2 Agent Misunderstandings That Can Ruin Your Transaction

May 29, 2008 · Filed Under Ask the Realtor · Comment 
Two of the more common mistakes I see on real estate contracts is

  • The use of escrow “allowances” such as carpet, paint, roof or landscaping allowances for the buyer after closing

  • Incuding personal property in the real estate transaction.

The short answer is, neither of these is allowed by lenders.

Allowances / Holdbacks / Credits

The idea is, you’ll buy my house from me, at closing I’ll let the escrow keep $xxxx dollars from me for you to use on repairs to the house.

Just this morning I ran a search on the Spokane MLS for the word “allowance” and found 37 listings offering escrow allowances:

  • Buyer to receive $10k roofing allowance w/acceptable offer at closing.
  • $4,000 exterior paint allowance to buyer at closing.
  • Up to $5,000 driveway allowance, paid at funding.
  • With acceptable offer seller will offer $10,000 credit on HUD as a repair allowance to the buyers.

Seems fine and dandy, until you try and get your loan funded.  The loan underwriter will shoot this down faster and harder than Dick Cheney taking aim on a quail hunt. 

What we are NOT talking about is having the seller contribute cash toward the buyer’s loan closing costs.  This is a perfectly legitimate and accepted practice from the lender’s eyes.  What we are talking about is the seller leaving a credit, Read more

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I Love FHA, and so do my clients

May 23, 2008 · Filed Under Lending and Finance · 2 Comments 

I love FHA.  I love everything about it.FHA Mortgage love

If I could I’d send FHA a little love note and flowers and take FHA out on a date.  We’d go to the new Churchhill’s steakhouse in town, then head for a nice stroll along Riverfront Park.  I hope my wife doesn’t mind, I’ve invited FHA to move in with us.

FHA-insured mortgages have been the saving grace in an otherwise bloodied lending landscape.  My clients have benefited immensely from FHA-insured mortgages.  Just this week a client of mine, about to close on a house using an FHA mortgage, wrote to me and said “Thankyou for all the small but significant things you do for us besides the big things… helping us with our investment planning (two homes)…” 

See if this scenario works for you…

The Scenario:

  • My clients’ credit score is marginal, right around 600
  • They only have about $2,000 in savings
  • My clients own a beautiful home in Spokane in a neighborhood they aren’t particularly fond of
  • They are do-it-yourselfers, hooked on DIY-network and have done about all they can to their current home, it is absolutely darling
  • They’d like to move into and rehab a similar-sized home around Corbin Park, a neighborhood they’ve been eyeing for a few years
  • Although they don’t like their neighborhood, my analysis shows their neighborhood will appreciate at an above average rate due to certain coming, positive changes in the neighborhood
Bedroom of current home - GORGEOUS,
and soon to be a rental

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