Are you FHA-Approved????
That's an important question all condo, townhome, and villa owners should be asking.
Why? Great question.
The government has a program run through the Federal Housing Administration that will allow qualified borrowers access to mortgages of UP TO 96.5% of the home's value (notice I did not say contract price, as an FHA appraisal will supercede a contract price). The borrower has to come up with the other 3.5% down payment, as well as closing costs. Closing costs can be paid by the seller on behalf of the buyers.
This is a terrific program that gets buyers with meager savings and blemished (but not sub-prime) credit into homes. Think first-time homebuyers, newlyweds, single parents, lower-income, etc. Truly a great program that encourages home ownership among a class that doesn't qualify for conventional loans.
Ok, so that's FHA in a nutshell. How does that help you, the condo/TH/villa owner? Well, since the 100% loans have gone the way of the dodo bird (non-existent) it is one of the most popular loan programs in the market today, aside from VA loans. This means more and more buyers are qualifying under this program. THE FLY IN THE OINTMENT IS THAT THE COMPLEX HAS TO BE APPROVED BY THE FHA FOR FHA LOANS.
It's an involved process with forms, documentation, and some elbow grease. Some complexs, due to their restrictions, will never qualify. However, it's well worth it for enterprising residents to ensure they have explored getting approved for FHA loans.
How can you tell if you're already approved? Luckily, FHA has a continuously updated website to check. It's: https://entp.hud.gov/idapp/html/condlook.cfm
Most likely your complex will not be approved, but it's normally for lack of trying. Once approved, it's something you want to SCREAM from the rooftops and let all buyers know. Ask you Association if they have ever tried to get approval. If they have not, volunteer to be a liaison and get them approved. Visit HUD.gov for more info.
FHA is a gift to buyers AND SELLERS so do your best to take advantage of it today.
Monday, October 26, 2009
Monday, October 19, 2009
The Perils of Being Your Own Realtor!
We are the generation of DIY'ers...national brands have been built on empowering consumers and telling them they can do it themselves. Millions of dollars are spent assuring people they have the know-how and background to tackle any project, from fixing an electric socket (ZAPPPP!) to changing out an engine - yes, one of my college buddies actually attempted that (unsuccessfully by the way).
So when it comes to selling your own home, you can do that, too. Right? Well, the answer is not so clear cut. Most people know the majority of homes are sold via realtors and brokerages. However, a small share of homes are sold By Owner and those owners don't have any real estate sales background. The advent of the internet age has made this a distinct possibility, an easier mountain to climb so to speak. But there are pitfalls in this approach that will take you longer to sell and possibly decrease your net profit. Here are a couple of danger areas to avoid:
The Overly Proud Owner: I had this experience 2 weeks ago. Sellers bragged to my buyers that they were "Professional Homeowners". By the time we were done, my buyers were so detailed-to-death and tired of saying "oh, wow, that is a terrific shade of blue" that we high-tailed it out. But Mr. Professional Homeowner was on our heels and followed us to our cars, still bragging about his home. I finally had to start my car and drive away to get him to stop.
Is a proud owner extolling the virtues and upgrades of their home a bad thing? Not necessarily. But the fact that he was over-priced by about 10% scared the buyers away - the odds are so slim that someone so impressed with their own home would consider a below-list price offer.
The Uninformed Homeseller: I come across this alot with people representing themselves. Lawyers commonly say the quickest way to lose a legal case is to represent yourself. Harsh, but probably true. Well, one quick way to a lawsuit (if things go south) is by representing yourself in a home sale if you're not up-to-date on the latest and greatest "gotchas".
Example 1: You own a home built in 1977. Using a pre-printed contract from the internet, you lock up a buyer and close in 30 days. After closing, a lawyer for the buyer calls asking for the full contract and addenda. Unfortunately, you had n ot realized that FEDERAL LAW requires a pre-1978 home to have a Lead-based Paint Disclosure signed by all parties.
Example 2: You are selling your mothers home and want to move it quick. In 2002, it had a settlement issue that was repaired and the home was remodeled in and out. Since know other problems have cropped up, you put a sign in the yard and 5 months later you slide the keys to the new buyers. A month later, you get a call from a lawyer representing the buyer. They are looking for the Sellers Disclosures which state the home had a repaired settlement issue. The new buyers were putting in a pool and the workers discovered the pier-and-grout system that stabilizes the home. You thought you mentioned it to them in passing and that they were ok with it, but with no WRITTEN disclosures, you're in hot water.
The Oops, I Can't Advertise That? Homeseller: This is a big one. You are selling your home and putting an ad in the paper. Knowing your home is perfect for single people, you mention in the ad that the home has a terrific location for single owners or owners without children while also being perfect for Christians, as there are 3 churches in walking distance. Ooops. You just violated the Civil Rights Act of 1968, aka the Fair Housing Act, which protects people with children from being discriminated against while also disallowing religious discrimination.
Ok, so I dramatize a bit for illustrative purposes. But the point is that real estate transactions can be unintentional minefields, for lack of a better term. As GI Joe once put it, "knowing is half the battle".
We are the generation of DIY'ers...national brands have been built on empowering consumers and telling them they can do it themselves. Millions of dollars are spent assuring people they have the know-how and background to tackle any project, from fixing an electric socket (ZAPPPP!) to changing out an engine - yes, one of my college buddies actually attempted that (unsuccessfully by the way).
So when it comes to selling your own home, you can do that, too. Right? Well, the answer is not so clear cut. Most people know the majority of homes are sold via realtors and brokerages. However, a small share of homes are sold By Owner and those owners don't have any real estate sales background. The advent of the internet age has made this a distinct possibility, an easier mountain to climb so to speak. But there are pitfalls in this approach that will take you longer to sell and possibly decrease your net profit. Here are a couple of danger areas to avoid:
The Overly Proud Owner: I had this experience 2 weeks ago. Sellers bragged to my buyers that they were "Professional Homeowners". By the time we were done, my buyers were so detailed-to-death and tired of saying "oh, wow, that is a terrific shade of blue" that we high-tailed it out. But Mr. Professional Homeowner was on our heels and followed us to our cars, still bragging about his home. I finally had to start my car and drive away to get him to stop.
Is a proud owner extolling the virtues and upgrades of their home a bad thing? Not necessarily. But the fact that he was over-priced by about 10% scared the buyers away - the odds are so slim that someone so impressed with their own home would consider a below-list price offer.
The Uninformed Homeseller: I come across this alot with people representing themselves. Lawyers commonly say the quickest way to lose a legal case is to represent yourself. Harsh, but probably true. Well, one quick way to a lawsuit (if things go south) is by representing yourself in a home sale if you're not up-to-date on the latest and greatest "gotchas".
Example 1: You own a home built in 1977. Using a pre-printed contract from the internet, you lock up a buyer and close in 30 days. After closing, a lawyer for the buyer calls asking for the full contract and addenda. Unfortunately, you had n ot realized that FEDERAL LAW requires a pre-1978 home to have a Lead-based Paint Disclosure signed by all parties.
Example 2: You are selling your mothers home and want to move it quick. In 2002, it had a settlement issue that was repaired and the home was remodeled in and out. Since know other problems have cropped up, you put a sign in the yard and 5 months later you slide the keys to the new buyers. A month later, you get a call from a lawyer representing the buyer. They are looking for the Sellers Disclosures which state the home had a repaired settlement issue. The new buyers were putting in a pool and the workers discovered the pier-and-grout system that stabilizes the home. You thought you mentioned it to them in passing and that they were ok with it, but with no WRITTEN disclosures, you're in hot water.
The Oops, I Can't Advertise That? Homeseller: This is a big one. You are selling your home and putting an ad in the paper. Knowing your home is perfect for single people, you mention in the ad that the home has a terrific location for single owners or owners without children while also being perfect for Christians, as there are 3 churches in walking distance. Ooops. You just violated the Civil Rights Act of 1968, aka the Fair Housing Act, which protects people with children from being discriminated against while also disallowing religious discrimination.
Ok, so I dramatize a bit for illustrative purposes. But the point is that real estate transactions can be unintentional minefields, for lack of a better term. As GI Joe once put it, "knowing is half the battle".
Monday, October 12, 2009
One result of our over-supply of homes for sale is that many homesellers have turned into landlords, for good or for bad. Tightened mortgage regulations and economic hardships have increased the pool of available renters so there's a good chance a seller looking to rent their property will successfully rent it out.
Many sellers continue to market and sell their property with the permission of the tenant. Normally, tenants receive discounted rent or a lower deposit in exchange for keeping the property in showing condition and being flexible with showing appointments.
What happens when the property actually goes under contract while tenants are on property??? In Florida, the existing lease must be honored in accordance with the terms specified within the lease. So if the tenancy continues 6 months after the closing date, the new owners shall assume landlording duties and responsibilities as outlined in Ch 83 of the Florida Statutes. Many leases, especially for homes for sale, specify rights and responsibilities as it pertains to the sale and disposition of the property while being rented. Normally it requires 30 - 60 days notice to the tenant which allows them to line up other housing.
Many tenants living in a home that's also for sale, when given sufficient notice of such sale, are very cooperative. Don't forget that after the initial showing, a home that's under contract will need to have additional inspections, appraisals, and possible followup showings in accordance with the sales contract. That will require an understanding tenant and the best way to achieve that is for a Landlord to be understanding and protective of the tenant's privacy.
But what happens if there is no lease in place (a month to month for example) when a home goes under contract? Well, the law references the previous lease with respect to cancellation of an unwritten lease:
83.57 Termination of tenancy without specific term.--A tenancy without a specific duration, as defined in s. 83.46(2) or (3), may be terminated by either party giving written notice in the manner provided in s. 83.56(4), as follows:
(1) When the tenancy is from year to year, by giving not less than 60 days' notice prior to the end of any annual period;
(2) When the tenancy is from quarter to quarter, by giving not less than 30 days' notice prior to the end of any quarterly period;
(3) When the tenancy is from month to month, by giving not less than 15 days' notice prior to the end of any monthly period; and
(4) When the tenancy is from week to week, by giving not less than 7 days' notice prior to the end of any weekly period.
Basically Florida law only requires a MINIMUM of 15 days notice for a tenant on a month to month unwritten lease. That's really not much time, so I would recommend a minimum of 30 days.
Florida law also gives the landlord (or their agent) the ability to access the property to further the sale of that property. All access is conditioned upon "Reasonable Notice" to the tenant.
83.53 Landlord's access to dwelling unit.--
(1) The tenant shall not unreasonably withhold consent to the landlord to enter the dwelling unit from time to time in order to inspect the premises; make necessary or agreed repairs, decorations, alterations, or improvements; supply agreed services; or exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workers, or contractors.
(2) The landlord may enter the dwelling unit at any time for the protection or preservation of the premises. The landlord may enter the dwelling unit upon reasonable notice to the tenant and at a reasonable time for the purpose of repair of the premises. "Reasonable notice" for the purpose of repair is notice given at least 12 hours prior to the entry, and reasonable time for the purpose of repair shall be between the hours of 7:30 a.m. and 8:00 p.m. The landlord may enter the dwelling unit when necessary for the further purposes set forth in subsection (1) under any of the following circumstances:
(a) With the consent of the tenant;
(b) In case of emergency;
(c) When the tenant unreasonably withholds consent; or
(d) If the tenant is absent from the premises for a period of time equal to one-half the time for periodic rental payments. If the rent is current and the tenant notifies the landlord of an intended absence, then the landlord may enter only with the consent of the tenant or for the protection or preservation of the premises.
(3) The landlord shall not abuse the right of access nor use it to harass the tenant.
Selling a property with a tenant can be an involved, sensitive situation that requires the utmost in care and compassion. When in doubt, one almost always gets more "flies" with honey rather than vinegar!
Many sellers continue to market and sell their property with the permission of the tenant. Normally, tenants receive discounted rent or a lower deposit in exchange for keeping the property in showing condition and being flexible with showing appointments.
What happens when the property actually goes under contract while tenants are on property??? In Florida, the existing lease must be honored in accordance with the terms specified within the lease. So if the tenancy continues 6 months after the closing date, the new owners shall assume landlording duties and responsibilities as outlined in Ch 83 of the Florida Statutes. Many leases, especially for homes for sale, specify rights and responsibilities as it pertains to the sale and disposition of the property while being rented. Normally it requires 30 - 60 days notice to the tenant which allows them to line up other housing.
Many tenants living in a home that's also for sale, when given sufficient notice of such sale, are very cooperative. Don't forget that after the initial showing, a home that's under contract will need to have additional inspections, appraisals, and possible followup showings in accordance with the sales contract. That will require an understanding tenant and the best way to achieve that is for a Landlord to be understanding and protective of the tenant's privacy.
But what happens if there is no lease in place (a month to month for example) when a home goes under contract? Well, the law references the previous lease with respect to cancellation of an unwritten lease:
83.57 Termination of tenancy without specific term.--A tenancy without a specific duration, as defined in s. 83.46(2) or (3), may be terminated by either party giving written notice in the manner provided in s. 83.56(4), as follows:
(1) When the tenancy is from year to year, by giving not less than 60 days' notice prior to the end of any annual period;
(2) When the tenancy is from quarter to quarter, by giving not less than 30 days' notice prior to the end of any quarterly period;
(3) When the tenancy is from month to month, by giving not less than 15 days' notice prior to the end of any monthly period; and
(4) When the tenancy is from week to week, by giving not less than 7 days' notice prior to the end of any weekly period.
Basically Florida law only requires a MINIMUM of 15 days notice for a tenant on a month to month unwritten lease. That's really not much time, so I would recommend a minimum of 30 days.
Florida law also gives the landlord (or their agent) the ability to access the property to further the sale of that property. All access is conditioned upon "Reasonable Notice" to the tenant.
83.53 Landlord's access to dwelling unit.--
(1) The tenant shall not unreasonably withhold consent to the landlord to enter the dwelling unit from time to time in order to inspect the premises; make necessary or agreed repairs, decorations, alterations, or improvements; supply agreed services; or exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workers, or contractors.
(2) The landlord may enter the dwelling unit at any time for the protection or preservation of the premises. The landlord may enter the dwelling unit upon reasonable notice to the tenant and at a reasonable time for the purpose of repair of the premises. "Reasonable notice" for the purpose of repair is notice given at least 12 hours prior to the entry, and reasonable time for the purpose of repair shall be between the hours of 7:30 a.m. and 8:00 p.m. The landlord may enter the dwelling unit when necessary for the further purposes set forth in subsection (1) under any of the following circumstances:
(a) With the consent of the tenant;
(b) In case of emergency;
(c) When the tenant unreasonably withholds consent; or
(d) If the tenant is absent from the premises for a period of time equal to one-half the time for periodic rental payments. If the rent is current and the tenant notifies the landlord of an intended absence, then the landlord may enter only with the consent of the tenant or for the protection or preservation of the premises.
(3) The landlord shall not abuse the right of access nor use it to harass the tenant.
Selling a property with a tenant can be an involved, sensitive situation that requires the utmost in care and compassion. When in doubt, one almost always gets more "flies" with honey rather than vinegar!
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