Condo Spot Approvals (again), Reserves, Time-Frames; Rate Volatility

RATE VOLATILITY On Monday, a top producing loan officer/friend told me over dinner how much he loves the lack of volatility in the current rate environment. He explained that it allows him to float (not lock in rates) for many of his borrowers until he has the time and capacity to process their loans. But […]Read More

Will a Recession Tank Housing Prices? Probably Not…

I know numerous people who are anxiously waiting for the next recession b/c they expect housing prices to tank. They can’t wait to swoop in and find bargains like the many that were available after the 2008 meltdown. BUT, according to Appraisal-Blogger-Extraordinaire, Ryan Lundquist, housing prices don’t always “correct” or decrease during recessions. Prices often […]Read More

Tenacity & Focus vs. Training, Seminars, Self-Help, Organizing, Inputting, & Fixing Your Business

Of all the agents we work with (over 800 and counting), one of the most successful, by far, is a buyer’s agent on a very successful team. She is successful via every major metric – units, total volume, and income. What makes her so successful though is simply her tenacity and focus. She does not […]Read More

Leverage Your Database Before Amazon Does; Amazon Teams Up With Realogy

Most readers have probably heard this already but Amazon is teaming up with Realogy to match homebuyers with real estate agents through a program called TurnKey. This is a huge deal b/c of the size of the partners. Amazon is the world’s largest retailer and Realogy, which owns NRT, Better Homes, Century 21, Coldwell Banker, […]Read More

New Condo Complexes/Phases Do NOT Have to Be Complete

Many loan officers and real estate agents mistakenly believe that condo projects and/or phases within a project must be complete before units within them are eligible for mortgage financing. We, however, have an investor that offers new construction condo financing as long as only the building containing the unit is complete. Again – neither the […]Read More

How Much Do HOA Dues Zap Purchasing Power?

We recently had a buyer who desperately wanted to qualify for a condo purchase but could not b/c the HOA dues were $800 per month! This prompted me to remind agents and buyers alike of just how much purchasing power HOA dues extract from buyers. In the above situation, $800 of HOA dues equates to […]Read More

House Flipping Back to 2006 Levels; Worried?

I get several calls or texts every week by someone offering to buy a condo we own in Scottsdale. What is particularly interesting to me is that the offers come from dialers at large call centers that house-flipping firms have set up to make nonstop calls. In other words, house flipping is a big business […]Read More

Don’t Deposit Gift Funds, Please! (Straight to Escrow)

It is well-known that buyers can use “gift funds” from a relative to help with the purchase of a home. But, we want to again remind buyers to not deposit gift funds into their personal accounts. Buyers should instead tell their “donors” (aka “gifters”) to hold on to their funds and to instead deposit all […]Read More

Too Busy for Big Houses! Too Old & Too Dated Too

I hike for five or six miles every weekend in the hills around one of the Bay Area’s most high-end housing developments. The homes are huge, stunning and fun to see, but the best part is the extremely elaborate backyards with vineyards, gazebos, massive pools, outdoor kitchens, terraces, fruit trees, playsets, sport courts, and immaculate […]Read More

Important Condo Considerations

Below are twelve things buyers and agents should consider if they plan to finance the purchase of a condo. I repeat these items from time to time b/c they are so important and b/c we continue to add so many people to our blog distribution list. Concentration Rule. No single entity/person can own over 20% […]Read More

Marketing & Lead Gen – “There Is No One Thing”

We work with a Keller Williams agent who closed 140 transactions last year (over $100 million in sales). When people ask her what she does to generate so much business, she always says: “There’s No One Thing.” Her comment always amuses me too b/c the namesake of her brokerage (Gary Keller) wrote a famous book […]Read More

Clean Purchase Contracts; No Reports/Inspections; All Addenda

We received a purchase contract last week, and immediately emailed our confirmation of terms request to the Realtor and then ordered our rush appraisal, as per usual. Four days later, we received the appraisal at the contract price of $830,000. Yaaaayyy, right? Wrong. The Realtor forgot to send us the addendum indicating the price was […]Read More

Condos – Three Numbers To Know

If you’re looking at a Condo, there are three numbers to know: 1) % of owners delinquent with HOA Dues: Less than 15% of owners must be less than 60 days late. This number is often an issue after market corrections b/c people are more likely to walk away from condos (and stop paying HOA […]Read More

Reasons Why Inventory Is So Low

When my boys and I go back to South Dakota to hunt pheasants, one of the most interesting things to observe (besides the massive cultural chasm between the Bay Area and rural America) is the real estate market. In some parts of South Dakota, the inventory and the “days on market” are almost infinite b/c […]Read More

Recipe for New Real Estate Agents to Follow?

Heejin sat on a panel last night at a Realtor event, giving advice to Realtors. This is humorous in light of the fact that she is and always will be a lender. It makes sense, however, when you consider that she has worked closely with hundreds (if not thousands) of Realtors over the years and […]Read More

Motorcycle Falls Off Wall; Fixing Houses; Appraisal Fails

When I was in college my roommate and I hung a motorcycle on a wall b/c we loved motorcycles and b/c we thought it was “artful” and amusing. My two roommates who didn’t love motorcycles found it neither artful nor amusing, particularly when the wall started to sag. And sure enough, after a month or […]Read More

Have Housing Prices Peaked? Probably Not, After Inflation

Many people mistakenly believe housing prices have surged out of control in recent years and may have peaked. The reality is that in most areas they are only back to the levels they hit previously in 2006. More importantly, if we adjust for inflation since 2006, housing prices are actually 16% below their 2006 peaks […]Read More

Appraisals with “Adverse External” Influences; Big Deal Lately

We are having more issues lately with properties that have “adverse external influences.” Adverse external influences are structures or entities near a property that negatively affect its value. Adverse influences include freeways, busy arterial through-streets, railroads, BART or mass transit trains, cemeteries, schools, and commercial buildings or establishments. Realtors involved in transactions with external influences often under-estimate […]Read More

Beware of Homeowner’s Association (HOA) Dues; Lower Qualifications

As the prices of single family residences (SFRs) continue to climb, we have more and more borrowers shifting their home searches to condos and townhouses. The problem is that they (and their Realtors) often do not account for the impact of HOA dues on their maximum qualification amounts. HOA dues range from $200 to well […]Read More

“Negative Interest Rates;” How Do They Affect Real Estate?

The German 10-Year Government Bond Yield hit negative territory yesterday. This means that investors actually pay Germany to borrow their money; Germany doesn’t pay interest, but it actually gets paid to borrow money. The same thing is happening in Japan. Why would investors take a negative yield, or pay somebody to borrow their money? B/c […]Read More

Importance of Local Lender In Hot/Unique Markets; Quotes Of The Day

Employing a local lender is now more important than ever in the Bay Area’s super hot markets. Listing agents simply do not want to risk a transaction on untested lenders or appraisers (they go hand in hand) when so much can go wrong in today’s lending environment. We take enormous pride in the reputation we […]Read More

Condo Issues: Concentration? Delinquent HOAs? Oakland Tribune Bldg :)

First, unrelated to anything, if any of you appreciate the Oakland Tribune Building as much as I do, here is a great podcast discussing it: Secondly, we have had condo deals below up recently b/c of HOA issues – one involving “concentration” (one entity owns more than 10% of units, and another involving delinquent […]Read More

Inflation Concerns Explained – How They Affect Real Estate

The Fed is expected to raise short term rates this month b/c employment numbers are adequately strong. But, one area that remains a concern is inflation, or the lack thereof. The Fed actually desires a little inflation, and they do not understand why there is so little. The WSJ had an article this morning on […]Read More

How To Buy A Flip – Property Bought & Re-Sold Within 90 Days

We have been seeing “Flips” surface again lately. Flips are properties that are purchased and re-sold within 90 days. Lenders go by “contract date” and not close of escrow. Hence, if you buy a property on October 1st, your contract to re-sell it must be dated after January 1st, to avoid “flip” status. Anytime a […]Read More

Condo Concerns? What To Look For

Things to consider when looking at Condos: 1. Rates are usually higher for condos if the down payment is less than 25%. 2. Concentration Rule. Does one owner own more than 10% of the units? If so, most lenders won’t finance the units. 3. Litigation. If the HOA is involved in litigation, most lenders will […]Read More

“Site Condos” For Multiple Units When Lot Splits Are Not Allowed

We are seeing “Site Condos” more often than ever lately. This is b/c many cities, like Berkeley, will not allow small lots to be split into multiple parcels, but they will allow multiple units on a single lot. B/c of this many developers opt to convert small lots into “site condos” or condo units that […]Read More

Why Young People Need To Buy Real Estate

We have many clients who come to us concerned about timing the market. While it is of course very advantageous to buy at the bottom, the reality is that nobody can truly know what the market will do over the next few years. The more important thing for young homebuyers to remember is that property […]Read More

“Flip” Rules Again – Selling 90 Days After Purchase

We still see the occasional “Flip” surface, although not nearly as often as we saw them in 2010-2012. A “Flip” once again is a property that is purchased (usually by investors) and re-sold within 90 days. FHA will not finance Flips at all. Conventional and Jumbo lenders will finance Flips, but they require two appraisals. […]Read More

Un-permitted Space OK If No “Health & Safety” Issues; No Value

Unwarranted or un-permitted space is always OK, from a lending perspective as long as: (1) it is just an additional room, with no plumbing or stove; (2) it was built in a workmanlike manner with no health and safety issues; and (3) no significant value is attributed to it. Hence, un-permitted sun rooms, breakfast nooks, […]Read More

Mortgages Can Only Finance Real Estate; Not Cars, Pianos, Commissions

After the bust 15 years ago, a lot of “wannabe rock stars” had to sell the houses they couldn’t afford. As an enticement to potential buyers (to overpay), they often would include the car they couldn’t afford (usually a Porsche) that was parked in the garage they couldn’t afford. Lenders, of course, frowned on […]Read More

Townhouse/PUD vs. Condo: Affects Rate and FHA Financing

We frequently have Realtors and borrowers confuse PUDs (Planned Unit Developments) or “townhouses” with “condos.” It is significant b/c condo complexes need to be FHA approved before a unit can be financed by FHA, and conventional condo financing often requires slightly higher interest rates. PUD/Townhouse complexes do not need to be FHA approved; individual PUDs/townhouses […]Read More

Paying More Than Appraised Value? Why? Appraisal Not Market Value

Yesterday we pointed out how borrowers with large down payments sometimes use FHA or VA financing when appraisals come in low. Several realtors asked why borrowers are willing to pay over appraised value. There are several reasons that we have observed: (1) the buyer is a 27 year social media employee with $11 million in […]Read More

Down Payment Options for Investment Properties

We often get questions about investment purchases, so we wanted to revisit a few unique things that everyone should know about purchasing investment properties. 1.) Lenders require a 20% down payment for loan amounts up to $625,500. Many people come to us under the impression that the minimum down payment is 25%, but Freddie Mac […]Read More

Mixed Use Condo Complexes with Commercial Space Are OK If…

Condo complexes can have commercial space and be eligible for financing as long as the commercial space comprises less than 25% of the square footage of the entire complex. If commercial space exceeds 25% of the overall space, we have a couple of portfolio lenders that will finance the projects. The rates and terms are […]Read More

$100,000 “Wall Treatment” Did Not Increase Value of Home

We had a borrower years ago whose appraisal came in much lower than she expected and she was irate b/c the appraiser gave insufficient or no value to many of her upgrades and improvements. Specifically, she had spent over $100,000 on a wall treatment in her foyer. The wall treatment, interestingly, was a textured gold […]Read More

Debt Ratios Too High? Buy House As Investment; Not As Occupant

We have borrowers with substantial down payment funds and limited income who cannot qualify for the home they would like to purchase b/c their debt ratios are too high. A solution for these borrowers is to buy the house as an investment property (instead of an owner-occupied property). Buyers can put a renter in the […]Read More

Manufactured Housing – Fannie Mae/FHA Will Finance; Need Manuf. Comps

There are a surprisingly large number of “manufactured homes” in almost all areas. These are not to be confused with “mobile homes” that are not on a fixed foundation. Manufactured homes are homes that were constructed off-site in some manner but are now on a fixed/permanent foundation on a piece of land. Both Fannie Mae […]Read More

Property Condition? What Is “Lendable?”

Properties can be very “tired” looking and still get financing (with repair requirements). Very old appliances, worn counters, worn floor coverings, dated decor, old roofs, faded paint, a few holes in the carpet and even walls are all “OK.” As long as there are no major and visible structural issues (clearly leaky roof, undulating floors […]Read More

All Questions to Ask When Evaluating Condo Financing/Purchases

We frequently discuss Owner Occupancy ratio requirements for condos, but there are many other important considerations that need to be addressed up front. The below are questions we ask all buyers and Realtors who are considering a condo purchase. These are all questions that significantly affect condo financing and they need to be known up […]Read More

Owner Occupancy Ratios for Condo Complexes

We are still getting questions about required Owner Occupancy ratios in Condo Complexes. At many of our lenders, if the financing is “Owner Occupied”, the owner-occupancy ratio is irrelevant. Again, Owner Occupied Buyers do not need to worry about Occupancy Ratios in most cases. It is only when the financing is FHA or NON-Owner Occupied […]Read More

Condo Owner Occupancy Ratios Irrelevant for Owner-Occupants

This is a reminder that Condominium Owner-Occupancy Ratios are irrelevant if the person seeking financing intends to occupy the unit she is buying. It is only investors looking for financing who need to worry about occupancy ratios. Most investor financing requires occupancy ratios greater than 50%. Jay Voorhees Founder/Broker | JVM Lending (855) 855-4491 | DRE# […]Read More

Condos in Litigation; Sometimes OK; Options

We have a condo purchase with an HOA that is in litigation. The litigation involves an owner of a unit in a building separate from our building suing the HOA for mold issues; she is looking for $500,000 in damages. The lender reviewed the legal documents and allowed Fannie Mae financing to go through. The […]Read More