Real Estate Work During Covid19 Requires Patience
Covid-19 mortgage tips to save your deal is a fabulous blog written by our team’s Sacramento lender, Dan Tharp. Enjoy. — JaCi Wallace
It’s been almost two months since Governor Newsom’s order that all Californian’s shelter-in-place. It sure feels like more. I feel such empathy for those that live alone, are single parents or have lost their job, It’s simply awful. I am thankful every single day I get up and get ready for work.
Covid-19 has re-ordered virtually every industry in the world to figure out how to adapt,. Not only adapt, but mprovise, and overcome this virus or otherwise fail. In California, mortgage lending and real estate are still thriving; all be it, with a whole new subset of issues to we have never faced before. Below are just a few tricks that might help you during your next purchase:
Did you know that in some cases, your lender will not require you to get an appraisal when buying a home? We have been doing this for years. Now, with Covid-19, and given the fact, sellers don’t want a stranger in their home, the appraisers can be just as uncomfortable entering a home. It’s lovely to know you have this option if you work with the right lender.
Fannie Mae and Freddie Mac traditionally offer an appraisal waiver for low loan-to-value refinance or if you put down at least 20% on a purchase. Also, in conjunction with new Fannie and Freddie Covid-19 updates, our underwriters are permitting exterior only appraisals under certain circumstances.
However, you may still want to get an appraisal done (~$525) to ensure you are not paying too much for the home. But if you and your agent have taken the time to look at comparables and feel the value is there, not needing an appraisal can not only save you money by not having to pay for the report, it can also help in other ways.
For example, I had a client facing multiple offers, and the only reason their offer was accepted is that they came in at asking price AND agreed to remove the appraisal contingency. Meaning, if for some reason, the appraisal came in lower, they would have to come out of pocket to make up the difference. These buyers didn’t have much in reserves after the down payment and closing costs, and what they did have left was their cushion for any future emergencies. With this appraisal waiver in place, they would not pay one extra dollar out of pocket – And not needing an appraisal was just what they needed – peace of mind.
CAN’T GET A JUMBO LOAN?
Jumbo loans have been walloped during this pandemic as mortgage servicers tighten their lending criteria. Many lenders have stopped issuing them altogether. Jumbos are loans that exceed the maximum you can borrow with a Fannie, Freddie, or FHA conforming loan. For example, let’s assume you are buying a home in Sacramento County, where the max Fannie/Freddie loan amount is $569,250. Thus, if your loan amount is higher – you fall in the Jumbo loan category.
Since Fannie and Freddie do not back jumbo loans, they are considered riskier and require higher credit scores, lower debt-to-income ratios, and may require a few months of cash reserves or even up to a year or more worth of mortgage payments. A little trick is to use a piggyback second mortgage to avoid taking out a Jumbo loan. Jumbo rates can be higher than those on conforming loans, so borrowers buying a high-value home may take out a conforming mortgage, then cover the rest with a piggyback loan and down payment.
Qualified For A Loan
Let’s assume you found your dream home for $850,000 in the perfect neighborhood. Now, throw in you were just told by your Jumbo lender that the loan for $680,000 you were qualified for, no longer exists. When the reserves required become higher, your rate just went up too. You could instead go with a conforming loan of $569,250 plus a piggyback loan of $110,750 and save the day.
Every day this pandemic throws new challenges our way. Because of that, we continue to adapt and improvise and overcome. This is why it is essential to work with people you trust. Lenders that have decades of experience will guide you through the steps of homeownership and finance. Be safe, everyone.
— Dan Tharp with Guild Mortgage
Real estate work during Covid19 requires patience as everyone is impacted on some level. Though real estate has been named as an essential service along with construction, don’t kid yourself it is not back to normal by a long shot. The scheduling of repairs is often booked weeks out. In many cases, as there have been layoffs in various businesses, a shortage of the workforce can mean delays. This week has been about working longer days. Whatever it takes we are putting in the extra time and effort.
When I worked at another real estate company previously, we would measure different aspects of your sales personality. When we polled 20% of the top producing agents (who by the way sell 80% of the real estate) we found two qualities that were consistent, one of which was impatience. To follow up on leads and take care of so many tasks each day you have to be hair on fire impatient for results. We kill it, cook it, and serve it on a pretty platter while someone else is still writing a memo.
In this Covid19 environment, it is not about fast pace as much as it is about digging in and looking creatively at how to best help our clients. It does not mean not taking action, but that we must continue to work cooperatively with other agents and vendors to get the job done. We can no longer fly through inspections as we are on waiting lists in some cases.
Dust Yourself Off After Setbacks
Our photographer is busy and many people are preparing in advance to sell their homes, a great idea right now. We were very busy the last two days, long hours with little sleep. There can be setbacks of course. Sharing with clients and setting expectations can help avoid disappointments. The key is to get up, dust yourself off, and hit the reset button. We will show up and continue to work hard for our clients. People still need a place to live and with low-interest rates, this can spell out more affordable payments. Also, some people out of work may need to sell their home and some are relocating.
What seems one of the hardest things right now is getting things completed in a swift manner. Most companies have cut way back on staffing. That includes pest companies, stagers, roofers, inspectors, and repair people. Now, you hope someone calls you back, but it may not be the same day. Yesterday and today have been days where I had to take a breath and say I’m doing my very best. Working within the framework of this environment is what we must continue to do and making unrealistic demands of people will get you nowhere. That doesn’t mean accepting poor performance. It may mean in some cases you are helping other people to ensure the tasks are done well.
Patience And Perserverance
I was working with a friend yesterday on a co-listing and she was very honest with a seller after a disappointment with a vendor. She said we just don’t know when we will be able to get someone back out and it may cost more. We will get someone but it’s going to take time, she said. The client understood. We didn’t say, ” no worries this will be done right away.” The truth is we are working on it round the clock. We will get the job done but it requires patience and perseverance in this Covid19 climate. Our sellers are amazing people, we are so very grateful for so many wonderful clients.
We have to interview vendors very carefully as they are making promises and they don’t always deliver. We have the best plumber but he is on a job in the bay area for a few weeks. Some vendors have scheduling issues as they may have skeleton crews and suffer from exhaustion. We can’t control someone else’s performance but we can fire them and start over which is what we have to sometimes do. This means delays and postponing other steps as there is a sequence to properly preparing a home for sale.
Set Expectations With Clients
I’m now setting expectations with clients much more carefully as this market demands it. I find myself on a daily basis saying, folks, we need your patience during this time as it’s a team effort. Talking openly about the counties that have implemented restrictions with regard to how we show homes is critical. As information becomes available, we continue to post it for everyone.
There are addendums with regard to Covid19 that buyers must sign before being shown a property. Trying to hold escrows together takes much more effort right now. We are doing our very best each day to sell your home, which is almost a daily conversation. Sharing the smallest details is what helps sellers the most.
Now, it is more important than ever to price correctly as homes are still selling if they are priced to sell, based on closed sales. Loan qualifications are more stringent and working with a great lender is more critical than ever. I think what worries sellers the most now is that property is not being shown as frequently. More buyers are looking online at photos and area, driving by first. If there is something that buyers decide is not appealing, they don’t come and take a look. The good news, buyers that are serious and qualified are looking, there is no window shopping right now.
Keep the faith. Warmer temperatures are on the way. We are working harder than ever to help our clients sell and buy homes. Real estate work during Covid19 requires extra patience and diligence. We have several homes in escrow right now and working hard to close them. If you are looking for information on how to buy or sell a home during Covid19 call Weintraub & Wallace Realtors, with RE/MAX Gold. We can be reached at 916-233-6759.