Posted by acw on January 18, 2010 at 08:04:18:
Ken…thanks very much for your input. I will try the Stip sheet as a contingency in my agreement.
~Tony
FHA buyer…(sigh) - Posted by acw
Posted by acw on January 17, 2010 at 11:47:17:
The 90 suspension will create more of these buyers…but FHA buyers come with FHA guidelines and concerns for closing.
? What are some of the Caveats of dealing with a FHA buyer?
? Can you get a non-refundable deposit from an FHA buyer?
Appreciate the constructive input…
Re: FHA buyer…(sigh) - Posted by David Krulac
Posted by David Krulac on January 17, 2010 at 22:41:11:
-
tighter inspections, lead paint, railings, broken or cracked glass, spalding driveway, smoke detectors,etc. etc. etc.
-
No.
Re: FHA buyer…(sigh) - Posted by Kristine-CA
Posted by Kristine-CA on January 17, 2010 at 11:57:14:
The only thing that’s changed is the 90 day seasoning. All the other
anti-flipping regs remain in place. Which means selling for 20% or
more above your purchase price will require additional documentation
and/or additional appraisals.
It’s spelled out easily and clearly here:
David - Posted by acw
Posted by acw on January 18, 2010 at 08:07:45:
David,…there are two paragraphs requiring 1 check mark to indicate whether the contract is contingent on financing or not. I think if you check the one that says it is not contingent on financing, your deposit is non-refundable.
I will double check with a FHA underwriter that i know…
Thanks very much!
~Tony
Kristine… - Posted by acw
Posted by acw on January 17, 2010 at 12:25:39:
Yes…i saw that. A little language needed from the appraiser stating why the property is worth more now.
Can you get a non-refundable deposit from an FHA buyer?
don’t know your contracts but here… - Posted by David Krulac
Posted by David Krulac on January 18, 2010 at 10:03:14:
an FHA buyer, would have a morthahe contingency and therefore would have a REFUNDABLE deposit. If the buyer had a non0-refundable deposit, they would most liekly be a cash buyer and not an FHA buyer. In 4 + decades I’ve never seen a non-refundable deposit for an FHA contract. Typically the FHA buyer does not have excess funds and is looking to borrow as much as possible 97%+ and have very little down/deposit.
loan contingency - Posted by Kristine-CA
Posted by Kristine-CA on January 17, 2010 at 12:49:29:
An FHA buyer is almost guaranteed to present a contract with a loan
contingency, so the deposit would stay refundable. Not because of
FHA regs, but because the contract is contingent on funding.
If you were to take out the contingency, perhaps the deposit could
become non-refundable. But if the buyer is working with an agent and
broker, they will be supported in presenting the contract with a loan
contingency.
Pre-approval letter - Posted by Penny
Posted by Penny on January 20, 2010 at 11:17:59:
We recently closed on a house sold to an FHA buyer. We had a clause requiring the buyer to submit a loan pre-approval letter from their lender within x business days and we could back out if we didn’t approval the letter.
In our case, the lender called me personally to ensure that I had received the letter and assured me that the buyer was solid.
Also keep in mind, that the pre-approval letters are subject to the buyer’s relevant facts (i.e. employment, amount of debt, etc.) have not changed prior to closing. So there is still some risk, but at least you know the buyer is working with a lender and is into the loan process.
Thanks… - Posted by acw
Posted by acw on January 17, 2010 at 16:06:50:
Thanks…i got that. But i am not willing to take my property off the market for someone who THINKS they may have a chance at getting a mortgage. If they want the property, they can have it with a 3% non-refundable deposit…which would cover costs of taking it off the market and passing on other buyers (especially since property values are sinking everyday).
Re: Thanks… - Posted by Dave T
Posted by Dave T on January 20, 2010 at 12:30:49:
If you are working with a real estate agent, ask what a kick-out clause is and how it may accomplish what you want.
Re: Thanks… - Posted by Mark (SDCA)
Posted by Mark (SDCA) on January 18, 2010 at 09:13:09:
In these times, it’s going to be tough to get someone who will be getting a loan to agree to no loan contingency.
GL,
Mark
my strategy - Posted by ken in sc
Posted by ken in sc on January 18, 2010 at 07:11:29:
acw,
IMO, you wont sell many properties demanding non-refundable earnest money. The agent, who has a fiduciary responcibility to the buyer, would be hard pressed to tell them to sign that. These days, there is almost no such thing as a “sure thing” loan. You just never know.
So, my strategy is to try and find a buyer who has a real good chance of getting a loan, and also to be allowed to be involved in the loan process. What I mean by this is: there are certain mortgage brokers and banks who I trust. I trust that these lenders will tell me the truth, as they value their relationship with me as much or more than that one potential borrower. Steering the borrower to these lenders is best - or if I have 2 or 3 offers, I can choose not the highest price, but the best loan officer.
Second, I can write in the contract certain phrases that allow me the right to know what is going on…allow me to have permission to talk with their loan officer and receive certain paperwork. There is a form called the “stipulation sheet” or “stip sheet” for short, which is what comes back from underwriting after the loan is first submitted. It says basically “we will loan the money if” and then list the “stips”. Stips can be nothing items such as a copy of a drivers license, or can be daunting tasks such as other proof of assets. If you get good at reading these, you will know as well as the loan officer the chance of this loan going through. You can word your contract response such that you have access to this info, and allow yourself the right to void the contract if you are not satisfied. Something to the effect of “buyers lender must provide full loan approval or other paperwork satisfactory to the seller by XX date or the contract may be voided by the seller, and the lender is hereby permitted to share loan information with the seller”. This is a lot less harsh than a non-refundable deposit, as the buyer can still get their earnest money back. Meanwhile you have a certain date by which you dont have to ride this pony any more unless you want to.
Re: Thanks… - Posted by Rick, the Probate Guy
Posted by Rick, the Probate Guy on January 17, 2010 at 19:58:00:
Just have an addedum whereby you both agree that property to remain in MLS as Active listing until all contingencies (including financies) are removed.
I think your plan won’t fly because in the real world, you’d have to sue for buyer’s non-performance and get a judgment to get money held in escrow.
I haven’t seen a judge rule against the little homebuyer yet, so you’d be a first. Maybe you could have money placed outside of escrow but what buyer’s agent is going to go along with that, let alone the client?
Your issue is nothing new; just make it clear that the first buyer with money and contract with no contingencies gets your attention.