Ask The Realtor

I'm so excited to bring you Exciting News; My Ask The Realtor Column will now be present on The Phoenixville Patch! I am so happy to have the opportunity to continue the column as so many readers have told me they enjoy it. I receive many questions on a regular basis and I welcome the opportunity to answer them right here. As always questions can be sent to me via email at Sellinghomesjenn@aol.com. I welcome all questions and answer each and every one that I receive. Here is this week's column, the first on Phoenixville Patch:

Is it possible to purchase a foreclosed property with FHA financing?  

This will depend on the condition of the house. The bank is not going to be willing to do repairs required by FHA in order to sell the house. Most foreclosures are as-is. If the house is in good condition and your Realtor feels that there will not be any repairs required by FHA you should be able to purchase with that financing. However if the house needs work the bank is more than likely looking for a cash or conventional mortgage offer. There is an option in such a situation. FHA203K is a renovation loan. This type of loan still requires the 3.5% down payment and you can still receive a 6% Seller's Assist if the Seller agrees but with this type of loan you are adding to the mortgage the amount needed for repairs as well as any updates you would like to complete. For example if you are looking at a house that is 100,000 but it needs $15,000 to get up to FHA standards and to complete a few repairs you would like to see, you would be purchasing the house for $115,000.00. You will need a contractor that is already approved through the bank you are working through. That contractor would go through the house with you and prepare a list of what needs to be completed and what you want completed. He would then present an estimate to you, the buyer, and to the bank. The bank would send out an appraiser to determine if they require any additional repairs and then that appraiser would determine whether or not the house's appraised value is $115,000 once the repairs are completed. If the value would be there they will accept the proposal. The repairs would take place after you purchase the house. This loan can be very complicated and should only be handled by Realtors and Banks with extensive experience. They are very technical loans and everything must be completed correctly the first time. It takes at least 60 days to close this type of loan and that is if you already have an approved contractor on board. The contractor will know what the pay schedule is from the bank. Once you have closed on the house you can expect a check in both your name and the contractor's name for a percentage of the invoice within 2 weeks. The contractor then starts the work and once completed, the appraiser comes back out to the house, approves the work and another check (the final check) is issued to the homeowner as well as the contractor. If you are working with experienced personal in this situation it should go smoothly. Just realize that there is much involved in this type of loan but it is a wonderful option.  

My Realtor put an offer in on a home for me. The next day I was told that the house was sold to someone else. Don't I have the right to know there are additional offers on the house? Isn't there something somewhere stating that I should be able to change my offer price based on that fact? I cannot believe no one told me about the 2nd offer.  

No one has to tell you or any buyer the number of agreements on the table. That is up to the Seller whether they want that information shared or not. It is usually in the best interest of the Seller to make that information known as those presenting offers may indeed bring up their offer price. But it can also go the other way and buyers become nervous about such a situation and back away from the deal. In this case, based on the information I would have to say that the Seller considered all the offers on the table and decided to take the best one. Perhaps the offer they took was full price, or a cash offer or had few contingencies attached to it.

I was under the impression that you could get a good deal on a foreclosed property. That doesn't seem to be the case. I have had two offers rejected by banks and they haven't even countered. After speaking with my friends, prior to putting in the offers, they felt that the banks are anxious to get rid of these properties and that I should offer 25-30% under asking price. Are they not anxious? I would think they have already lost a lot of money and would want these homes sold.  

Your friends were incorrect. It's best to take Real Estate Advice from Real Estate Experts. Many times friends and families have great intentions but unfortunately they are not in touch with the actuality of the situation. It's very easy to watch the media and pick out the parts of what they are saying to fit your particular needs but the Media is speaking about the Country as a whole. You are dealing with a specific area and in that case you need to heed the advice of an expert in that particular area. The banks are in no hurry to get rid of foreclosures. You have to understand there is a group of people from the bank that sit at a desk and crunch numbers. That is what they do. They have their bottom line, their schedule of reductions and they deal with thousands of deals on a regular basis. They are dealing with very large areas at one time. If you are purchasing a foreclosure in this particular area, you are not going to get a house at 35-30% below asking price except in EXTREMELY rare cases. The banks rely on the Realtors they list the houses with to provide them with a good market value AND they also have the property appraised. They know what the value of the home is before they list it. They normally will list it below market value, but not to the extreme you describe. In fact since they do list below market value many of the foreclosed homes go above asking price and normally there are many cash dealers waiting for those deals. When making an offer on a property, instead of trying to come up with a formula or guessing what the bank is thinking look at the comparables. Decide what needs to be done at the house you are interested in purchasing and make an educated decision as to whether or not the listing agent took that into consideration when listing at a particular price. This is how you will secure a property.  

Jennifer Daywalt, Realtor
RE/MAX Results Realty- Collegeville, PA
Licensed in PA
Phoenixville's Home Town Realtor
Top Realtor 2004-2011
www.JenniferDaywalt.remax.com
Author of "Ask The Realtor" www.PhoenixvillePatch.com
RE Blogger The Phoenixville Patch www.PhoenixvillePatch.com
610-489-7355 Main - 610-999-7693 Direct