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What Palm trees in Texas? Yes Austin is the place that intrigues and surprises people from all over the world. We have an amazing country side, away from the Capital of Texas, that even amazes and mesmerizes Texans1 this is an overlook of one of the many lakes in the lake region to the west of Austin.

Keep you eyes open for more beautiful photos of the area...

Let m know if you want a view like this!

Bob Kenney,
Realtor
®
 Email: bobkenney@reillyrealtors.com
  

How come some of the listings I see on public search sites do not reflect current status or correct pricing?

Hi Jason,

Good question and one that has, depending on who you ask, fingers pointing in every direction! The advent of such sites as Zillow and Trulia (the 2 best known but not the only 2 search sites for real estate) has been the development of local MLS (Multiple Listing services).

These services act as the bulletin board for realtors to post (list) their listings and leases in a given market area. These listing are pretty complete and comes with a set of rules the users need to follow in order to use the service. Like reporting all price changes, changes of status and sold information once a transaction if closed. There are usually fines associated with violations of these things and the separate entities do best to police themselves and their members. Accuracy is probably 95%

At some point in town these 3^rd party sites , Such as Zillow/Trulia, came into being and the MLS's communities saw this as an opportunity to broadcast their members information onto a wider national platform. I most cases costs of sharing the information was minimal because there platforms do not typically charge to list the properties.

How can they do that? Because they do charge advertisers that are attracted by volume of visitors to their site. So for these companies the more listings they have the larger number of audience they attract. They also can tap the Realtor® market by selling placement services on each property landing page. Ever see the “Neighborhood expert” spot? Well I can tell you from experience they are not experts in the neighborhood they appear next to. They have just paid to be placed there as the expert..Never mind going down that path but it is a little misleading to say the least..

So now you have all of this information posted on sites not under the same guidelines as the original host site. Some of these sites data fields don’t match up the same, sometimes the data is corrupted, sometimes the changes to status and price to not make it to the 3^rd party site, some times the changes make it but the site reads it as a duplicate and does not publish the changes. I ave hear a lot of excuses from various 3^rd party sites over the years.

These sites have different ways of advising the public on what estimates are for home values although usually those values have noting to do with market activity in a given market place more to do with public tax evaluations and other public information. In Texas sale information is not made public, the 3^rd parties respond well if you want more accurate information to be given by us release the sold information to us. By law it just does not work that way so they go ahead and publish information that is inaccurate and helps create this market confusion over prices.

It is a nasty spiral and one that is about to change. A lot of MLS's around the country are not sending the information to these 3^rd party companies anymore. This will leave them looking for other ways to generate traffic to their sites. In that past they have down played the accuracy of the information saying it is not our data we just show what is given to us. Being a realtor and have data misrepresented on these sites and trying to get the information changed is not an easy task.

I actually had one client call and started crying on the phone that she had just gone on and done an estimate on one of the 2 biggest sites and they told her she had lost value in her home over a 4 year period and lost all of her equity. I of course panicked because I knew that was not even remotely possible because of the property she purchased. The comps showed her not only was her equity protected but she had actually realized a a nice appreciation. We sold her home and she now does not visit those sites anymore.

So there are many reasons the data may be different. The feed with the updates not working, service agreement that bought original data to the 3^rd party site is out of contract and they just not updating stale info. Duplicate listings from different sources some being updated some not being updated. Agent has not updated the info on the original MLS site.

The best solution would be to contact the listing agent (If you can find their name since even that information is blocked by 3^rd parties sometimes so they direct you to a paying advertising agent) and ask what the status is. Anytime you are looking at real estate it is a good idea to verify all information before you act.

Hope this helps.

Please feel free to visit: http://www.austinhomelistings.com/agents/robert-kenney/

For real estate information in the Austin and surrounding areas.

Regards

Bob Kenney, Realtor®

Mobile/Text: 512-922-4922

I want a friend who’s Real Estate License has expired to represent me as an agent, but no Realtors are willing to help me find a home? What is going on?

Hi Jean,

Thanks for the question.

So to answer your question. You want a Realtor® to search the market for a suitable home, Make appointments, provide you with current data and advise you on the market and what you should pay for a home, write the contract and have your friend receive the commission?

First of all your friend can not receive commission from a real estate transaction because he/she are not licensed. If they have an interest in participating in real estate transactions such as yours here is my advice:

You should suggest to your friend that they reinstate their license. Then they would be able to refer you to a licenses, practicing Realtor® and ask for a referral fee. That way your friend generates some funds for referring his excellent client and the Realtor® actually doing the work and assuming all of the responsibility and liabilities, that go with that work, gets paid for their service to you. A win win situation for everyone.

Please feel free to give me a call if you need more info.

Regards,

Bob Kenney, Realtor®

Mobile/Text: 512-922-4922

I am thinking about listing my home and a friend referred me to an broker who provides limited services. What does this mean?

Hi Jennifer,

Great question.

There are some brokers that provide "limited services" for buyers and sellers of real estate. If you include the phrase “limited representation” in this description you would have a clearer picture of what they are offering.

From my experience they usually offer a seller to list the home in a locale MLS and maybe put a sign in the year. The seller is responsible for making appointments, following up on agent visits, any interaction with interested parties and all marketing and advertising expenses. In some cases they will receive an offer but consulting on the offer is an additional charge from their “services menu”.

Most of these “limited services” brokerages will offer all of the additional services from a “services menu”.These services are on a fee basis(A la caret). $$ for sign, $$ for asking agents what they thought about your property, $$ for negotiating contracts etc. There may be some advice given when an offer is received but typically the seller is relying on his or her knowledge about the real estate market to make decisions.

For this limited service they will charge you less than what a full service brokerage would charge you to list the home. Full service brokers on the other hand become your partner in the process. Running interference with buyers agents and their clients by gathering answers to questions that they know will be asked beforehand, marketing and advertising costs are paid by the agent/broker, getting the best possible exposure for your property, advising on strategies, pricing and timing of market conditions, advising on what needs to be done to get a home ready for market, doing analysis of the market so you can be competitive when you list, handling all of the paperwork that will be needed for a successful transaction. There is much more that each individual agent brings to your table that is not on a Service menu basis but part of the obligation that the real estate agent has with their client.

For buyers similar limited representation, they may get notified of listings in the area they are interested in but when it comes time for making appointments with listing agents or sellers it is all up to the buyer. They will produce an offer for the buyer at the time the buyer identifies a home they are interested in and in a lot of cases prepare offers for homes they have not even visited. I once had an out of town buyer contact me to see a home my broker had listed because his agent said if they were only in town to look at homes he did not have time to show them properties, just let him know when they found something they liked and he would write an offer!!

Everyone is entitled to their own opinion on this type of service. I had a client once mention after talking to a limited service company it felt like having to go to court with out your lawyer!

In either buyer or seller case it depends on how comfortable the client is with dealing with the whole process by themselves. Sometime the opposing agents get a little frustrated by doing the work of 2 agents but having to pay the other agent a commission for less than full service. For the full service areal estate agent at the end of the day it only matters if their clients interests are best served so you do what you have to for your client.

I would strongly suggest you meet with a full service brokerage in your community and compare the level of services and dedication you may find with a full service brokerage. Keep in mind it takes a lot of the stress off of you during the selling process when you have someone working side by side with you instead of being available just a FEE away!

Good luck in your listing. Please feel free to contact me for Full brokerage services if in the Austin, TX area or if you need a referral for anywhere else in the world!

Kind Regards,

Bob Kenney, Realtor®

Reilly Realtors

Mobile/Text: 512-922-4922

Do Open Houses really work to sell my home?

Thanks for the Email Jack,

There are a couple of different schools about Open Houses

A) While the additional exposure can not hurt the marketing of a home. A large percentage of the time the Open Houses benefit the Realtor® holding the home open to the public.

The agent has a chance to interact with the people coming through the doors and if this is not the right home than maybe they can help them find another one that would be a better fit.

B) Open houses are a great for the exposure of the home in any kind of market.

So you have agents that are looking for the opportunity top “pick up buyers” and agents who believe in exposing the home to as many individuals as possible hoping to generate interest in your home.

In my experience a buyer walks into an open house blind maybe less than 5% of the time. I believe open houses are a win win for the homeowner and the agent as it helps expose the property to a market (people that love to go to open houses) and to neighbors that may have friends or family wanting to move into the area.

It really comes down to the homeowner and how they feel about open houses. I have had clients prefer not to open their homes up to the public. Trouble of getting the home in “showing condition” worry about personal property etc.. I think it is a marketing tool that has to be discussed before you list the home so that everyone’s expectations are set before the home gets to market.

So to recap – Yest it can be helpful to have open houses, especially at the beginning of a listing, but it depends on homeowners feelings about preparing and opening their home to the public.

Have the discussion up front with your Realtor® They will know the locale market and how important/unimportant it may be from a locale market perspective.

Good luck with the sale of your home Jack.

Bob Kenney, Realtor®

Reilly Realtors

Mobile/text: 512-922-4922

 

 

 

 

 

I am ready to buy a home should I have financing arranged prior to a search?

Hi Angelia,

While there is no requirement for you to have been approved prior to a search there it is a very good idea for you to have talked to a mortgage lender and if possible get a per-approval so that you will know what price range you can afford.

He process moves astoundingly fast once you place an offer on a home. So as many things as you can do in preparation for closing on a home of your choice the smoother the transaction.

• Financing – Know what you can borrow based on your income. Debt obligations and cash reserves. A licensed professional is the best source of information. There are several ways to find a good mortgage lender.

Realtors® are a good source. They will give you the names of lenders they have worked with in the past and have proven to be good representatives of their clients best interest. Among other responsibilities your agent should be looking out for your ability to close a transaction w/in a specified time frame and knows lenders who are capable of processing and closing deals in the most efficient way. Make sure you talk to all referrals, sometimes clients can get a feel for personality fits after talking to a lender.

Banks. Your bank is also a good source. If they do not have mortgage services available they most likely have a corresponding relationship with another bank that does.

Friends that have recently closed on a home – If you have close friends who’s opinions your trust ask them about their experience with their lender of choice. A lot of clients value the opinion of people they know and trust.

• Current living situation – Regardless if you are in a lease or own a home. Have a plan in place to shift out of your current living arrangement. If you are having to break a lease make sure you know all penalties/options available to you from the management or owner of your lease unit.

Ask your Realtor® to do a CMA on your home and see what current market values are. A lot of consumers have inflated ideas on home value and the mortgage lander will need to know what you owe and what the current market value.

• Timing – A lot of people forget they have to specify a time frame on the offer contract that they intend to close on a home. There are several other time deadlines in the contract that must be met as well so make sure your agent explains all of the phases of the contract and exact deadlines that you have to perform under the contract terms. Pay close attentions to any changes that may be made during a negotiation some of these dates may be negotiable.

 

• Consumer purchases – All mortgage lenders will tell you right up front - “DO NOT MAKE ANY LARGE CONSUMER PURCHASES DURNG THE APPLICATION PERIOD”

It is tempting to buy appliances, furniture etc before moving into a new home. Any credit purchases of changes in cash positions will have an affect on the Debt to Income ratios the lenders use to help determine your ability to make mortgage payments. Hold off until after the home closes. The lending company is going to verify your credit/bank account balances and employment w/in 3 days of closing. If there are any large changes this could affect your closing date as they will need to verify the changes and possibly ask for explanations about cash deposits etc..

So best advice is to have as much of your financial information in order to help delay approval process. Be proactive in finding out reputations of the lenders your are targeting to use and listen to what your referring sources have to tell you. Seek advice only from qualified professionals. They are in the business everyday and may know some things that lenders will not tell you up front.

Hope this information assists you.

Please do not have any hesitations in contacting me direct if you have further questions.

Regards,

Bob Kenney, Realtor®

Mobile/Text: 512-922-4922

Contingency offers: Good or Bad?

Most agents selling real estate in the last 10 years has received a “contingent on the sale of other property” contract at one point or another. Is it good or bad for your seller client?

Like everything else in a negotiation it just depends on what the property being sold is, How it is priced compared to the market conditions and the terms that are offering.

FACT – The majority of consumers looking to buy a new home will need to sell an existing property to access equity and reduce Loan to Value ratios in order to qualify for a new mortgage. Of course there are exceptions to that statement. Buyers with Cash, someone who may own an existing property outright but most people will need to sell one home to buy another.

So it all comes down to TIMIMG

I urge my clients to look at the offer they receive 1^st and once they address any terms that need addressing but before there is a response, then look at the contingent property.

This requires a little more cooperation from the buyer and his/her agent. Once a consumer has found a home they want to buy they tend to get pretty serious about getting their property sold. If the property is one the market and they have an offer that is past the option periods then it is still considered contingent but it is a little stronger than maybe something that is not on the market, not ready for the market and is going to be priced too high for quick contract.

Each situation is unique and I think contingency offers need to weighed just as seriously as non contingent offers. Is there risk for a seller to take a contingent offer? Yes. What if the contingent home does not close on time? You would have signaled to the market that you have a contract on the property but a contingency and it may be dismissed by some other potential buyers. Are there benefits for the seller ? Yes typically you can be a little firmer on price that with someone who may think they can discount you property if paying cash or other favorable terms.

So I would always suggest that the offer be considered as serious as any other offer and treat it was much respect. In 13 years as an Agent I have had only 1 Continent deal fall through and it was a client who was not very honest about the sale of their property. Other than that I have concluded several contingent contracts successfully and when a buyer is in that position I have learned that the presentation of the offer, terms and status of their home sale if handled correctly can be a positive for the selling client.

Let me know if you have any questions.  I appreciate your referrals!!

Send questions to Mobile/Text: 512-922-4922

Regards,

Bob Kenney, Realtor®

Texas Homestead Exemption Application

If  you have purchased a home in Texas in 2013 as a primary residence you are eligible to apply for what is called a “Homestead Exemption” after January 1, 2014.

There are several companies who will advertise to you that they can file this application for you for a fee. Do not pay the fee. There is no charge for this application it is free!

The county in which you reside will have the forms available to you as a PDF (in most cases) print it out fill In the information and send it to the address on the form.

Travis County link is here: http://www.traviscad.org/pdf/Forms/Exemptions/50-114_Homestead%20Exemption%20Form.pdf

Hays County link is here : http://www.hayscad.com/forms/

Williamson County link is here http://www.wcad.org/Appraisal/PublicAccess/Forms/PublicServices/HomesteadExemptionApplication.pdf

Also here is a copy of a blank form – Whatever county you live in simply fill in the tax appraisal district information and follow instructions. You can find mailing address on your locale appraisal district web site: http://www.window.state.tx.us/taxinfo/taxforms/50-114.pdf

What is a Homestead Exemption:*window on state goverment http://www.window.state.tx.us/taxinfo/proptax/tx96_295/home.html

Savings on Home Taxes   

An exemption removes part of the value of your property from taxation and lowers your taxes. For example, if your home is valued at $50,000 and you qualify for a $15,000 exemption, you pay taxes on your home as if it was worth only $35,000. Other than exemptions for disabled veterans or survivors, these exemptions apply only for your homestead. They do not apply to other property you own.

Does your home qualify for exemptions?

You must own your home.

To qualify for a general or disabled homestead exemption, you must own your home on January 1. If you are 65 years of age or older, you need not own your home on January 1. You will qualify for the over-65 exemption as soon as you turn 65, own the home, and live in it as your principal residence.

Your homestead can be a separate structure, condominium, or a mobile home located on leased land, as long as you own it. Your homestead can include up to 20 acres if the land is used as your yard.

A residence may be owned by an individual through an interest in a qualifying beneficial trust and may be occupied by a trustor of a qualifying trust.

If you are not the sole owner of the home, you will receive only a portion of any qualified exemption, based on your percent of ownership. For example, you own a 25-percent interest in a homestead valued at $100,000, for a total value of $25,000. You will receive 25 percent of a $15,000 school homestead exemption, or $3,750.

You must use the home as your principal residence on January 1.

If you have more than one house, you can only get exemptions for your main or principal residence. You must live in this home on January 1.

If you temporarily move away from your home, you can still get an exemption if you don't establish another principal residence and you intend to return. For instance, if you enter a nursing home, your home still qualifies as your homestead if you intend to return.

Renting part of your home or using part of it for a business doesn't disqualify the rest of your home for the exemption.

Note: Texas has two distinct laws for designating a homestead. The Texas Tax Code offers homeowners a way to apply for homestead exemptions to reduce local property taxes. The Texas Property Code allows homeowners to designate their homesteads to protect them from a forced sale to satisfy creditors. This law does not protect homeowners from tax foreclosure sales of their homes for delinquent taxes.

So get your applications in and don't be fooled by the offers to make application on your behalf.

Let me know if you have any questions.

Regards,

Bob Kenney, Realtor®

VP Turnquist Partners Realtors

Mobile/Text: 512-922-4922

I need to lease a home, can my Realtor help me?

Hi Loni,

Thanks for the question.

In most cases your Realtor® will be very happy to assist you and very appreciative that you thought to seek their advice and assistance.

Leasing of homes and apartments is handled different all over the United States. Each market seems to have it;s own system in place. In Austin, Texas your have either a leasing company or management firm, apartment owner leasing, Listing agents (Brokers) that will list your unit in MLS for all realtors to see.

Some Realtors® prefer not to assist clients in leases. This is always an individual decision by the agent. I have found that telling a client they are no interested in assisting them but “hey don’t forget to call me when you are ready to buy”, is not a very good business policy!

If I have a client in need of assistance on any type of transaction I will do my best to handle the transaction or if not qualified find someone with the experience needed to give them the best representation.

For a Realtor® they earn a commission from the leasing transaction after the client has been approved for the lease and lease the terms are negotiated and the lease is signed and funded (security deposits and rent payments made). Typically the Realtor® will receive a % from the leasing company or listing broker between 30-50% of the 1^st months rent.

There is a lot of paperwork associated with the lease process , at least here in Austin, and it is very chaotic as every company/broker has their own sets of rules in order for an applicant to be accepted. I personally think there is a better way to handle leasing process but think until a more efficient process is introduced there is just no way to get around the pain of the leasing process.

The majority of agents will assist you in this transaction so please make that call!

I will point out that in some markets around the country the leasing market is very tight with available inventory. There are usually multiple lease applications on desirable properties and how you present your application is essential in obtaining the lease. So work with your agent and let him/her find out exactly what is required to present a strong application. Do not assume that this is any easier than buying a home! Sometimes it seems to be even more difficult to get approved for an application than a mortgage.

The main reason is that the owner of the unit is trying to get his monthly cost of carrying the property covered by the rent. Any disruption in the rent payments could be costly for them so they want to make sure they are not having to re list the property every couple of months and gamble that they might loose income for any period of time.

So emotions run high in these transactions. Don’t be put off bu being rejected, a lot of lease negotiations fall off prior to the finale leases being signed so it is good practice to keep in touch with leasing agent for the next 5 days or so after they have decided to go with another applicant. Don’t stop looking just keep it in play until it becomes more finale.

What to have prepared for a lease application:

1.You will need to approve the leasing entity access to your credit and criminal history. This is usually included in the “application fee”. They will access an on line service that costs between $30-$50 per applicant (You will need separate applications for each adult that will be named on the lease) It is usually required that this application fee be paid with application in certified funds (money order or cashiers check) and made out to the leasing entity. This fee varies but runs between 40-75 depending on the company. Yes more than the costs of the reports!

They will send you an Online approval from the credit checking service asking for permission to access your records. Be prepared to check spam box if you do not get anything w/in 24 hours

2. You are sometimes required to also submit security deposit (typically 1 months rent) by either cashiers check or money order. It is usually made out the owner of the property but some leasing companies have escrow accounts so from time to time you make these out the leasing company. You really need to know this info up front so make sure your agent asks!

I know – "WHAT!  I have to give them security deposit before I know that I am approved? " What happens if I am not approved? This is one of the broken features of the leasing process in Austin market. I cant tell you the number of times I have had to fight with the listing entity to get these funds back. Some will just hand you back the cashiers check/money order and your client can return to where they purchased it to convert it back into dollars. Some will actually cash the check and then wait 7-15 days for the funds to clear then issue you a refund check, some very unscrupulous companies will tell you you lost the funds and you need to get very argumentative to get funds returned. If nothing else this is a great reason to have a Realtor® involved.

  
3. Read the lease carefully (as with any legally binding document) and make sure you know the terms of the lease. Make a copy of it and keep it handy because after the term of the lease there are certain time deadlines you will be responsible for and you will want to have a quick reference

Hope this answers your question Loni. Please feel free to contact me if you have any firther questions or need a referral!

Regards,

Bob kenney, Realtor®

VP Turnquist Partners Realtors

Mobile/Text: 512-922-4922

“What’s going on in the market?”

Ever ask a Realtor this question at a party or social event? Surprised at the generality of the answer?

We as Realtors are taught to respect the Agent/Client relationship. If you are not formally working with an agent you are what we refer to as a customer.  In an Agent/Customer relationship there is no general understanding about the respective roles of each individual.  A Realtor sounds guarded because we are taught not to give advice that others may act on if they are not clients. Seems trivial but it is rather fairly straight forward. You might not reveal all the particulars about a property or transaction you have in mind when you ask the question. You act on agent’s thoughts and later feel you were misadvised about the state of the market. This has actually happened and as a result Realtors have been faced with having to defend themselves in law suits.

In an Agent/Client relationship there is full disclosure of motive, fiduciary responsibility of the Realtor to protect these motives and all personal information disclosed in the relationship. This fiduciary responsibility survives any contractual dates and a good, professional Realtor will make certain you are advised of these facts. Thus when advice is given it is specific and well thought out.

There are several misconceptions a professional Realtor deal with on a daily basis “every Realtor should be advising me on the market conditions” and “why should I pay a commission, I know plenty of people who want to buy my home”.

Well 1^st and foremost I am a professional and I earn a living and pay my bills by advising my clients about the sale and purchase of real estate. If I were to come into a consumer’s work place admire a particular item or service and say “great, I like that can I have it for free” I don’t think I would get a very good reception. Unfortunately this happens quite a bit in Real estate.

There is also a general misunderstanding in regards to the costs of a Real estate professional participation in a real estate transaction. Some consumers look at the commission as an inflated cost that no one agent can justify. I like to educate my clients explaining that the total commission does not reach my pocket intact. There are typically broker fees, expenses that are paid out of pocket by the agent (in 90% of the cases there is no expectation of reimbursement, even if a deal does not happen), Federal tax liabilities and regular expenses associated with maintaining license/ association memberships etc. 

It is just like every other business out there. You have a gross and a net compensation. The goal of every Realtor is to increase his/her sales to help average the costs of maintaining their license and professional designations.

Commissions are such a touchy subject with some consumers and Realtors that they tend not to talk about the costs associated with a transaction. In my business plan I have a mix of business. Client referred, repeat clients, new client associations through marketing and market exposure, Realtor/Broker referral business and 3^rd party relocation referrals. All of these types of clients are treated equally by me even though they all have some different fee structure associated with them. The goal at the end of the year is to achieve an income level that allows reinvestment back into the profession and earn a sustainable living.

There is a reason that Real estate plays such a large role in our current economy. It is not only the Realtor commissions that generates income, all of the inclinatory services from Property inspection, appraisal, title or attorney fees, mortgage lending, credit reporting, moving services, home improvement if you think about it one transaction generates a lot of momentum into the economy and it is no wonder we were in such dire straits when the markets ceased in 2009/2010.

So next time you are talking to a Realtor at a party or social gathering ask “how his/her business is going” instead of “what is happening in the market”. You might get a different response then what you are used to. And don’t be surprised if the Realtor asks if you are in the market and if so do you have an agent representing you interest. They are asking for a reason.

I wish you all the best of luck in 2014.

May your dreams come true, your goals be realized and your health well

Kind Regards,

Bob Kenney, Realtor

VP Turnquist Partners Realtors

Mobile/Text: 512-922-4922

Email: rkenney51@gmail.com

“I am ready to look for a new home. What should I do first?”

Congratulations!

OK 1^st thing you want to do is determine how you want to purchase the next home. Several options

A)     Cash

B)      Mortgage

C)      Borrow against assets

These are but 3 most conventional options. The point is to have a financing plan in place so you do not spend time looking for something you might not be able to purchase.

When you contact a mortgage professional there are a few things you want to make sure of.  Like any vendor relationship get referrals from people you trust then do some checking on your own.

A)     They are a licensed lender

B)      The company the work for should have reviews/ratings on various web sites

C)      Find out what fees are involved above and beyond the amount borrowed and how long it will take to close a transaction once you go under contract.

This is as serious step as making the actual purchase. You will be providing the selected mortgage company and individual with very sensitive financial information and you need to know that the information is not going to be disclosed to anyone outside the transaction.  Be prepared with 2 years of Tax returns, Debt information, all sources of income verification. This is all used to calculate your debt to income ratio which will be used to determine how much you will be able to borrow and the terms of the loan.

The company you choose will need to be able to conclude the transaction based on the terms of the purchase agreement. So it is important to ask how long you will need for the loan process to be completed and the loan funded.

This is part of the contact that deals with ‘Time is of the essence”. If you are financing any portion of the purchase the 1^st time deadline is usually the time negotiated in the contract to get financing approval. There are several things associated with this 1^st step all of them have to happen in order for you to get approval for the mortgage

 

A)     You must make written application with a mortgage company. This is when you are going to need all of the records that will be needed to determine your ability to receive your loan. I strongly suggest you ask your representative as soon as you talk to them a list of the required documents. Each company has slightly different underwriting standards so the things they require from you may vary.

1)      Tax Returns – They will pull what is called a tax transcript from the IRS. This should be done very soon after you make application. This will verify that you have submitted your tax return to the IRS and that the information matches the copy of the return you provide them with. It is important to provided them with the return tht matches what the IRS has on file. So if you submit an amended return include it with what you provide the mortgage compay. Any discrepancies can delay your loan approval considerably.

 

2)      The lender will pull your credit report (typically you only need to provide them with permission to access the report on your behalf) some people will pull credit reports on themselves within 6 months of making a large purchase. One reason is to see what the score is and the other reason is to see if there are any mistakes on the report. You would be surprised what come people find on their reports and if you have a little time to try and get them straightened out before a big purchase than it will help the process along

If a lender finds something that if adversely affecting the report rating, they can sometimes help fix the issue so this step is usually taken very close to the application date as well. Some time fixes can take up to a week or more depending on the reporting institution.

3)      The period from the application date to final approval is typically referred to as the 3^rd party Financing Option period. This can be anywhere between 15-21 days typically but varies by lender. Please make sure you ask your vender how long it will take them to get financing approval. If you contract at 15 days and then find out you need 25 days then you put additional pressure on all parties and if the lender is feeling rushed or cannot process the load application w/in the time line they may reject it based on incomplete information.

 

4)      Interest rate – The lender is going to give you information on what the interest rate is for loans on a given day (Yes it fluctuates daily). Once the lender feels good with the information you provide and has a handle on the application process they should begin to talk about “locking the interest rate”. What this means is that they will offer to close your loan on the negotiated closing date based on the “lock rate”. So if you apply and the rate os 4.5% and you see it inching up to say 4.75% you will want to talk to the mortgage person to see if you can keep it from floating on you. This is called “locking” and is an agreement by both sides to close the transaction at a set rate. This option is available to all consumers but you should be aware of what the economic conditions are. Most lenders will only lock out so far (typically 30-45 Days) they are taking a risk when they “Lock” so everyone has to be aware of what factors may influence the rates either up or down.

 

5)      Appraisal – This is property appraisal and part of the approval process. In today’s fluid real estate market this is a very important component of the whole process. The financial entity you will be using is going to lend you money based on your loan to value ratio(LTV).  The term is commonly used by banks and building societies to represent the ratio of the first mortgage lien as a percentage of the total appraised value of real property.

 

For instance, if a consumer borrows $130,000 to purchase a house worth $150,000, the LTV ratio is $130,000 to $150,000 or $130,000/$150,000, or 87%. The remaining 13% represent the lender's haircut, or amount at risk if the loan is defaulted on, all adding up to 100% and being covered from the borrower's equity. The higher the LTV ratio, the riskier the loan is for a lender.

 

Appraisals are responsible for more deals falling apart in some markets than any other factor.  Selling agents and buying agents will have done their due diligence to make sure the home is being marketed at current market price. Unfortunately appraisals are sometime behind the market values if an area if very popular. It could be because they can only use data from homes that are comparable to the subject property and if a particular neighborhood has not had many homes for sale then they will need to expand outside the area and adjust prices according to makeup of the other neighborhoods. Another determining factor is what sale information is available to the appraiser. A home closing w/in a week of the appraisal my not have the information in a place that can be used to help determine value.

 

Having a knowledgeable appraiser who is educated on a particular areas values and sale histories is crucial but not always possible. As a result an appraisal may come in “Under value” which will adversely affect the LTV ratio and may cause a loan to be denied based on the lenders criteria. There are solutions to these issues but they may well add delays to the closing of the transaction.

So as you can see it is very important that everyone involved in the transaction is active and aware what is going on during this initial financing option period. Everyone from the agent(s) to the borrower needs to be actively updated and advised on any delays or early acceptance so that the expectations of the contract can be managed effectively. Make a note on your calendar for a reminder to check in with the mortgage person at regular and short intervals and keep notes when possible about the conversations so you have a clear understanding on where in the process your loan application sits.

The Agents do not need to know the personal financial particulars of your loan only whether or not the criteria is being meet or if something is going to be a factor in successfully making the contract close as per the contracted date.

So the short story is: Make sure you are dealing with a competent, seasoned and trusted lender when making a loan application. Talk to friends and your Realtor and get referrals and PLEASE make sure you ask for references.

If you should have any questions please do not hesitate to contact me anytime

Mobile: 512-922-4922   email rkenney51@gmail.com

Bob Kenney, Realtor