“Is it a problem if you buy a home with a kitchen and bathrooms that were remodeled without a permit?”
***ANSWER:
In my experience, most kitchen and bath remodels do not have permits.
Be sure to have your home inspector check them out to be sure they’re done correctly, especially the electrical, plumbing, and gas.
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“Hi Gary. We just talked with a mortgage broker and got mortgage loan approval. Buy my wife mentioned that you’ve said some loan approvals aren’t really approvals. What did you mean?”
***ANSWER:
When is a loan approval not a loan approval? Sadly, the answer is: most of the time.
I recently got an “approval” letter stating the person was “fully” approved subject to:
1. Verifying income
2. Verifying funds
3. Verifying credit
4. Proof of any credit-related resolutions (if applicable)
5. Final lender approval
I ask you…would YOU really call that approval?
If you have a short conversation with a lender on the phone and they tell you you’re approved, they’re almost certainly lying to you and you’ve only been pre-qualified. Yes, even if they write you a letter using the word “approved”.
There are 3 levels of loan qualification/approval:
1. Pre-qualification
You’ve had a conversation with a loan agent and perhaps your credit has been run. They’ve given you their opinion of how much you’re qualified to borrow…based on their skill, knowledge, experience, and honesty. Please pay close attention to the words following the “…”!
2. Pre-approval
Your credit has been run and you’ve been through some kind of underwriting process, be it human or automated “desktop underwriting”. Your funds, assets, and employment have probably not been verified. I believe that with some no-verification loan programs (growing very rare), you could be pre-approved without going through any underwriting.
3. Approval
The above, plus all required items have been verified, the home has been appraised, title checked, T’s crossed, I’s dotted, and all is approved.
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“I’d like to find out the value of my home. But you can’t really use comps to determine the value. When can you come over?”
***ANSWER:
Uh oh. That’s short-hand for:
“Scrap the accepted, time-tested way of evaluating homes because that won’t support the crazy price I want. Instead, get out the Ouija Board, tarot cards, and tea leaves to set the price. And if that doesn’t get us high enough, I’ll just tell you the premium price that I feel I should get, and I should get that price for no other reason than it’s MY house.”
In only the most extraordinary one-in-ten-thousand situations do you scrap the “comparable sales approach” (aka “market data approach”) and instead use the “cost approach” to evaluate a home.
Because I haven’t determined the value of real estate 10,000 times (I’ve only hit about 6,000), I haven’t encountered one yet.
You could be the one, but I doubt it.
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“Hi Gary. I’d like to trade down from my house to a nice condo in the beach. If you find someone who’d like to trade, that would be great…”
***ANSWER:
I’d love to help you but…
The odds of you liking a specific condo AND that owner liking your specific home AND them being willing to pay your price AND you being willing to pay their price AND you qualifying for the loan AND….
I think you get the idea. In 23 1/2 years of real estate, I’ve only seen that happen once.
Better to list your home for sale (probably contingent on buying a home), find a buyer, then buy the home you like.
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“I’m interested in buying foreclosures in bulk from banks. Can you give me help getting in touch with some of the asset managers you work with?”
***ANSWER:
You’re one of many people who’ve contacted me about this. Most are how-to-get-rich-quick-in-real-estate seminar attendees and/or in way over their head.
I may be wrong, but I assume you want what they do: Discounts of 25-50% off today’s already low values.
You’re not going to like my answer, but some day you’ll thank me because I’m going to save you a lot of time…
I have over 20 as clients, so I’m familiar with their motivations. By the time they foreclose, they’ve already taken a huge loss. Their additional costs and risks aren’t big enough to justify a 25-50% discount.
Sorry.
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