Most agents worth their salt know that the Federal Housing Administration insures loans for borrowers needing the benefit of minimal cash out of pocket so that those buyers only need to come up with 3.5% of the purchase price for the down payment. However, FHA has strict rules on which houses will and will not “go FHA” – that is, be approved for an FHA loan. Certain qualifications must be met, such as: any appliances installed must work, including heating system; no exposed wiring anywhere; no significant cracks, holes or water damage in floor, walls or ceiling; and many more. (For the full list, click here for an FHA Home Inspection Check List.)

An FHA 203k loan is a little bit different, though. With a 203k, the buyer is pre-qualified for a certain amount and can use up to that amount to purchase and renovate the home. So, let’s say I have a buyer who is pre-qualified for a $150,000 FHA loan. We find a home he wants to purchase for $120,000, but it has some cracks in the walls and the stove doesn’t work. My buyer can use up to $30,000, the difference between the purchase price and the amount he qualified for, to make repairs and improvements.

On a $120,000 house in Sacramento, $30,000 of improvements can make a huge difference!

Because it is still an FHA loan, there are certain restrictions on what types of improvements can be made, but even so, this is an amazing program that can help many FHA buyers get great bargains on some of those “fixers” around town that would normally have to be sold on fire sale to cash investors. I only wish I had known about the FHA 203k when I was buying my home.

For your buyers who can afford a conventional loan, our office has just learned about a product Wells Fargo offers – a conventional renovation loan. The basic idea is the same, but since the loan is not being handled by FHA, there are far fewer rules and a lot more leeway for what the buyer can do. We heard stories from Jen Ostrode, our mortgage consultant friend at Wells Fargo, about buyers who added master bedrooms or bathrooms, or another one who added a permanent foundation to a manufactured home. There are few limits besides creativity and imagination to what your buyers can do with these types of loans.

With all of these renovation programs, typically the only extra costs are about $450-$600 for consultant fees and inspections and an extra 1/4 – 3/8 percentage point on their interest rate. Both buyer and seller should also allow for a 45-60 day close of escrow. Small price to pay to get what could be your dream home at a deep discount.

Combine something like this with the Energy Efficient Mortgage and the ECO program I wrote about previously, and you’ll see that it’s an amazing market for buyers right now. And all of those buyers will need agents, so it’s the perfect time to start your real estate career in Fair Oaks, CA with us at Century 21 Noel David Realty. Call or e-mail our office today for more information.

Photo by heymarchetti

Last September, I bought a house and got new dual pane windows, attic insulation, and weatherization, and all those improvements didn’t cost me a dime. In fact, I save money every month because I did this.

How did I do it? Three words: Energy Efficient Mortgage.

Energy Efficient Mortgage, or EEM, is a program sponsored by the Department of Housing and Urban Development (HUD) designed to give buyers/borrowers an opportunity to increase their loan amount in order to finance energy efficiency improvements on a future home.

So if the loan amount increases, how do you save money? That’s the cool part. To begin an EEM, a Home Energy Rater comes out and figures out the energy improvements that would increase efficiency and lower utility bills the most, then makes recommendations on which improvements to make. The idea is that the money that the buyer will save each month on utility bills because of energy improvements made will be more than the added cost of the monthly loan increase.

To sum it up for you math majors:
money saved > money spent
Therefore:
your pocket = extra money

For those of you in real estate careers working with buyers, this is what’s known in the business as a pretty sweet deal. And here’s where it gets even sweeter. Out here in Fair Oaks, CA, and all over the Sacramento area, the Sacramento Association of Realtors (SAR) is sponsoring a program called the ECO Grant which gives buyers using an EEM a $2000 grant of free money. There are only five stipulations:

• Buyer must finance at least $4000 of the EEM
• Home must have been built prior to 1979
• Home must be owner occupied after close of escrow
• Agent must be a Realtor with SAR
• Lender must be an affiliate of SAR

That $2000 can be used on closing costs, energy upgrades, or to pay down part of the EEM. You can read more about the ECO Program at SAR’s website.

Sacramento is one of the leading regions for using the EEM, and one of the foremost experts on EEM is based right here in our area. Tom Carruthers and his wife Lee run Federal Energy Services, and they have been helping homebuyers with their Energy Efficient Mortgages since 1982. They helped me with mine last year, and I have nothing but good things to say about them.

The moral of the story here is that it is a fantastic time to buy right now, especially for those who would normally have to rent, and most especially in Fair Oaks, CA and the Sacramento area. Get signed up for the classes to become a real estate agent today and our office can help you get great deals for some of the multitudes of buyers out there.

Original photo by The U. S. Army

These days, selling real estate reminds me of a pickup line Tom Cruise uses in Top Gun: “I can see it’s dangerous for you, but if the government trusts me, maybe you could.” Don’t worry — this post is not going to compare how prospecting clients is like picking up women (though that might be a fun topic for a future post). Actually, the main point is trust.

How important is trust in the real estate agent-client relationship?

Of course, we all know the answer to this: trust is everything. In a real estate career, just like in almost any other sales-related industry, the client has to be able to trust the agent that he or she is going to act ethically throughout the process and that the end result will be satisfaction for both parties.

In an age where trust in advertising, newspapers, and even friends’ opinions is on the decline, it’s more important than ever to build a business based on marketing to those who trust you or think they could trust you. Which brings us back to “Top Gun.”

With the economy the way it is, military applications are increasing more than many other industries. All of these people will need places to live, and right now they have all sorts of military benefits for housing, such as VA and CalVet loans, First Time Homebuyer Credit extended for military, and the recently approved military forbearance. So this is the best time in decades for anyone to buy a home, and military members are the group with the best incentives. And all of those military members will be needing a real estate agent to help them take advantage of all of these incentives out there.

Here’s where the trust factor is huge. If you are in the military or are a veteran and you want to become a real estate agent or get a real estate job, you have a built-in client base with thousands of potential buyers or sellers who already trust you because, as Maverick says, “the government trusts you.”

So, while you may not be able to use pickup lines from “Top Gun” to get clients, hopefully you see now how important trust can be when it comes to real estate relationships.

If you’re in the military and are interested in a real estate career, e-mail us or give us a call and we can help you get started.