It's no secret that many Sacramento listing agents prefer to receive offers from conventional buyers over FHA buyers. The reasons are many and sometimes unfounded: Listing agents and their sellers like to see large down payments. They believe a large down payment makes the buyer more attractive and solid. They know that credit score requirements for a conventional loan are higher than those for FHA, so they sometimes believe that FHA buyers have lower credit scores, even when they don't.
Listing agents also worry that FHA may impose repair demands that could cost their sellers more money, but FHA's requirements have been relaxed somewhat. FHA no longer makes sellers replace cracked windows, for example.
No matter how you look at it, though, FHA buyers often get the short end of the stick when it comes to offers. I've had buyer's agents call me to ask before they wrote an offer if my seller would even consider an FHA buyer.
Here's the good news. Although there's been a lot of confusion, frustration and anger over the well intentioned but poorly drafted HVCC -- Home Valuation Code of Conduct -- it doesn't apply to FHA loans.
Many Sacramento agents are discovering that conventional appraisals are coming in lower than market value. Moreover, review appraisals are often demanded through underwriting. Escrows are blowing up. Of course, in the case of a Sacramento short sale, the short sale banks will often reissue a short sale approval based on the appraised value, but those underwriting demands delay closing.
A Sacramento buyer of a bank-owned home also received a low appraisal this week. The appraiser based the appraisal solely on foreclosed home prices and refused to consider the regular sales. Good thing the subject property was a foreclosure. The buyer's lender suggested at first that we contest the appraisal, and I don't understand that kind of thinking. Why? I represent the buyer. We have asked the bank to lower the sales price.
But in other escrows where I represent the seller, you can bet those FHA buyers are looking more attractive all the time. At least with an FHA buyer, the buyer's lender is free to choose a reputable, experienced and knowledgeable appraiser -- an appraiser who intimately knows the neighborhood, has appraised and been inside other homes in those neighborhoods -- so we are more likely to receive a reasonable and valid appraisal. You can order 5 appraisals from 5 different appraisers, and they can all deliver a different appraised price. It's just an opinion of value. An estimated opinion of value.
Photo: Big Stock Photo
Elizabeth Weintraub is an author, columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you.
The Short Sale Savior, by Elizabeth Weintraub, available in bookstores everywhere and at Amazon.com.
Sacramento Short Sale Agent, Elizabeth Weintraub, has the answers to your Sacramento short sale questions.
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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available through bookstores everywhere and at Amazon.com.
Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.
The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
