Pat's Real Estate Blog

About a year ago I began working with a single young mother of three boys to help her find a home.  Her credit was not horrible, but she had no money to put down and very low income.  I could go on and on about this person telling you about her devotion to her children and church and how she attends school in the evenings in addition to working to try to make a better life for her and her family.  However, the point of this post is to make sure all of you out there don't miss out on an opportunity to truly help someone in need.

Cindy (ficticious name) and I looked at homes on a weekly basis for months.  It is not easy to find a decent house and keep the payment between $600 and $700 a month---even in one of the most affordable markets in the country.  We looked at all kinds of run down properties and homes with special problems such as being located in a flood plain or manufactured homes made to look like stick built. Keep in mind that Cindy had no extra money and needed to find something that would be habitable from day one.  No extra funds for the roof, or carpet, or appliances.

I was contacted by the local branch of Habitat for Humanity to help them locate lots on which to build their homes.  Up to that point, I really didn't know much about this organization other than some famous people were picking up hammers and helping to build some of these homes.  I learned that they could put someone in a home with nothing down and their payments could be as low as $400 per month--taxes and insurance included!  I encouraged Cindy to contact them to see if she would be eligible for one of their homes.

She called me just a few minutes ago to tell me that she had gotten through their process and had been chosen for one of the homes to be built in 2009!  I got chills and a lump in my throat all at the same time.  Cindy will be required to help build her house and she has also volunteered to help work on homes for others as time allows.

The KW office I am affiliated with just announced this past week that we have volunteered to help fund and build a Habitat home in the fall.  We were each asked to donate $20---about the cost of a pizza, and a few hours one day in the fall.

I urge each of you to keep this possibility in mind for buyers who contact you and who seem hopeless. Don't turn people away until you have given them this option.  I also urge you to check out the possibility of sponsoring a Habitat for Humanity Home.  As we all know, what goes around comes around and we need to take care of each other!

Indianapolis was recently named as the 2nd most affordable city in the United States. Understandably, this has attracted the attention of many investors.  In spite of the fact that most 'investors' who contact us are just everyday folks thinking they may have found a new way to get rich quick, we (me and my team members) are polite and try to give them the information they seek.  Very few of these people wind up using our services to purchase property.

The latest contact we had was a woman who admits to being a novice.  She has 'mentors' giving her advice and is more willing to listen to these mentors than the advice of seasoned REALTORS who do business in her area of interest.  She only wants to consider bank owned and foreclosed properties.  Today she gave us a list of ten requirements that the bank would have to agree to before she would bless them with the purchase of one of their homes.  She actually thinks the bank is dying for her offer and will bow to her demands.

Among her demands---1)  She wants the offer to be contingent upon approval from her partners.  This is after bank acceptance, then she wants to go to her partners to see what they say.

2)  She wants the bank to agree to let her sell the home to another party before she closes on it herself.

3)  She wants 72 hours to deliver the earnest money and she wants to write a personal check.

4)  She wants to choose the title company.

5)  She wants the home taken off the market at acceptance.

6)  She wants ten days to walk away from the deal if she is not satisfied with the inspection. 

The other items are already written into the Indiana State Purchase Agreement, but she wants us to write them in again.

We have told her that banks play by nobody's rules and that she can ask for anything, but they have their guidelines and they are carved in stone.  She said it sounds as if we don't want to work with her..... 

I always tell new agents and even my clients that I learn at least one new thing from every transaction.  With that said, after every closing, I should always have something new to share with the ActiveRain community.

After one of my closings last week I learned that home warranty coverage does not always begin on closing day even though the policy states that it does.  My buyer had plumbing issues on move-in day.  I was very proud that she remembered what I told her and called the warranty hot-line before the plumber.  The warranty company promply told her that since it was after hours on Friday she would have to wait until Monday when they could contact the title company to verify that the check covering the warranty had been mailed out.

Needless to say I was on the phone immediately and was given the same hogwash. I then called the sales rep and was able to get this resolved.  However, my client's sense of security in having that warranty has been severly shaken. This was a first for me.  Not everyone will have issues move-in day, but now I know if they do, we will have to call the sales rep directly.

My webmaster has been after me for a year to post on ActiveRain, but I thought I was too busy.  I now understand the importance of this wonderful network.  How interesting that some of the other networks I have been participating in do not bring the same value and potential for business as ActiveRain.  Many of the top posters on ActiveRain used to participate on these other networks.  Suddenly, strangely they disappeared!  I honestly thought perhaps they had met with some unfortunate event---even death came to mind.  I am now finding those smart people on ActiveRain.

I hope to become a very active member----and I hope to balance business with my participation.  This could be addictive!!

Guess I just want to cry on someone's shoulder.....I fully understand that a realtor should always ask the question, 'Are you working with a realtor?' before allowing a buyer in their car.  However, last week, 'Pat' called me.  (Wow!  What a coincidence, she even has the same name as me!  Bet we hit it off right from the start!)  She simply stated that she was now ready to look at a few houses.  She obviously thought I knew who she was so I was not going to say anything different.  Normally I would have notes or would have set this person up on an automated search for homes, or something to remind me of who they were or how we made contact.  I could find nothing.  I chalked it up to the age thing finally getting me.  My mind must really be going.

So Sunday we met up and headed out to look at some homes.  Pat turned out to be a very nice person and we did hit it off immediately.  Still there was nothing in her appearance or our conversation that jarred my memory of how this person knew me.  About the 3rd house, she mentioned her home in another city that was currently on the market.  I thought, okay, she listed with a local realtor to sell her home, but wants to work with me in this area because I would be more knowledgeable.  About the fourth house she said, "You guys have my home listed."  I took that to mean the real estate company I affiliate with had her home listed.  Then she went on to say, "Derrick.  Derrick has my home listed."  I then had to ask if it was one of the two 'Derricks' I know.  She answered that it was.

Derrick and I both cover the same areas. Why had she not called him to look at homes?  Why had she called me?  I did not say more about it at the risk of making Pat feel bad, but showed her the remaining homes on our schedule. I felt as if I was in some sort of a daze the rest of the afternoon. She found two homes that were possibilities for when the contingency on the offer on her existing home was removed.

How did this happen?  What just happend?  After sleeping on it, I decided to call Pat the next morning.  I asked her why it was that she was not using Derrick to help her find a home to buy.  She answered that she wanted to use Derrick and that she 'had' to use Derrick. She thought I worked with Derrick and was his buyer's agent.  I told her that I had my own team and was not on Derrick's team. I also said that after we had parted ways the day before, I realized something was not right.  I was very nice about it and said that of course she should use her listing agent to help her find a house.  She apologized for wasting my time.  I asked her how it was that she came to call me in the first place.  She said that I had called her!  I explained that there would have been no way for me to have her number and that I did not call her, she called me.

After that phone conversation I called Derrick and left him a voicemail telling him what had happened and to get in touch with me if he would like to know which homes his client had decided on.  I have not heard from Derrick and I still do not know how his client came to contact me. I am still trying to sort through this.  Strange........

When structuring real estate transactions to meet Fannie Mae, Freddie Mac, FHA, VA, and community products, agents should keep in mind the following allowable seller contributions for closing costs and prepaids:

Conventional Loans

            Primary & Second homes

                        90% to 100% loan-to-value:  3%

                        75% to 90% LTV:  6%

                        Up to 75% LTV:  9%

            Investment properties

                        2% maximum, regardless of LTV

FHA Loans

            6% plus 3% for down payment assistance through a third party

VA Loans

            4% regardless of LTV

First-time homebuyer community programs

            3% to 6%

Seller contributions are based on the lesser of the sale price or the appraised value of the property.  Comparing similar active listings and sold homes in the area is critical.