Love's Real Stories

Answering all the real estate questions you never knew you had.

Category: Buyers

May 22, 2014

Out of the Shadows

A “shadow inventory” of new buyers is infiltrating the real estate market.

This “shadow inventory” of buyers is made up of people who lost their homes through distress sales, such as foreclosures or short sales, and are ready to jump back into homeownership. These buyers have worked hard to get back on their real estate feet, but they are also lucky. New loan programs have sprung up recently, allowing them to qualify to buy again, despite the heavy hit they took on their credit when they lost their homes.

Traditionally, if you lost your home through foreclosure your credit would suffer enough damage that you couldn’t qualify for a real estate loan for up to seven years afterward. A short sale would set you back at least three years. If you also declared bankruptcy, your credit damage was that much worse.

Now lenders are giving new consideration to distress-related credit damage. The hard times in the Great Recession were so bad, and so many people lost their jobs and their homes, that lenders have created new loan programs to accelerate their re-entry into the market.

FHA launched the “Back-to-Work-Extenuating Circumstances” loan program which cuts the waiting period for loan-qualifying down to one year after a foreclosure, a bankruptcy or a short sale. The borrower has to prove that they suffered a 20 per cent drop in income for six consecutive months due to job loss or another economic event, and they must have 12 months of on-time rent payments.

Sean and Anita Burkes recently bought a new home through the FHA Back-to-Work-Extenuating Circumstances loan program.

“It’s a great program,” said Anita, “but it’s not easy.” She made hair-pulling motions as she described the amount of paperwork involved in getting the loan. Then she held her hand two feet above the table top. “A stack this high,” she said.

Sean laughed. “The only worse paperwork nightmare I’ve seen was our short sale when we lost our house a year and a half ago,” he said. He held his hand as high as he could reach above the table. “A stack this high,” he said.

“We’re so thankful, though,” said Anita. “We were really down and out. But Sean got a new job, and now we own our new home. It feels good that a lender will take a chance on us again.”

Sean nodded. “And it feels good to come out of the shadows.”

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May 2, 2014

Real Short

“People have been going through hard times and I feel kind of guilty that we lucked out,” said Jena Scott. “The house we bought just a year and a half ago for $180,000 is now worth $260,000. Our Realtor says he hasn’t seen anyone else come out so far ahead so quickly.”

Jena shrugged her shoulders. “We just got so lucky,” she said.

It wasn’t all luck. Ron and Linda Jameson, the sellers of the house, were going through hard times. “I was down so long it looked like up to me,” said Ron Jameson. Ron is a building contractor and was hit hard by the economic crash.

“We bought when the market was swinging and my business was rolling, he said. “I put a bunch of remodel work into that house right outta the chute, but everything dumped right after,” he said.

Ron and Linda were selling via a short sale and would receive nothing from the sale, no matter who bought it or how much they paid. So, they could choose their buyer. They chose Jena and Jack.

“We chose the Scotts because we liked them,” said Linda. “We passed up an all-cash buyer who would have been more of a slam-dunk, but we wanted to give the Scotts a chance though they were first-time buyers with the possibility of loan difficulties.”

As it turned out, there was loan difficulty. The appraiser for the Scott’s lender turned in a low appraisal, $20,000 less than the sales price. The appraiser wouldn’t give value to Ron’s unfinished remodel work.

“It was all good work,” said Ron, “but I ran out of money and time before I reached the finish line.”

A low appraisal, especially $20,000 low, is typically a death blow to a sale. Banks won’t usually approve a short sale at that kind of discount. Cash buyers were on the sidelines waiting to jump in when this sale died, but the bank ignored common sense and didn’t look at any other offers.

“Through some kind of glitch in the red-tape process, the short sale was approved. Real short,” said Jack Scott.

The Jamesons were okay with it because they got nothing anyway. “We were just glad to have our loan debt forgiven,” said Linda Jameson.

“We bought way below value,” said Jena Scott, shrugging her shoulders. I’m so glad the Jamesons were our sellers.

That’s lucky.

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January 16, 2014

Draw the Line

A certain word associated with country property should never be forgotten. Hard lessons are learned when it is.

The lesson for me began with a phone message from my client, Jill:

“We have a problem. Would you give us a call, please?” Her voice was shaky. “Freddy won’t go away!”

Jill and her husband Jack closed escrow and moved into their new country home just a week prior. “Freddy” was the seller, Mr. Johnson, an old mountain man who didn’t say much. Jill dubbed him Freddy after a character in a horror movie. “He just creeps me out,” she would say. “He stares at us. And he wears that black felt hat and plaid jacket.”

I first met Freddy, that is, Mr. Johnson, at the side of the road. He held a rumbling chain saw, and stared at me. He made it clear I had inconvenienced him by interrupting his work.

“I’m looking for the owner of the property up the road, the two-story house with the pond in back,” I said.

He stared.

I explained I had buyers for country property and I was scouting for them. Did he know who owns the property?

“Yep.”

Did he know their name?

“Yep.”

Several ‘yep’s later, I determined he was, in fact, the owner in question. I eventually listed Mr. Johnson’s property, and Jill and Jack bought it.

I returned Jill’s call.

“Freddy’s up there right now,” she said. “At our pond!”

Forty minutes later, I stood next to Mr. Johnson.

“Pretty, ain’t it?” he said. The pond was the best feature of the property; clear, fresh, and private, surrounded by sycamores, maples and oaks.

As tactfully as I could, I told Mr. Johnson that Jill and Jack were uncomfortable with his unannounced visits. “It is their property now,” I said.

“Pond ain’t on the property,” he said, “this here’s BLM land.”

“But the fence line…….”

“Old cow fence,” he said.

I flinched and recalled a vision of my old mentor, KDV. “A certain word associated with country property should never be forgotten, babe,” he said. “Listen, bro, the only way country buyers will know what they’re buying, is if they get a………..”

“Survey,” I said out loud. “We should have gotten a survey!”

Mr. Johnson stared at me. “Yep.”

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January 7, 2014

Animal Aura

“No more charging bulls and no more vicious dogs, please,” said my client, Janice. “I want to find a place with good vibes.”

Janice was referring to two properties I had shown her and husband Mark. At the first a neighbor’s bull charged us and at the second a neighbor’s Springer Spaniel sunk his teeth into my ankle. In both cases, Janice and Mark had loved the property we were touring, but left in horror.

“Not this time,” I said. “I checked this one out this morning; no beasts as far as the eye can see.”

We drove up the gravel driveway, and curved behind a row of maple trees. At the back of the property, hidden from the road, stood a two-story cottage with a front yard of tall flowers and a vegetable garden behind.

A little round lady emerged from the front door wearing an apron, wiping her hands on a dish-towel. She smiled and waved as we arrived.

“I’ll be out in the garden,” said the lady. “You kids just make yourselves at home.”

The place smelled like a bakery. In the kitchen a pie sat steaming on the wood-block countertop. All the rooms in the house had high ceilings, wood floors and old-time wallpaper.

“I already love this place,” said Janice.

“Funky, but nice,” said Mark.

We headed out the back door. An over-sized black cat was sleeping on the back porch rail-cap. Janice and Mark strolled out to the garden and I hung back with the cat.

“Beautiful cat,” I heard Janice say.

“Oh he just visits. He belongs to my neighbor,” said the lady.

I reached to pet the cat, and in a flash, he sunk his fangs in my thumb. I stifled a scream and hid my bloody hand in my pocket. I said nothing.

“Let’s write it up,” said Mark as they returned.

Back at the office I put the purchase contract on the table.“What is wrong with your thumb?” said Janice.

I confessed the cat attack. “I didn’t want to tell you guys that yet another vicious animal lived in the neighborhood.”

“Come to think of it,” said Mark, “that bull was aiming for you. And the dog bit you; and the cat attacked you.”

“Yeah,” said Janice. “This place has good vibes and we’re buying it. And you should adjust your aura.”

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January 1, 2014

Dog Day

“That was really, really, scary,” said Janice.

“We could’ve been killed,” said Mark.

Janice and Mark were referring to the recent incident wherein a massive bull had charged the three of us in a pasture behind a ranch house they were considering buying.

“The place has bad vibes. Really, really, bad vibes,” said Janice as we drove away. She pulled bits of weeds from her hair with shaking hands.

We were now back on the road, after a break to settle the adrenalin rush, on our way to see another property I thought might be a good candidate for them to buy.

I pulled off the main road into a quiet tree-shaded country cul-de-sac, and up the driveway of a Tudor-style cottage home with a brick and stucco exterior, high-pitched tile roof, and tall mullioned windows.

Inside were high ceilings, tile floors, and plush bedroom carpets. At the conclusion of our inside tour, Janice stood in the center of the Great-Room. Shafts of sunlight highlighted the wood-paneled walls and brick fireplace.

“This place has a great feel,” she said. “I really, really like it. But we better go look out back.”

Mark was already in the large back yard, surveying the nearby properties for their bull population, no doubt. Although the place was adjoined by country property to the rear, none appeared to contain any livestock, and the homes on either side were of the residential non-bull type as well.

“Nice place,” said Mark.

“Oh, look,” said Janice, “what a cute dog. And not even barking at strangers.”

A Springer-spaniel in the yard of the next-door property rested his nose on the lower bar of the split rail side fence wagging his tail and his entire hind end, watching us with droopy brown eyes.

“Springers are sweet dogs,” I said as I walked over to the fence.

The Springer’s head shot forth through the split rail fence like a rattlesnake. He sunk his teeth into my ankle and ripped my pants as I pulled my leg away.

As we drove away Janice said, “Bad vibes, bad vibes again!”

Back at the office my mentor, the wily old KDV asked, “Did you find a property for that couple who were chased by the bull?”

“I thought so,” I said, “but it turned out to be a dog.”

 

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