What the Three Little Piggies can teach us about the real estate market.
We all know the story, the big bad wolf keeps creating havoc on the homes of the three little pigs.
The first little pig took the easy route made his house with straw. His brother little piggy built his out of sticks which was a little better. As I recall the big bad wolfed huffed and he puffed and blew their houses down--some versions have him having the brothers for lunch as well.
Big Bad Wolf as Buyer
OK, lets say the big bad wolf is a buyer--he looks at your home and sees cheap fixtures and chinzy cabinets and really bad workmanship or lets say the roof looks like it will leak with the next puff. . Well that will translate in this buyer to think the whole place is going to fall down--or needs to be redone-doesn't matter how much money you spent at Cheap Depot.
So lets say you are wanting to buy a house that needs work. Well third little piggy might apply for a 203-K rehab loan that will allocates an additional $35,000 for repairs and improvements. Here is a link to info on this type of loan.
Big Bad Wolf as Home Inspector
Most buyers will hire a home inspector--I suggest you have an inspection done in advance to get a feel for issues that may come up. Thre are many great Licensed home inspectors who can perform a pre-inspection to unearth surprise problems before the buyer's home inspector does. Check out my preferred vendor list.
Lets say the Big Bad Wolf finds you need a new roof which will cost $10,000. That means that on top of financing for the house, a buyer will have to get an additional 10,000 out of the cookie jar to pay for the repair---buyers don't want to deal with that. Some lenders may not give them a mortgage as a result too.
The first little piggy will simply deduct the cost but that is no good for some because they may not have the extra cash to do so.
The second little piggy might offer a reduction for more than the cost of repair as an incentive. The third little piggy would just fix it because something like a new roof is an important selling point. But lets say he couldn't fix it. Well he would consider to have the funds escrowed for the repair cost to be used after closing.
Big Bad Wolf as FHA Lender
Actually not so bad. The Federal Housing Authority offers incredible financing options for buyers -but it comes with some challenges. The house has to be in decent shape because they want to make sure the house will last more than a day. You can't have loose wires or cracks in the showers or leaks in the roof For mobiles you have to have hurricane tie downs installed in case a wolf comes by and huffs and puffs. You certainly couldn't have a house made of straw. There are also limits depending on where the house is located.
I suggest contacting your lender to go over the guidelines. If you need suggestions on who to talk to, give me a call.
Big Bad Wolf as Credit
It is so important to be ready to buy a property. That begins with knowing your credit and things to clean any messy debris left by previous huffs and puffs from other Big Bad Wolf. Sometimes were are our own worst wolves. Before falling in love with a house to buy, you need to know what you are prequalified for. Again I can help you find a great mortgage broker to help you--just remember it serves nobody to not be honest about everything in your finances.
Big Bad Wolf as Appraiser
These days an appraisal is ordered by the bank and then no one other than the listing agetn can even talk to them. After the financial crisis of the 2008. the Big Bd Government stepped in to try and separate the percieved cusshy lender, realtor, appraior relationship which may have over inflated hoem values whihc created a lot of home buyers later with upside mortgages. I make sure to meet with the appraisor to give realistic comps and any notes on them that may impact value. In the end overpricing a home won't help anyone.
These days it seems there are so many Big Bad Wolves getting in the way of buying a home--and a bunch of little piggies asking too much for their homes, little piggy buyers not wanting to reach very deep into their piggy banks to buy your home and a bunch of capitalist piggies reaching out to get paid in fees and whatever.
Well it isn't really that bad. Life isn't really a Fairy Tale. So let me help you through the Beauty and the Beast of Buying without having to Go Off to See the Wizard or finding the goose that layed the Golden Egg.
®2010, Michael Travis
I can't remember where the illustration of the Wolf came from so if it is yours please send me your info so I can provide proper credit for it. Thank you