It's true that FHA buyers in Sacramento sometimes get the bum rap, if you know what I mean. Especially when trying to buy Sacramento short sales. That's because many listing agents believe conventional buyers are better for the following reasons:
- The credit score requirements -- FICO scores -- are higher than those for FHA
- Buyers put down more cash
- Appraisers rarely call for minor repairs
However, the fact remains that on a short sale, much of the time by the time short sale approval is received, the buyer has gone south. That's such a funny expression: gone south. I hope it's not discriminatory and, if you think it is, I apologize.
So, I ask you, which buyer is likely to hang in there for the long haul? The FHA buyer -- with an offer that often contains a closing cost credit -- or a conventional buyer? Conventional buyers get the edge 9 times out of 10 and can qualify to buy anything they want. Are conventional buyers more or less likely to wait through the short sale?
I propose that FHA buyers may be more loyal if, for no other reason, than their options are limited. It's all cash in the end.
The Short Sale Savior, by Elizabeth Weintraub, coming May 15th
Photo: Big Stock Photo
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Certified HAFA Specialist
My Sacramento Real Estate Listings
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 the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
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The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
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These are some good points that you brought up--and some excellent questions. Can't wait for your book to hit the shelves. :)
It's all true here as well down south, literally.
Elizabeth - Good question girlfriend. I've often wondered the same thing. I don't work with many conventional buyers (just the occassional investor). Most of my purchases are FHA (and last year CalHFA). I know for a fact that many of my FHA clients won't even look at short sales because of the process. The few that have made short sale offers typically walk after a few weeks because they found something better they like that isn't a short sale.
However, having said that, I am currently in escrow with an FHA client who waited three months for the short sale condo he's buying. Back in December (right before Xmas), when he made the offer, he was in back-up position. So, he continued to look around and did make other offers on some REO's but was never able to get any of them accepted. In February, he was contacted and was told that the other buyer had walked and he was now in first position and they wanted to know if he was still interested. OF COURSE!
He still continued to look right up until we opened escrow on March 31st. We were supposed to close this week but the bank has pushed the date out now because last week, the negotiator we were working with at the bank left and the new person coming in "needed some time to catch up". SERIOUSLY?
Here's our approval, here's the HUD-1 we approved, we're ready to order docs, there you go - all caught up, now let's close this escrow. Seems the previous negotiator wasn't authorized to have the bank pay off the HOA lien because that is now considered a junior lien and it must now go through the process of being approved for pay off. SERIOUSLY? Pay the bleeping lien and let's close!
NOW my client wants to walk.
Elizabeth: I think the buyers that stick around are the ones, regardless of loan, that have time expectations for a response that are reasonable.
I have to agree with you. Cash buyers are the first to walk, they think they shouldn't have to wait for anything. FHA buyers are much more loyal and understanding of things taking time.
Elizabeth, the FHA buyer illustrates supply and demand with their limited options, so don't discount them.
Hmmmm...we don't have too many FHA short sale buyers....and few walkers...thankfully....patience is a virtue whatever the financing.
We just don't have many short sales here. Does it really take a long, long time.
Good point most of the buyers do get discouraged with the process and those with fewer options may stick it out.
Elizabeth, I am thinking you're right...my daughter cannot seem to get a home in Southern California with FHA though she is well qualified. Just doesn't have the minimum 10% down for a conventional.....crazy market!!! ;-)
Hi Teri: Some agents discount FHA buyers, that's true. But I'm not one of those.
Donne: I see you really LOVE doing short sales, heh, heh.
Barbara: Short Sale approval can take 6 to 8 weeks if I'm doing them, unless it's Countrywide. Then it's 90 to 120 days.
Great Blog Elizabeth - Over in Humboldt I think it's even harder to get an FHA buyer accepted on a short sale. Many of the short sale homes that fall the buyer's price range are usually in the lower median price range and most if not all of those homes have visible minor and some major repairs that an appraiser would likely flag. So in our area - if there's obvious issues with the house the listing agents aren't accepting FHA offers.