Our Lake Norman housing market is doing very well right now, but that doesn’t mean that buying or selling a home is easy. All real estate markets are constantly facing new challenges unique to myriad influences in any particular month, season or year. Today’s typical stress-producing hurdles can be minimized if you have a good understanding of what they are and how best to prepare for them:
As a direct result of the lax lending practices that led to the end of the housing bubble throughout the country, the home loan process can now be overly burdensome and frustrating.
Down Payments ideally should be 20% of the purchase price although there are still options, ie 10% down and 10% second loans. Potential Lake Norman home-buyers should expect to have 20% down and should meet with a lender before you even begin to search for a home.
- The paperwork required to get a loan can seem staggering and sometimes offensive to even extremely qualified buyers. Be prepared to provide extensive personal financial documentation. This is truly of EVERY loan.
- Underwriters can be downright irrational. I think they are so because in part they are afraid to approve a loan that might ultimately fail.
In order to minimize the stress in the loan process, I recommend only very qualified, experienced lenders to my Lake Norman area home-buyers. Which lender you use can make or break your ability to get a loan. (Don’t choose based on the lowest interest rate alone). It is critical to be proactive as well. From the first week, get a commitment from the lender as to when they will order the appraisal, what documentation they will need from you and when it will be submitted to the underwriter. After “conditional approval”, expect for the underwriter to ask for additional paperwork right up until several days before closing. Also make sure that your lender is in constant communication with your closing attorney so that they get the Title information etc. in a timely fashion. I try to anticipate any potential hurdles and keep in contact with the lender to make sure everything is being processed in a timely manner. If you are selling your home and the sale is contingent upon the buyer’s home closing, you also need to ask your Realtor to get updates on their buyer’s buyer’s loan. I just closed on a sale with buyers who had no problems with their loan but whose buyer of their home in another state had a terrible lender who almost ruined our contract due to their incompetence.
One of the critical changes to our real estate process is due to the Dodd-Frank law which essentially prohibits lenders from having any direct communication with appraisers. Lenders now use a third-party company to order appraisals. While I appreciate the reasoning behind this bill, the result has led to a number of challenges. The most common problems are appraisals being ordered too late, appraisers who are sent out who are not knowledgeable about Lake Norman, especially waterfront home sales, appraisers who take way too long to submit their appraisals which leads to delays in closing, and appraisals that are just poorly done. While, by law, lenders can’t contact the appraiser directly, Realtors can if we have questions or concerns. We can’t intimidate but we can provide additional property information. I have not actually had an appraisal come in below the contract sales price but I have experienced several fairly incompetent appraisers and an appraisal that took 2 weeks to be submitted despite a “rush” order. So, make sure that your Realtor keeps on top of the appraisal!
As a Realtor in California during the 2000-2005 bubble years when we got up to 60 offers on a listing, we worked hard to fine-tune the multiple offer process. If representing the buyer in a multiple offer situation, a cover letter can make the difference between you getting the home or not. The cover letter is my way of “selling” my buyers to the seller by emphasizing their strong financial qualifications, sharing what they love about the property and anything that might strengthen their position. (One time my seller chose a buyer because they shared a mutual love of dogs!). A good listing agent will counsel their sellers to take the offer that is most likely to close, not necessarily the highest price. All cash in this market should trump a loan. A short Due Diligence period is also a plus. Pre-approval letter is a must. And, believe it or not, the Realtor representing the buyer can make a huge difference. I would much rather work with a Realtor I know, trust and respect and I can usually get a pretty good sense of the competence of a Realtor by how they present the offer.
As Teke Wiggin wrote in an Inman News article on April 18, 2013, “Today’s housing market is a weird animal”. Home buyers are still cautious and in some cases still have unrealistic expectations that if they search long enough they will find an incredible bargain. Afraid of overpaying, they are hanging on to the mind set to want to write low offers. With only 5% of our Lake Norman active listings distressed (foreclosures or shortsales), some buyers just haven’t fully embraced the upward trends in our housing market. While prices haven’t gone up a lot, we are seeing multiple offers.
At the same time, sellers hear about the strong sales and low inventory in our Lake Norman real estate market this spring and can get a bit too optimistic when it comes to pricing their homes. In fact, the same rules apply to over-pricing a listing today as they always have. Even in this strong market in Lake Norman, over-priced listing will sit.
The fact that you managed to read through this blog to this point tells me you are someone who wants to understand our Lake Norman housing market and will be well prepared to buy or sell! Great job! If you have any questions, always feel free to email or call me: firstname.lastname@example.org.