Category Archives: Terminology

Choosing the Right Lender….Or Else!

Wow it has been a long time since we spoke! Sorry for the delay people…that is if you are still out there listening. I promise to get better with my communication.  On that note lets talk about lenders!  So you found a house, your contract is accepted, your inspection is a success…..now what?!?!? I often tell my buyers that the inspection is the toughest part but given the week I have had I am going to go out on a limb and say that lenders are now the toughest part of the negotiation.

IMPORTANCE OF CHOOSING THE RIGHT LENDER

The lender you choose is in my opinion one of the single most important pieces of the deal.  Without an adequate lender you might as well throw the deal away from the start.   Each contract in the DC area has whats known as a financing contingency and appraisal contingency.  The financing contingency essentially states that on X day after mutual acceptance the buyer will deliver to the seller a letter from the lender stating that the loan is approved.  The appraisal contingency is similar but you are delivering notice that the appraisal has been completed and the purchase price is approved by the lenders underwriting department.   If you fail to deliver the financing contingency the seller could deliver a notice in which you have three days to respond. If you are unable to respond or produce a commitment letter from your lender then your contract  becomes void.  If your contract because void because of this notice then your earnest money deposit is NOT at risk. HOWEVER if you release the financing contingency and later on in the transaction your deal falls apart because of financing your earnest money deposit is then at risk….yeah, that sucks!   With regards to the appraisal, once the seller delivers notice you have three days to produce the appraisal and remove the contingency. If you fail to do so the appraisal contingency is lifted and the contract moves forward.  What really sucks is if you lender misses this deadline and then you find out 10 days later that the appraisal came in lower than anticipated and you now have to make up the difference or risk losing your earnest money deposit.  Bottom line is that your lender needs to have their shit together or your get screwed. Scared yet? Check out some helpful pointers below:

WHAT TO LOOK FOR IN A LENDER

If the first part of their name starts with Bank and ends with America STAY FAR AWAY.  That is my first tip.  I have worked with this bank many times and every single time they let my clients down.  The bitch of this is that the clients end up paying this bank $400-$500 for an appraisal which is non-refundable! So….what to lookout for:

1) You are trusting this person with your future…30 years of your future to be exact so before you start searching for homes start with a search for lenders.  Be sure to interview them thoroughly and see what services and commitments their bank offers. Aside from rate (which isn’t the most important thing) what else do they offer? How can they be held accountable if they fail to meet deadlines? Afterall…..if you don’t meet your deadline you can lose your EMD so why shouldn’t they lose something besides your business?
2) Direct and local are always best.  Stay away from the big chain banks like Bank of America and Wells Fargo.  These banks are too big and have way to many layers.
3) Credit Unions and USAA generally can’t compete.  Yes Hill staffers, that means you don’t belong using your Congressional Credit Union account when you are ready to take the plunge and buy.  Credit unions often have very lengthy approval processes and cannot offer competitive time frames with regards to the financing and appraisal contingencies. Also if you are in a competitive situation and the seller is looking for a quick settlement, that’s not going to happen with a credit union. Sorry!
4) Underwriting should be in-house. When this happens it means your loan officer has quick access to the person in control of seeing the loan through and when deadlines creep up they can act quick and deliver.
5) If you have to call a 1-800 number every time for an update that’s probably not a good lender!
6) Rates aren’t everything. How much do they require you put down?  What options do they give you if any? Some lenders now do 5% and 10% down loans with no PMI!
7) If you don’t understand what you’re doing ASK QUESTIONS!!!! I hate it when buyers get to the closing table and have no clue what they signed up for.

DO REALTORS GET A KICKBACK FROM LENDERS THEY RECOMMEND

So you are hesitant to accept my recommendation of a lender because you probably think I get some sort of kickback or incentive? WRONG!!!!!! In DC, MD and VA it is illegal to accept any sort of financial incentive or kickback from lenders, title companies or any other parties to the transaction.  That doesn’t mean it doesn’t happen but for the most part it doesn’t.  Realtors recommend people because these are typically people we have good working relationships with and we know they are going to get the job done.   Plain and simple.

Well, that’s if for now! Stay tuned for more.

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Filed under Terminology, Tips of the Trade

What Can I Afford to Buy?

The snow is certainly messing things up and over the course of the past two weeks I have only seen approximately 15 properties!   So definitely bummed that I haven’t been able to provide any new updates.  But soon the snow will melt, the market will grow and  I will have tons of properties and neighborhoods to report on.   In the meantime, if you are in the market for a home in the DC area there is a great tool on the Washington Post website.  This tool gives you an approximation of HOW MUCH HOME YOU CAN AFFORD.   This is only an estimate and I would definitely speak to a lender if you are really interested in buying.  This tool is free and it does not require any personal information or registration.  So if you are in the market to buy give it a look.   This will at least give you a good idea of what a lender is going to tell you.    Other items like credit score are not factored into this calculator so again…its is a very rough estimate!

CLICK HERE TO CHECK IT OUT

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Filed under Terminology

SW DC: Land of the COOP

Have you ever toured properties in SW DC and noticed that most of the high-rise properties or low-rise communities have COOP fees?  If you haven’t then I am about to teach you something, and if you have noticed continue reading anyway.  

What is the difference between a COOP and Condo?

In a cooperative the building containing the residential units or apartments are owned by a ‘cooperative housing corporation.’ In a condominium owns an individual apartment in fee simple. In addition, the buyer owns an undivided interest in the common elements such as the exterior walls, roof, pool and other recreational areas.  

Regardless of whether you are looking to buy a COOP or Condo they both have monthly fees that are assessed to the individual owners.  These fees cover a range of items from cutting the grass to maintaining the building and much more.  It varies per building but this information is usually available via the listing document.  If none of this makes sense and you have more questions please feel free to ask them in the comments section. 

Why are COOPs all over the place in SW?

To be perfectly honest I don’t know, and I haven’t found an agent that can give me a straight answer on this.  What I do know is that COOP was a form of ownership that existed before Condo associations so you see a lot of them in the northeast US, especially in NYC.   I am not sure why the bulk of DC COOPs happen to be in SW.  Perhaps it is because to a large extent, most of the high rises that are close to the water date back to the 70’s and before. 

When looking at a COOP property in SW I noticed that the fees were high.

This is very true.  I have shown properties with COOP fees as high as $1100 and I am sure higher ones exist.  Don’t be scared though.  This fee usually includes a lot.  Because of the way COOP buildings are setup, the building is charged one giant tax bill.  The COOP board then splits this tax bill between the units, usually by figuring a cost per square foot.   Not only do the COOP’s usually factor taxes into the fees but they may also factor utilities.  In some cases the fee might also be high because of the age of the building and the lack of an adequate reserve fund for repairs.   These are all things you should review with your real estate agent before making a purchase.  Any unanswered questions can usually be found in the buildings COOP or Condo documents which the selling agent must release to you.  If they won’t release the documents until you have a signed contract, you then have three business days (for previously occupied property) to review the documents and cancel the contract.  For new construction you have seven business days.

Long Story Short

There are tons of COOP buildings in SW and other parts of DC.  Don’t be alarmed when you see such a high fee, just ask, “what am I getting.”

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Filed under Neighborhoods, Terminology