Chicago real estate, living and neighborhood perspective

Deal or No Deal

Stopwatch
Image by wwarby via Flickr

With many home buyers looking to take advantage prior to deadline, many properties are racing off the market, and in some cases receiving multiple offers.  Some deals look too good to be true; doing some homework can prevent last minute obstacles that can stall the contract and make you miss the credit deadline.

Many non-warrantable buildings are sometimes priced aggressively, even if they are not in the foreclosure process.  Many buyers find it hard pressed to find financing for such property types.  As such, sellers have a lower percentage of qualified buyers with appropriate financing, or an all-cash buyer and so price themselves to hopefully target a larger demographic.

An association becomes non-warrantable when the owner occupancy percentage is too low.  There are financing options available but their terms diff from their conventional loan counterparts.  Large down payments around 20-35% is typical.

In some instances, high end homes and highly customized properties may have a hard time being appraised.  The more customized a home is the harder it is for an appraiser to find appropriate comps in the area.  This can usually be addressed by factoring in line items for each aspect of the home that is customized.

Verify whether the property is a short sale, REO, or just a motivated seller.  There should be different terms to a contract depending on whether it is a resale or a distressed sale.  Even with new guidelines that go into effect today, it is still unknown whether it will expedite the short sale process, and with just weeks before the credit expiration, some buyers may not want to be the first to test lender response times.

Some properties on the market may be suited to move right in.  Others may need minor repairs, while some need full rehabs.  If you are looking at a property that needs work, whether minor or major, be aware of what financing options are available.  Lenders require that a home be “habitable” to close; so depending on the extent of the work required, a conventional loan may not be suitable financing.  A HUD 203k loan has been popular for many of my clients looking at properties that need minor work.   There are guideline requirements for this loan, so speak to your lender to verify whether they offer these types of loans or any alternatives.

On some occasions, buyers may have to do work to the property prior to closing.  Past liens, taxes and assessments can also create unplanned financial burden for the new owners.  Use a strong broker and attorney familiar with the process to avoid unexpected circumstances, otherwise that home you thought was a killer deal may be a big headache.

Sherwin is a REALTOR® in the Chicago & Suburban area with @properties. Questions can be forwarded to Sherwin Sucaldito

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”Deal or No Deal” by Sherwin Sucaldito is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Based on a work at Realty Evolved

Realty Evolved