make your offers according to the most you would be willing to pay for that home in order to have a better chance. Banks are looking for the best offers according to price and term. They favor buyers with the most generous offers, largest down payments, and fastest closes.

First Time Home Buyer Tip7; You will likely have to sign a bank addendum to buy a REO home. When your offer gets chosen, the listing agent will likely provide your agent with a bank addendum for you to agree to. Until you and the bank have agreed to this addendum, the bank usually reserves the right to accept other offers. Make sure you go over the addendum carefully with your agent.

First Time Home Bueyr Tip8: Not all REO homes will qualify for financing. If there are broken windows , a drained pool, or if the home is not in livable condition, than the home might not qualify for financing especially FHA financing. Since REOs are usually sold "as is" you may have to fix these items before you can close your loan.

First Time Home Buyer Tips- Seller #3- The Corporate Owned or Flip Home:These homes usually start off as fixer upper bank owned or short sale homes. These homes are bought by investors or investment groups who then come in and fix up the home to resell. These homes often have granite counter tops, new flooring, and recessed lighting. They are made to be in turn key condition so that you, the buyer, can move in without having to do any work.

First Time Home Buyer Tip8: Your agent should check to make sure the home has value. Lately a big problem has been real estate appraisals. If the home does not appraise for the amount you are buying it for, than your lender will not allow you to buy the home unless you come up with the difference in cash. Because the seller's intention is to profit, there are times that these homes are overpriced. Since these homes are usually the nicest, there is often competition amongst buyers as well which can cause overbidding. If your agent does her homework when making an offer, you can avoid appraisal problems down the road.

First Time Home Buyer Tip 9: FHA financing may not be available. If you are using FHA financing, these flip homes may not qualify due to the FHA flip rule. The seller must own the home for 90 days before FHA will allow financing. Many corporate owners specify in the MLS that they do not accept FHA for this reason. Your agent will be able to advice you on the possibilities of FHA financing for a home.

First Time Home Buyer Tips- Seller #4- The Equity Seller: This is a good old fashion sale. There are no lenders to negotiate with or REO addendum. If you make an offer on this type of home, you and your agent will be working directly with the sellers agent and the home owner. Sometimes repairs and termite work can even be negotiated.

First Time Home Buyer Tip 10: Because there is less red tape in these kinds of sale, they often draw quite a crowd of buyers especially if the home is priced aggressively. If you spot an equity sale that you would like to see, make sure to make an appointment to see it right away before it is sold to someone else.

First Time Home Buyer Tip 11: Beware an equity sale may be a short sale in disguise. Some homeowners are unrealistic and price their homes accordingly. If their agent does not ground them in reality than this "easy" sale can become quite complicated. Remember, the house must appraise for the price you are offering so make sure your agent looks into the houses value and make your offer accordingly.

As I set out to write this post, I didn't realize how long it would become. This does wrap it up for my First Time Home Buyer Tips series. I know buying a home can be overwhelming, but by selecting a good Realtor who specializes in working with First Time Home Buyers, you can rest assured that your agent will help guide you through the process. As you can probably see, there are many things to keep in mind when buying a home, but it is also a great time to buy. Prices are at a level we have not seen for years and rates are near historical lows. If you are a First Time Home Buyer who is looking to buy in Orange or its surrounding areas, please give me a call. I would be honored to help you with any questions you may have.

Click here to Read First Time Home Buyer Tips- Part 3: Buyer Do and Don't