Consequences of Buying and Selling a Home Under Forebearance

I want to talk about a topic that is really starting to come to the forefront in the seller world – it’s when a home seller is trying selling a home and buying another and the tools I have at my disposal to help you with this.

Right now, a lot of folks are taking advantage of the CARES Act with deferrals and forbearances. Unfortunately, there are some really big unintended consequences with those programs that no one is talking about. The biggest one is the fact that if you as a seller or if you’re an agent and you’re listing someone’s home and they are in this program, when they go to sell their house, that will be fine. But when they turn around to buy another house, they’re not going to get a home loan.

This is a really big issue that needs to be addressed before you as a homeowner or as a listing agent take a listing to make sure that the homeowner can actually buy a home after selling theirs. I have a Sellers Advantage Program, which is really great. We start working with the sellers before they put their homes on the market, get them preapproved, and make sure there’s nothing to stop them once they sell to buying the next home. The last thing anyone wants to do is to be under contract and then find out they can’t even sell their home because they won’t be able to buy a new home after all. This is going to be the case until we get guidance from Fannie and Freddie on how they’re going to handle these deferral payments. Right now there is no guidance and therefore we have no way to do a loan because we have no information on how to process this.

So until this gets fixed, if you are a seller or a person who is interested in selling and you are in deferral or forbearance, you need to sit tight until things kind of settle down and we get some more information. And if you’re a listing agent looking at listing homes for folks that may be in deferral or forbearance, and they haven’t mentioned this to you, this is something you need to know as well. You don’t want to put your home seller in a predicament where they don’t have a place to go.

If you have questions, let me know.

Appraisals and the Value of the Home You’re Purchasing

An appraisal is basically an evaluation by an independent professional. It could an appraiser to determine an opinion of the value of the home. The appraiser will look at recent comparable sales and market conditions to determine the value of a home in order to help support the agreed upon sale price. So let’s say the house you were looking to buy is $250,000. If you’re lucky, it may appraise for higher than what you are going to pay for it and that just means you get instant equity on the day you close. Suppose however the value comes in lower than the sales price. Well, this does allow you to possibly renegotiate with the seller, which may reduce your loan amount and save you money on your monthly payments. Appraisers also look at the condition of the home. Some programs do have much more strict guidelines on condition than others.

If you have questions, let me know.

Does it Make Sense to Take Time Off From Home Shopping?

If you are shopping for a home today, you know it’s really hard work. You may not find something right away and it’s super easy to get fatigued. Some buyers may get discouraged and say, “Let me take off a few months. Maybe I’ll come back in six months and see where everything’s at.” Well here’s the thing, while you can take some time off, the market isn’t and it is continuing to appreciate… and it’s hot right now in Clark County and in the Portland area.

The forecast appreciation is approximately 2% in just the next six months. Let’s quantify that. If you’re looking at homes priced at about $355,000 today, that home would be worth $7,100 more in six months. And if you were planning on putting the same amount down for percentage-wise, you would have to bring in more down payments since a home is now more expensive.

And what about those interest rates? Some folks think that rates aren’t as low as they could go. Well, while they’re at really attractive levels right now, does it make sense to wait for rates to go down further? They may not. They may go the other way. So, the monthly savings with a lower rate may be nice, but it is dwarfed by the missed appreciation and amortization. And it could take many years to recoup what you would have lost. Should rates drop significantly, we can always refinance you in the future. So stick with it, keep shopping, and you will find your home.