New FHA guidelines going into effect now & in the near future make it much more difficult to qualify for FHA loans. Some buyers will need to have 10%, rather than 3.5% for a down payment.  Mortgage insurance premiums are also increasing, making payments higher!  If you’re planning to use FHA financing, better act fast! (See www.QuigleyTeam.com/FHA-2010 for details - "FHA"  is in caps)

Property requirements:  The number of defaults have prompted tightened  requirements on properties as well as on borrowers.  Well-maintained homes in well-kept areas qualify for financing easier, sell faster & command a higher price!  These will have good resale value in the future—if they’re kept in good condition! 

Condos are often the first casualties of a down market.  It's now common to see condos sitting on the market for extended periods of time.  If you own a house or town home, you alone are in control of maintenance, but condo owners must depend on associations and/or other owners to keep the complex well maintained & meeting the requirements for mortgage approval.  

FHA loans require that 51% of condos in a complex be owner-occupied .  If the % was < 51%, a buyer could, in the past, get conventional financing.  Today, however, many conventional lenders are requiring that at least 60% (70% sometimes) of units are owner-occupied—AND that a specific % of association fees have been paid.  If fees are past due, or if the reserve balance is low, many conventional lenders are refusing to approve loans on any units in the complex.

If your complex doesn't qualify under the new requirements, you may be unable to sell unless you find a cash buyer!  If you have cash to buy a condo, I can probably get you a great deal—but you may have to offer a great deal to another cash buyer to sell in the near future!  (If you have cash & intend to own a condo for several years, this is a great time to get a great deal on a condo purchase!)

Sellers:  There’s a large pool of buyers for moderately priced (< $200K) homes that are in good locations, good condition & priced right.  But beware of over-pricing!  If your home is overpriced in comparison to similar properties, it will sit on the market & become “shopworn”.  Most agents won’t show it, thinking it's defective!  Best to price at or slightly below market to attract enough buyers to cause multiple offers & bidding wars--a great scenario for a seller!   

Higher-priced homes ARE still selling, but are taking  longer marketing times.  Be sure to price competitively & have your home in top-notch condition —  BEFORE it goes on the market--in order to compete for the smaller number of buyers!

Is the buyer qualified?  New RESPA guidelines make it complicated & costly for lenders to pre-approve a buyer, so many lenders are reluctant to do so unless they know the buyer will be loyal.  If your buyer hasn’t gone through the process to be sure of loan approval, the sale can fall apart at the last minute.  It might be safer to accept a slightly lower offer from a buyer with PROVEN creditworthiness, than a higher offer from a buyer who MIGHT be able to qualify!  Closing can now take 4-6 weeks; don't tie your home up for this time, then have to put it back on the market & start over because the loan doesn’t happen!  A good listing agent will verify your buyers’ creditworthiness up front!   

Some of the recent/ongoing changes affecting the real estate market:  

To keep lenders honest, the law now requires that certain fees disclosed upfront to buyers cannot change at closing time by more than a certain percent.  If changes exceed the allowed amount, the lender must bear the additional cost!  A standardized, more “user-friendly” good faith estimate (GFE) form has been mandated & is easier to compare to the final settlement statement (HUD-1). 

This new law protects the consumer but raises a lender's costs, requirements & amounts of paperwork.  Many may be reluctant to go through the many steps required to pre-approve a buyer, unless they know the buyer will be loyal.  So be sure to choose your lender up front--BEFORE finding your new home! 

The buyers’ choice of lender can greatly influence a seller’s decision to accept or reject an offer—& to determine the final sales price! 

Our advice to buyers:  Choose your lender well!  To sellers:  Make sure you check out the lender your buyer has chosen! 

HVCC (Home Valuation Code of Conduct):  Adopted by Fannie Mae & Freddie Mac (for conventional loans) this requires lenders to use an appraiser assigned by a “middle-man” company (appraisal management company), rather than “choose” an appraiser the lender has a relationship with.  Designed to prevent corruption & falsifying of appraisal values, it has also made the home-buying process longer, more difficult & more costly.  It's now taking up to six, rather than 3 or 4 weeks, for many loans to close due to the extra steps. 

Numerous instances of faulty values from “out-of-area” appraisers have been reported, as have reports of appraisers who feel pressured to deliver low, conservative appraisal values.  This has helped to keep home prices artificially low.  Even when both buyer & seller (& their agents) agree that a property is worth a certain price, a low appraisal can force them to re-negotiate the price—OR can result in the mortgage being denied!  On 2/15/10, FHA lenders adopted a similar procedure.  For more information see www.quigleyteam.com/HVCC.     

On a happier note, credit-worthy buyers who can come up with a good down payment are seeing increasing numbers of concessions from nervous sellers.  What could be better than finding the home of your dreams, negotiating a great deal & having the seller throw in the appliances, new carpeting or money for your closing costs?  AND—then collecting $8,000 or $6,500 from Uncle Sam!!! 

But time is rapidly running out for these lucky buyers!  He/she who hesitates will lose!  To qualify for the tax credit, you MUST have a home under contract by April 30th (& close by June 30th).  After that, it’s too late!  To take advantage of the tax credit—AND have time to shop around for a good buy, rather than purchase the first house you see, better start looking NOW!   

Sellers, too, must pay attention to timing.  Put your home in top-notch condition & price your home competitively NOW.  Reducing your asking price after the majority of buyers have already found their new homes may be TOO LATE!