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Cities that have been torn apart by recent tornadoes and floods are now seeing a big increase in home sales. Real estate agent Barb Maxon with Century 21 ProLink in Sioux City, Iowa, told the Des Moines Register that she’s made six sales in one week alone to Iowa families who have been displaced by the Missouri River floods. Residents, for example, from Dakota Dunes, Iowa, where hundreds of homes have been evacuated, are starting to look elsewhere for housing. Nearby Sioux City is getting a flood of its residents inquiring about new housing options, real estate agents say. Rental properties in Sioux City are quickly being snatched up and some families are even opting to purchase a second home for refuge. And other residents are planning to relocate entirely from the area and abandon their flooded area and buy a new home in Sioux City out of the flood paths. In Joplin, Mo., which had a deadly tornado rip through the town on May 22 that leveled a big portion of the town and left thousands homeless, real estate professionals also have reported home sales skyrocketing. One week after the tornado, 163 homes were under contract in Joplin, which is 10 times higher than its normal average, as those now left homeless are trying to snatch up the few housing there still left standing. Source: Des Moines Register
Federal Housing Administration (FHA) loans remain a great insurance policy that can help homeowners sell their home in a rising rate environment occurring in the future. Why? Because under certain circumstances a homebuyer can assume a government loan at the existing rate of the note, unlike most other loan types. Borrowers who buy a property from a seller with an existing FHA loan may be able to assume the seller’s note and save money if rates have risen. However, if the value of the home being purchased has appreciated since the original loan was taken out, the buyer may need to bring cash to the closing table in order to make up the difference. Additionally, the savings from assuming the loan must outweigh the cost of the upfront insurance charged by the FHA. The buyer must intend to live in the house as their primary residence, submit to a credit check, and sign a release of liability that absolves the seller from all future liabilities resulting from the loan. Also, FHA allows the lender to charge a $500 “assumption” fee, however, this cost likely to be lower than usual and customary closing costs of a new loan. It should also be noted that Veterans Administration loans are assumable as well, however, if assumed by a non-veteran, this may result in loss of future VA eligibility by the present veteran homeowner. Interested in an FHA loan to finance your next purchase or refinance? Now may be the time to act BEFORE rates move higher. Source: The Hershman Group
Cash buyers are flooding the real estate market in record numbers to take advantage of bargain housing prices. But these buyers may put consumers who need financing at a disadvantage. Sellers often prefer cash deals because it can mean faster closings and transactions that are less likely to fall through. Some sellers are even accepting lower offers because they are from cash buyers than higher offers from a financing buyer just because they view it as a more solid deal that will be quicker to the closing table. So how can financed buyers compete? Experts offer a few tips.
Get pre-approved for a home loan. “The smartest thing they can do is make sure they talk to a competent lender … to pre-approve them ahead of time,” says Mike Litzner, broker and owner of Century 21 American Homes in New York.
- Show you’re in good standing. You’ll improve your chances of getting a seller to accept your bid by having more cash that you’re willing to put down, showing you have a stable job, and good credit, Litzner says. Also, a well-prepared, typed-out contract that includes a cover page summary of the contract deals is another way to show you’re a serious buyer, says Dan Quinn, a real estate professional with Prudential Carruthers Realtors® in the Silver Spring area of Maryland.
- Offer more earnest money. Offering a high down payment and high deposit can also help improve your chances of beating out a cash bidder, Quinn says.
- Act quickly. “What I found out is with these cash buyers, they act quickly,” Quinn says. “To compete, you have to act quickly. A lot of times, these are investors and they have a relationship with these listing agents
Realize, however, that while some sellers may be highly motivated to accept a cash buyers offer, even if it’s lower than others, sellers with more equity in their homes may be less wooed by lowball cash offers, says Donne Knudsen, a loan originator with Cobalt Financial Corp. in Los Angeles. Instead, sellers who still have equity in their homes likely will be more motivated by the best and highest offer, since closing quickly may not be as critical to them, she says. Source: MarketWatch