Yesterday was another day morning spent in the quest to find a suitable home for my young buyers available for less than $150,000. We viewed six homes, all of them lender-owned (no short sales as I no longer show those homes unless absolutely forced, with permission of my client.)
Three of the homes had notes indicating the lender also will help with the buyers’ closing costs, which was somewhat unusual. A lender usually compensates with price, not incentives (unlike a builder who does the opposite.) Two of the listings also carried notes about credits for repair and paint.
Those sound good, until you realize they probably won’t get past the underwriter. In today’s lending environment, fresh off times filled with fraud and cash-back schemes, anything that involves a check being cut back to the buyer is going to raise eyebrows at underwriting and likely (not absolutely, but likely) sink the loan.
There’s a simple solution, of course … reduce the offer price by the amount of the credit and let the listing agent know you’ve done so and why on the cover letter for the offer.
It’s not a perfect situation as it leaves the buyer needing the cash on hand to make the repairs themselves. But it also may be the only solution when dealing with lenders who aren’t inclined to allow a buyer to finance their repairs as part of the home’s value.
[tags]Phoenix real estate, real estate financing[/tags]