It is a great time to purchase a home and, based on the big increase in activity, many people have come to that same conclusion. Home purchase activity has picked up significantly in 2009. In the Greater Seattle and King County area sales volume is up 14.3% since one year ago according the National Association of Realtors. Prices seem to be stabilizing as well. Most of the sales activity has been in the lower price range but many analysts think this is the beginning of the turn around in Real Estate. This is due to a combination of good interest rates, the first time home buyer’s tax credit and lower prices. Prices on houses have fallen approximately 20% nationally since they hit their peak in late 2007. These lower prices have made homes affordable again for more and more people.

 Falling home prices are primarily due to the existence of distressed properties. Distressed properties come in different forms but they all provide buyers with amazing opportunities to buy a home below even the lower current market values. These properties include foreclosed homes that are now owned by banks, pre-foreclosure sales, and builder inventory. A bank owned home is called an REO, pre-foreclosures are sold as short sales and builder inventory are homes still owned by the developer who needs to liquidate. All three can involve special challenges. One of the challenges now is there is competition for these homes. There are a lot of buyers bidding on the same homes in many cases. Make sure you are working a Real Estate agent who is familiar with this kind of inventory otherwise you will waste a lot of time making bids that will never be accepted. If you do not know a specialist I can refer you to an agent who has closed many distressed sales. The other challenge is financing can present problems.

 Distressed properties can come with financing challenges and buyers need to be aware of the special challenges to obtain a mortgage on these homes. It often takes a long time to find the right home and then another long period of time to hear if your offer has been accepted. The last thing a home buyer wants after all of that time and emotional investment is to have the financing create another set of challenges.

There are a few common issues when it comes to financing a distressed home purchase:

1. Time. Banks often will take the offer that gives them the quickest closing time line. If you can make an offer on a home with a quick closing time you often have a better chance of getting an agreement. Some banks require that the transaction close within 30 days of mutual acceptance. To put yourself in the best position you want to work with a lender that has very quick processing and underwriting. It has been very common for lenders to have difficulty closing a loan in 30 days due to new rules regarding loan disclosures and appraisals. Guild Mortgage has the fastest loan approval process in the industry. Every member of my team is a seasoned professional and have the highest competency levels among their peers.  From loan set up to underwriting and then on to loan document preparation, we control the whole process at our location. This enables us to get whole loan packages approved and closed in a matter of days.
2. Home Condition. With bank owned and short sales you can often have issues with the condition of the home. The lender will require that all aspects of the home will receive an average rating by the appraiser. If there are some things that are not up to an average level then the items will have to fixed before the transaction can be closed. These issues often include things such as bad carpet or flooring, damage to doors and cabinets, broken windows, safety issues and other general deferred maintenance. The buyer and seller can end up in an awkward situation where neither party wants to commit funds to fix the issue until the transaction is closed. The speed in which we can approve a borrower’s loan can help. Once the loan is approved a seller is often willing to fix issues in the home. Banks usually will only sell a home ‘as-is’. In this case if you are working with creative and flexible underwriters there are ways to make the remediation of conditions in the home relatively easy. Not all companies offer this kind of flexibility. At Guild our underwriters work with us to get your loan done.
3. Loan Program Flexibility. At Guild we have access to many different banks and loan programs. This is a big advantage over an individual bank that has only their loan products to offer borrowers. For instance, most banks require higher credit scores on their FHA loans that what Guild can offer.

Choose a lender that will give you the best loan with the best approval process and terms that do not change at closing. My team will delivers this to every client.