‘Armed, Educated, and Dangerous’

I got a call from a man last night – he was in front of one of my listings and wanted to see it RIGHT THEN.  If you’ll remember my last post, I did a bit of a rant on being ‘armed and dangerous.’ 

Little did I know just how appropriate that phrase really was.

When I asked the man if he was prepared to purchase a home, meaning did he have proof of funds if he wanted to pay cash or a preapproval letter from a lender if he was going to be financing the purchase, his response was “Yes – I’ve been to XXXX Bank and they have approved me for $X amount.”

Wow – I was not only shocked, I was pleasantly surprised.  He was preapproved, AND he was preapproved for approximately 30% more than the price of the home he was calling about!  I congratulated the man for being a prepared person and getting the loan preapproval prior to searching for a home.

I asked the man on the phone what loan type he was preapproved for.  His lender didn’t even explain to him that there were differences.  He didn’t know.  After asking a few questions and finding out what the lender had told him he would need for a down payment, I narrowed it down to FHA was his type.  Imagine his disdain and anger at me when I told him his loan wasn’t appropriate for this home.  The seller won’t even consider any offers with standard FHA financing.

Mr. and Mrs. Lenders – PLEASE – explain to your customers/clients what limitations their loans may have on the homes they will be looking to purchase. 

Remember, I’m the listing agent on this home - I’m aware of it’s…..limitations……meaning, I’m aware of some of the things it needs in order to be financed.  What most people don’t realize, just like different clothes fit different sizes, different loans fit different properties.

An FHA loan is like a speedo.  When worn by the correct body, meaning lean, muscular, and no flab, it works really well.  When worn by someone like me, it just doesn’t work–meaning I have too many things to fix in order for it to be appropriate.

Houses are the same way.  FHA, VA, and USDA-Rural Development loans all fit properties that don’t really need a lot of work….they might need a few small things.  For a home that needs more than a few small things, you’re going to need a conventional loan – and if it needs a LOT of things, you may need a lender to do an “in-house” type of loan.

This property has some……well, issues.  The floors are uneven, it has single pane windows with storm windows over them, it has damaged soffits and fascias, there are no interior doors as well as only a few door frames left.  This home won’t go FHA, VA, or USDA RD.

FHA does have a special program called FHA 203K rehabilitation loan.  It can be used to purchase a property needing some attention, but there are limitations on what can need attention.  Nothing structural, not over a certain amount, etc.  They are difficult loans but for the right person who has the ability to do all the necessary things, they can be a wonderful thing.  Ask your lender if they do 203K Rehabilitation type loans – most don’t.  I know of a handful in this area that will.

Buyers of the world – When you’re getting preapproved, ask your loan officer what limitations might be on the properties you may purchase with different loan types.   Let’s get ‘armed, educated, and dangerous.’  Otherwise, your time may be wasted in your home search.

Get 'Armed and Dangerous' before looking for a home.

OK Folks, I have a reputation for speaking frankly.  I am tactful, but I’m not going to blow any smoke up your pantsleg.

If you are not prepared to buy a home, I’m not going to show them to you.

**GASP**

I’m sorry, but if you’re serious about buying a home, then you need to get serious.  Are you prepared?  I am.  I have acquired the education and the expertise, as well as the reputation to be a good Realtor.  I’ve spent countless hours studying, I’ve gone above and beyond what many Realtors do and have gotten the extra 90 hours of education to get my Graduate Realtor Institute designation.  I’ve studied hard and attained my Executive Broker license.  I am ‘armed.’

I’ve been through the school of hard knocks and modified my ambitions to reflect the current market.  I primarily sell foreclosed properties – it’s not fun, but it keeps my dog in kibble.  There is no local owner to take care of these homes.  I’ve done all of the following (if not more):

• determined occupancy
• negotiated to get occupants out
• re-keyed the property
• arranged utilities
• coordinated trashout/repairs
• coordinated lawn care
• determined if there is a Property Owners Association and caught up those past due bills
• arranged to get them winterized or de-winterized
• paid bills and waited 30-60 days to get reimbursed for them
• I’ve done countless Broker Price Opinions and monthly marketing reports
• personally checked the property weekly

By the time that home hits the market, I’ve been to it an average of 5 times.  In the meantime, I’m marketing the home, negotiating offers, helping other agents unfamiliar with foreclosures, and monitoring properties that are in escrow to ensure they get to the closing table.  Also, in my role as Executive Broker, there are other duties I have that assist the Principal Broker/Owner with his day-to-day business.

I carry approximately 40 homes in my portfolio at all times – They are in 3 counties.  I begin work Mon-Fri at 5:30 or 6:00 each morning and typically shut it down at 7:30 pm. Saturday and Sunday, it’s more like 9-6.  I work 7 days a week.  80 hours weeks are the norm.

During that time, I also have to keep my house clean, keep the dog fed and watered, eat, sleep, keep the yard up, wash the truck, buy groceries, buy office supplies, keep my laundry done, pay my bills, go to the dentist, doctors, and various other appointments.  Oh – did I not mention?  I have a family too – they kinda want to see me occasionally.

Yes, you just drove past that house and saw my sign in the yard – and it is THE. MOST. BEAUTIFUL. HOME. YOU’VE. EVER. SEEN!  You’ve been thinking about buying a home, but you absolutely HAVE to see this one.  You call the number on the sign and I try to give you all the information on the home that I possibly can.  I ask if you’re working with any other Realtors? – NO.  Are you prepared to buy the home – have you been to a lender to get preapproved or will you be paying cash for your purchase?

THEM: “Well, we will have to get a loan, we haven’t talked to a bank yet, but my Mom will co-sign and it won’t be a problem.”  **record scratch**

ME: [Thinking: Mr. or Ms. Prospective Buyer, have you not heard all the turmoil in the lending industry lately?  It's not that easy!]  “I’m so sorry, but the seller will require seeing either a pre-approval letter if you’re financing or proof of funds if you’re paying cash.  Wouldn’t you like to be prepared before you see a home and fall in love with it only to possibly hit some snags later on?” (yes, that’s me being gentle–I can do it when necessary).

THEM:  ”Oh, it’s no problem, I’m sure I can get financing – when can we see the home?  Can you be here in 15 minutes?”  **another record scratch**

ME:  “I’m sorry, but my calendar is already booked through the next 3 days.  I can show it to you [insert appropriate date/time here], and in the meantime, that will give you plenty of opportunity to visit a lender and make those necessary preparations to buy a home.  Plus, if that one doesn’t suit you, you’ll be ‘armed’ and  ready for me to help you find one that does suit your needs. Then, you’ll be 100% ready to make an offer.”

THEM: “So you’re not going to show me the home.”

ME:  “I simply can’t, my schedule is already full until [previously mentioned date/time].”

At this point, as hard as I’ve tried to be tactful, they get a little miffed at me.  Sometimes I get verbally abused.  More often than not, I hear “well, I’ll just call another Realtor and get them to show it to me.”

ME:  “Great, at least you’ll be able to see the home today.  When you find one, have them call me and I’ll give them the instructions they’ll need in order to get inside. Sorry I couldn’t help you.”

How often do I get that call from the “Other Realtor?”  Never.  Do I possibly miss out on opportunites to sell a house?  I’ll never know for sure, but there is that probability. 

I used to jump up and drop everything, juggle appointments and go ahead and show that property RIGHT  THEN!  Did I ever make a sale?  No.  I have gotten so far that once they determined they loved it, they went to a lender only to find they can’t get financing.  I’ve witnessed everything from venomous anger at that point to TOTAL breakdowns involving sobs and wailing.

Folks – we’re not doing each other any favors by looking at homes without being prepared.  Please understand me, it’s better for both of us if we gather our resources before-hand, make those preparations, and then go out on the hunt ‘armed and dangerous!’