In order to get around the lengthy full-approval process, FHA permitted what were called “spot approvals,” in which a lender could make a loan on a unit which the lender reasonably believed would comply with FHA requirements. This spot approval process will expire on Jan. 31, 2010. If the spot-approval process deadline is not extended again, sales of units to first-time buyers will slow considerably, hindering move-up buyers.
The 2009 Home Valuation Code of Conduct adopted by lenders prohibited bank personnel from directly contacting any loan appraiser. The policy goal was to eliminate artificially high appraisals due to fraud. Many lenders have complied with this code by hiring a national appraisal management company, which then hires the appraisers without any contact with the lender.
This has indeed led to lower appraisals in many cases. However, many local appraisers have blamed the low appraisals on the management companies, claiming that those companies hired lowest-cost appraisers, ones not necessarily familiar with local market nuances or neighborhoods and who do their property valuation comparisons based upon computerized databases only. Obviously, if the lender receives a low appraisal, it will be unwilling to loan the requested amount. This can cause transactions to fall apart or prices to need to be renegotiated to a lower level, once again contributing to the cycle of low prices.
If you are trying to qualify for a loan, you might face these same obstacles or your buyers might face this too. It is in your best interest to keep this in mind when you are determining you roffer amounts.
It does create more opportunity for CASH BUYERS!!! appraisals are not used in these types of deals, so what you want to buy it for is what is paid. It is offering many cash buyers an added advantage over buyers who need to acquire financing. CASH IS KING!!! MAny lenders who are reviewing short sale and offers on REO's are willing to take a lower cash offer than a higher finance offer due to the amount of deals they have falling apart when financing is involved.
Find private investors and hard money lenders who are willing to make some great returns on their money in a short period of time.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125