FSBO (For Sale By Owner) Pointers

So, you’re going to sell your home in the For Sale By Owner arena. First… remember, whether you’re going enlist the services of a Semi-Assistance Real Estate Company such as “Buy Owner” or “Help U Sell” or “Seller 4 Less” or any number of alternate FLAT FEE companies, to get your home advertised in the local MLS computer or you’re going to handle all of the promotional efforts yourself, you may well be a For Sale By Owner (FSBO) Seller.

So… where do you go next? What’s the next step?

SECURITY AND SAFETY

The first and most important part of your project will be establishing a “Safety Net” around you, your family and your home. You don’t know anything about the folks who will barge into your home, announced or unannounced, invited or uninvited. You don’t know if the stranger who has called you to view your home is an honest buyer or a person with nefarious and ulterior motives. You don’t know if the stranger has arrived on site to case your home for a potential heist as part of a gang of individuals who target unwary FSBOs, or if the stranger is truly in search of a new house they too can call home. You only have you and your wits to try and glean the factual intents of your prospect.

Here are some tips that could be helpful… And remember… your best defense is a strong offense.

1. Every time you agree to allow someone to come into your home, let your family and/or friends or neighbors know what time you will have a stranger in your home.

2. Let your family and friends know when you intend to have your home open for showing to the public.

3. Let your local police department know that you will be offering your home open to the public for an Open House and give them the date and time.

4. Establish a safety plan. Here is an example:
   
   1. Never let yourself get cornered in your home when showing your home to a visiting stranger.
   2. Never let any stranger into your home if you are home alone, particularly if the stranger is accompanied by one or more strangers.
   3. If you have small children, you may want to prearrange with a neighbor to babysit your children while you are showing the stranger your home.
   4. Never let the stranger leave his/her car running in front of your home or in your drive way.
   5. Stay out of small rooms like bathrooms, pantries or the garage while the stranger previews your home.
   6. Always keep your body between the stranger and an exit door.
   7. Always keep your cell phone or a cordless phone in your hand.
   8. Never lead the way, always follow the stranger.
   9. Establish and share a Secret Code Word or Phrase with your family or friends. Here is an example of how that might be used. For our example we’ll use Red Crock Pot as our Secret Code Word. Let’s assume that you feel uncomfortable with the stranger that is in your house. When you began the process of becoming a FSBO you told your family or friends that you will call and give them the Secret Code Word/Phrase if you feel you or your family or your home are in jeopardy. Here’s the way our scenario might play out.

   
   i. While touring your home with the stranger, say something like this, “Oh my goodness. I just remembered I have a pot luck that I’m part of tonight. I need to get a crock pot from my sister. Would you excuse my phone call… just for a moment?
   
   ii. Call your family member or friend and say something like this, “Hi Jane… do your remember that RED CROCK POT that you have under the cabinet? Would you mind bringing it over? (or… “would you mind if I borrow it tonight”)
   
   iii. Your sister knows this is the Secret Code Phrase, RED CROCK POT, and she might say, “Do you need it now?” Of course if you need her to come right now, you would say, “Yes, Please”
   
   iv. Or… if your answer is No… she might follow up the Q&A with, “Do you feel you’re in danger?”
   
   v. Your response will alert the person you have called about the nature of your showing and of your concern about that particular stranger in your home.
   
   vi. Play these scenarios out with your family and friends/neighbors. Preparing your family for visits from strangers does not have to be a traumatic experience. Simply use a little common sense, keep alert and you should be fine.

9. Put all of your valuables out of sight. If you have weapons, be sure to have them locked or out of sight and/or reach by anyone but you.
10. Put your medications in a safe and locked area. Over the counter or prescription drugs can be a temptation to even the most earnest buyer prospect.
11. If the stranger calls to arrange a viewing of your home, ask the stranger to fax or eMail you a copy of his/her Loan Approval Letter and the name and phone number to his lender. It might even be wise to not allow anyone into your home who cannot produce this simple information and document. The better Realtors® in the industry do not take anyone into a home unless the Realtor® has confirmed the buyer’s ability to secure financing. Do you think you should do the same?
12. These are only a few suggestions… but they should get you started on the right foot. Remember… it does you no good to be a FSBO seller if you also are the biggest and brightest target on the shooting range.
    

MARKETING YOUR HOME

This is perhaps the second most challenging aspect of the real estate industry. Market places change in a pretty predictable pattern, although not in too predictable of a time line. The real estate industry is cyclical. By that we mean that the ebb and flow of the buyer vs. seller tug-of-war swings back and forth like the pendulum of a Cuckoo Clock. At one point in time there may be more buyers than there are properties to buy and at another time there may be more properties for sale than there are buyers to buy them. The real estate market also has its calm seas where there are a good mix of buyers and sellers at any one given time.

The Arizona real estate market has cooled quite a bit since about July/August 2005. For about 30 months preceding the July/August 2005 slowdown, homes sold in mere weeks; then in only days and then from about July/August 2004 through July/August homes sold within minutes of being posted to the MLS system. Anybody who had a beating pulse could call themselves “Real Estate Marketing Professionals”. It took no talent, no skill, no luck and no real estate experience at all to find a buyer for a home. Any monkey on a chain could do that. That is no longer the case.

Today’s real estate market is facing many forces that are working against sellers. In the $250,000 to $600,000 price range builders, who… in our opinion… are one of the major reasons we have seen such a dramatic shift in market trends, are offering incredible buyer incentives. For example, Richmond American Homes in Surprise has offered discounts off the list price of their SPEC homes of up to $80,000 and offered to pay as much as an ADDITIONAL $11,000 of the buyer’s closing costs. Continental Homes/DR Horton in Goodyear has offered discounts ranging from $35,000 and more and also has included an ADDITIONAL incentive of $10,000 toward the buyer’s closing costs on their SPEC home inventory. Centex Homes in Goodyear has offered $30,000 and more in the way of builder discount incentives to buyers who want to have a home built. All of the builders in the Marley Park subdivision, just to the north and west of Luke Air Force base are offering unheard of discounts; Randall Martin Homes is offering $30,000 to $40,000 off of certain SPEC homes and Element Homes is offering anwyere from $80,000 to $100,000 discounts and more off of their SPEC Homes This kind of competition is difficult to compete with, thus requires a very intense marketing strategy.

The Investor Buyers who purchased their properties between December 2003 and July/August 2006 are beginning to dump these properties back on the market. This is having a profound impact on the market place inventory. To demonstrate this; in July/August 2006 the total inventory of homes, priced between $100,000 and $10,000,000, listed in the Arizona Regional Multiple Listing (ARMLS) system hovered right around 7,000 to 7,500 residential resale properties. In just over 300 days, that number has grown to just over 45,000 residential resale properties. Each day between 600 and 800 more homes are introduced into the ARMLS system. That does not even take into account those homes that are launched into the FSBO market without MLS exposure.

The Buyer pool has all but evaporated. The hundreds of buyers who stood in endless lines at new construction sites in hopes of having their names drawn from a hat for one of the few lots released each week have disappeared. Where did they all go? Could they simply have been priced right out of home ownership? The rest of the buyers who tried to make purchases of residential resale homes, competing against other buyers or investor purchasers are also gone. Could they too have met with the same fate as the prospective new home buyer? The buyers who use to drive around looking for open houses to attend are also missing. Open houses are not producing the traffic they did years or even months ago. The National Association of Realtors’ statistics sites that over 70% of all buyers are heading to the Internet before they ever venture out of their homes, in search of their next or first home. Of that 70%, it is estimated that over 95% of them will enlist the services of a Real Estate Professional Buyer’s Agent to help them through the process. They are all too aware that they are not prepared to examine or interpret the reams of paper containing disclosures and other documentation that will be part of their transaction.

So, where do today’s buyers for today’s inventory come from? What’s a FSBO to do? Here are a few tip:

5. First and foremost… don’t toss out the old stand by staple of a good attractive For Sale Sign in your yard.
6. For the diehard buyers who are still driving the streets, looking for a new home, be sure to have flyers of your property in your Information Box that is hung on your For Sale Sign. But… you may not want to publish your asking price. There are two reasons for adopting this strategy. The first centers on security and the second on negotiating strategy.
   
   1. SECURITY: It is not necessarily the most practical policy to publish your family’s monetary worth.
   2. NEGOTIATING STRATEGY: Keep them guessing. Keeping your price close to your chest, as if it were your “Hold Card” in a poker game, is a good idea. If you give them no reason to pick up the phone to call you for more information then… they won’t! Another tried and true posturing method for negotiating is to never be the first person to speak and always be quite after you have asked for the sale. Remember… the first person to open their mouth, is usually the one whose negotiating position is compromised.
      
7. If you have hired a Semi-Assistance Real Estate Company, be sure they put your home in the MLS in the correct MLS Area and Grid; a Type-O during data entry could cost you thousands of dollars. Ask for a copy of the MLS datasheet so you can review it and request any necessary changes.
8. Make certain that your home has maximum exposure on the Internet. The majority of today’s buyers are not produced from print ads, open houses or radio and TV ads, they are the product of Internet exposure.
9. If you are going it alone, take advantage of the public FSBO web sites offered by all the major Internet search engines such as Google.com, Yahoo.com, AOL.com, MSN.com, Excite.com, AZCentral.com, RedZee.com, AltaVista.com and any number of other Internet ad space you can find. Check out ForSaleByOwner.com. This is one of the most popular FSBO tools on the market today.
10. If you have hired a Semi-Assistance Real Estate Company insist that your home be published on Realtor.com but not simply published on Realtor.com but published with not less than 6 photos and with a Virtual Tour and… most importantly, published on Realtor.com’s Enhanced Listing Pages. Realtor.com statistics show that the first homes passed over by visitors to their site are those homes without any photos. Next on the Hit List are homes without multiple photos and next to be introduced to the DELETE KEY are homes without Virtual Tours. Properties that are displayed in the Realtor.com Enhanced Property Listing Pages are the FIRST homes to pop up in the Realtor.com search list. It does you absolutely no good to get your home published to Realtor.com if you’re at the bottom of the list.
11. If you have hired a Semi-Assistance Real Estate Company, insist that your home is published on the real estate company’s corporate web site.
12. If you have hired a Semi-Assistance Real Estate Company, insist that you be informed of any prospects who might call their office or the real estate agent so you can follow up on the call.
13. Here’s a bit of pricing strategy. Many agents might suggest that you offer a bonus to the Buyer’s Agent if the Agent can get their Buyer to purchase your home. We find this logic a bit flawed. Remember… the Buyer hired the Buyer’s Agent to represent his/her best interest. Do you think it would be just a bit… self-serving… if the Buyer’s Agent began to bear down on the person he owes his allegiance and fiduciary to, to try to force the buyer to buy your home? Not to mention… do you have… even… just a little problem with the moral ethics or caliber of an Agent who might even entertain such a suggestion? Why not offer a cash incentive to the Buyer? Why not offer the Buyer some money toward his/her closing costs? All the builders are doing it! Obviously… you’re a little fish in a big pond and can, by no stretch of the imagination, offer tens of thousands of dollars in cash assistance, but… I gotta tell ya… $3,000 to $5,000 could go a long way when the buyer is ready to cast his/her swing vote between your home or a competing home.
    

Bottom line… Internet Marketing and Buyer Incentives will take you a long way in helping you find a buyer for your home.

WRITING THE CONTRACT AND WHAT IF THE BUYER BREACHES YOUR AGREEMENT?

You will need to have a Contract handy. It’s a good idea to have a few of them on hand. It is also a good idea to have a few pages of Addendum forms and Counter Offer forms. You can pick these up from your Title Company or you might be able to buy a few copies from your local Board of Realtors®. You will also need to pick up a form called Seller’s Property Disclosure Statement (SPDS for short). You will also need a few other forms: Loan Status Report (LSR), Loan Status Update (LSU), Cure Period and a Home Owner’s Association Disclosure Addendum and, depending on your price point a HUD Form called HUD-92564-CN, “For Your Protection: Get a Home Inspection and… again depending on the age of your home a Lead Based Paint Disclosure form.

Today’s real estate Contracts are pretty complex. The Arizona Association of Realtors re-wrote the Contract and released it for use in May of 2005. The old Contract was only 9 pages long. Even though today’s base Contract is 9 pages long, the boiler plate of the Contract is prefaced by a disclosure page entitled Disclosure Attachment as the very first page of the document set. Within the body of the Contract, the FINANCING portion of the Contract REQUIRES that the Buyer produce a Loan Status Report (LSR) with the offer, making the actual root Contract 11 pages long. If the home is located within an HOA community the Contract requires a Home Owner Association Addendum and Disclosure now making the Contract 12 pages long. Add to this the state statutory requirement of Seller’s Disclosure of Material Facts about their home by use of the 7 page AAR Seller’s Property Disclosure Statement (SPDS) and the 9 page Contract quickly grows to a staggering 19 pages. Page 5 of the Contract REQUIRES the seller to provide to the buyer a copy of the Arizona Department of Health Services approved private Pool Safety Notice. This is, at a minimum 2 pages and could be 3 pages, depending on where you acquire the document. Your Contract has now grown to 22 pages in total!

Any number of conditions or instances or additional required documents could increase the number of pages your Contract could grow to. Simply be aware of your state statutory required disclosures to the Buyer and follow the instructions in the Contract and your transaction should move along just fine.

The Contract does not allow an immediate cancellation of a Contract if one or the other party breaches their Contractual obligations. The Contract provides the party who failed to comply with his/her Contractual obligations an opportunity to correct the breach issue. When a party has failed to complete some portion of their Contractual promise, the non-breaching party MUST issue a Cure Notice. The Cure Notice allows the breaching party to revisit that task or obligation and give him/her 3 days to make the correction. If the correction can be accomplished and documented then there is no breach and the Contract continues in full force and affect. On the other hand, and depending on how the Cure Notice is worded, if the breaching party cannot make the required repairs to the failed Contractual obligation, the Contract could die. However… keep in mind… it is nearly impossible to retain the Buyer’s earnest money as damages to the Seller if the Buyer uses his/her inability to secure a loan as the escape portal from the Contract. Such posturing, by the Buyer is perfectly legal and available to the Buyer in the boiler plate language of the Contract.

FINANCING
CAN THE PROSPECT EVEN AFFORD MY HOME AND MORE IMPORTANTLY, IS HE/SHE APPROVED?

The Contract provides the Seller with a tremendous amount of clout in this area. First, the Contract makes the production of an LSR a Contractual obligation of the Buyer. That is, the Buyer must present that document to the Seller at the time he/she makes an offer on the property. Without an LSR the Seller has no information at all as to the Buyer’s ability to “make it to the finish line” I.E. close on the property and on time.

Even more exciting is the Seller’s control over the Buyer to force the Buyer to manage and be responsible for the Buyer’s lender’s competency or incompetence during the escrow period. In the boiler plate language of the Contract, the Buyer is instructed to instruct his/her lender that the Buyer’s Lender is to deliver the Buyer’s closing documents to the Title/Escrow Company not less than 3 days prior to the actual date of scheduled closing. If the Buyer’s lender fails to do so, the Buyer is placed directly in the line of fire and the Seller can, and should, serve a “3 Day Notice To Cure” this failure to perform upon the Buyer.

Just as important as the Buyer’s ability to close on the property is the Buyer’s Lender’s ability to perform. All too often, when the real estate market slows, the quality of lenders and loan officers also becomes a big problem. It is not unusual to encounter a Buyer who has engaged the services of a loan officer who has very little loan experience. When this happens, closings can be delayed or even worse, not occur at all. This is another reason the Arizona Association of Realtors developed the AAR LSR (Loan Status Report) form. This form requires that the Buyer’s Lender include not only his/her phone and fax numbers, but also their eMail address, snail mail address and most importantly, their Mortgage Broker Number. This information allows the Seller to research the Lender on the Arizona State Banking Commissioner’s web site. Here you can learn how long the Lender has been in business or if he/she has any pending complaints being processed by the Banking Commission or if his/her license has ever been suspended, revoked and/or any number of additional helpful bits of information that could give you an indication about the quality of the lender.

If you have a banking relationship with a favorite lender or loan officer that you trust, it is not uncommon for Sellers to insist that a prospective Buyer, even though the Buyer has produced an LSR from the Buyer’s Lender, qualify for their loan with a lender that the Seller has confidence in. This posturing is not a requirement upon the Buyer that the Buyer must use your lender… that would be a violation of the Real Estate Settlement and Procedures Act; this is simply one more tool you can use to assure yourself that the Buyer will be able to make it to the closing table on time and at no additional cost to you.

DABBLING IN THE REAL ESTATE BUSINESS

Here are some check lists that you might find use for:

1. Contract Process Flow Chart
2. List of systems and components in your home that MUST be maintained and repaired by the Seller
3. Information about termites and what roll they might play in the successful closing of your transaction
4. Questions to screen Buyers with
5. Questions to screen Buyer’s Lender’s with
6. Critical Date Check List that includes almost all of the types of conditions that would trigger a Cure Notice.
   

If you would like any of these helpful check lists for your For Sale By Owner efforts, please feel free to send an eMail to us at Lori.and.G-II@RealEstateInPhoenix.net. We’ll see that you receive a link to them right away.

FOOT NOTE:

On March 19, 2006, Linda Water Nelson of the Memphis Business Journal/MSNBC wrote:

National Association of Realtors statistics show that of those unrepresented Sellers who are successful in the sale of their property, 40% say they wouldn't do it again," she says. That's because do-it-yourselfers are unaware about the time commitment for showings, open houses and other events, or the cost of advertising.

Don't become a NAR (National Association of Realtors) Statistic

FSBO Methods Used to Market Home:

Yard Sign . . . 61%
Friends/neighbors . . . 46%
Newspaper ad . . . 37%
Open House . . . 29%
Internet . . . 17%

Most Difficult Tasks for FSBO Sellers:

Getting the right price . . . 14%
Understanding paperwork . . . 17%
Preparing/fixing up home for sale . . . 16%
Attracting potential buyers . . . 9%
Having enough time to devote to all aspects of the sale . . . 8%

Of course… it is never our intent to let you get dragged under a bus, so if at any time you feel like you have taken on an alligator with Lockjaw or a Lion by the tail, we would be happy to interview with you for the job of getting your home sold. To reach us, you can either eMail us at Lori.and.G-II@HomesInPhoenix.net or CLICK HERE to complete our CONFIDENTIAL Seller Information Form. YOUR PRIVACY is always our most sacred trust. Remember… any monkey on a chain can bring a Buyer to the front door; it takes a seasoned professional to bring qualified buyers to the door and to manage the transaction to and through the closing process!

If you think it’s expensive to hire a professional…

Wait till you pay for an amateur!

Bye for now… Lori & “G-II” ... til our next posting... Happy Easter to all!

What Could Possibly Go Wrong If You Are Buying a New Construction Home?

So what could possibly go wrong if your going to buy a brand new home, built by one of over 200 Arizona Builders, registered as General Contractors and Licensed with the Department of Real Estate? Read on my friend… read on!

Lori & I have been given exclusive permission, by the Buyers, to tell these inconceivable accounts of New Construction Terror. You have the opportunity to communicate with them, if you wish, to validate any portion of these mind-blowing stories.

An Emotional Safety Net or What do you mean… I have to simply live with it?

Story Number One:

Our clients asked us to represent them in the purchase of a new home, being built in the west valley. We accompanied the buyer to the builder’s site. During a tour of the site where the subdivision would be built, our buyers fell in love with a particular lot. The site sales person took us back to his office so we could examine the plot plan and projected placement of street lights, street sewers, and utility boxes for phone, cable and electricity.

Our buyer had a need for an RV gate on the property so it was “materially important” to them that the property was free of any utility boxes on the property and particularly no impediments to the ingress / egress of the RV gate. We spent about a hour with the site sales person, examining the site plans, checking with the city and with the builder’s construction team that there were truly no utility boxes that were going to show up on this property.

About 3 months into the permit process, the buyers and we were notified by the builder that the FINAL Commissioner’s Public Report approval had been delayed. We were given no reason for the delay, only that the fire access ingress and egress routs had been redrawn.

About 4 months later, and without any word from the builder that changes to the site plan had been collaborated between the city and the builder, we and the buyer learned that three utility boxes had been plumbed right smack-dab in line with the RV gate. Obviously our buyer was extremely angry, not only because of the existence of the utility boxes, but more importantly because they had not been advised of the site plan alteration.

The builder and the site sales person were well aware that the unimpeded access to the RV gate was the main reason our buyer had selected this particular lot. The builder’s contract stipulated that no changes to any part of the construction site or plans would take place without written notice and mutual agreement between the buyer and the builder. That notification never took place.

When the buyer approached the builder’s site sales person to express the buyer’s wish to be granted a lot site change, at the same price the original contract was written for, the site sales person retorted with, “The utility boxes are not that bad… you might have to make a few adjustments as you maneuver to and through the gate, but you should be able to do it…”

Then the builder’s site sales person said to Mrs. Buyer, “…if you don’t like the look of the utility boxes, I’ll buy you a bush to plant in front of them… and besides… do you even own an RV?..”

You can imagine the explosive anger that brewed within Mr. Buyer when his wife relayed the builder’s site sales person’s comments and demeanor to Mrs. Buyer. Mr. Buyer then spoke with the builder’s site person about the problem with the construction site. The builder’s site sales person, insisted to the buyers that there was nothing that could be done and that they were simply going to have to live with the unexpected appendages, protruding from their lot that interfered with ingress/egress to their RV gate.

The buyers thought that they had just been handed a blow that they could not recover from.

When the buyers came to us and relayed their stories, we went to work to help them recover from the emotional damage and to resolve their differences with the builder.

At the onset the builder’s site sales person was less than cooperative. We quickly departed from having any additional dialogue with the builder’s site person and began communicating exclusively with the appropriate people within the builders management group.

Lori & I attached the builder through his own contract, used every ounce of legal knowledge at our disposal and eventually got the builder to agree to allow the buyers to move to a different lot, in a different community at the same price they had gone to contract for, keeping the nearly $50,000 of appreciated value of the property. The builder also agreed to credit the buyers back a $6,000 lot premium as compensation for the contractual breach of “Non Disclosure of A Material Fact”.

The builder promised that the buyers would be able to select their new lot within a week or two. We waited nearly 6 weeks, giving the builder plenty of time to make good on his promises. During the 6 week span, the builder’s lender sent a notice to the buyer, advising the buyer that the buyer had opted to cancel the buyer’s loan application with the builder. That was totally untrue and incorrect. Then… right on the heals of that notification was another notice from the builder that the buyer’s earnest money had been returned due to the buyer’s wish to cancel the contract. This too was incorrect and in fact… never occurred.

Once again… the buyer’s were furious. The buyers contacted Lori & me with the news and… once again… we went to work, diving into the interstices of the builder’s incompetent management fabric. We were successful… once again to knit the damaged quilt of buyer and builder fabric of interaction back together.

About two or three weeks later we received a call from Mr. Buyer. He told us that he was finished with the builder and wanted to be done with the builder, wanted out of the contract and wanted his $5,000 earnest money returned to him.

I drafted a letter of contract termination for the buyer to deliver to the builder. The builder’s attorney’s worked the letter over and over and over but knew that they were going to have their heads handed to them if they tried to take this transaction to court.

About 5 days after the contact termination letter was delivered to the builder, we received a Notice of Cancellation, signed by the builder, in advance of any signatures by the buyer.

We had won the battle for our clients! They were free of the builder’s hold on them and their earnest money.


Story Number Two:

How to win the battle and the war in 4 minutes
or
Predatory Lending / What do you mean I have an 11% APR on my mortgage?

Ok… so the buyer in Story Number One simply did not have enough fun with builder number one… he had to take another run at this New Construction stuff one more time.

This time he had wandered into the builder’s model complex without his Realtor® by his side. That was the beginning of his nightmare.

Fortunately, through some extremely competent negotiations we were successful in getting the builder to allow Mr. Buyers wife represent the purchase. You see… Mrs. Buyer is a Realtor with Coldwell Banker and one of Lori & G-IIs protégés. After we successfully gain that bit of capitulation from the builder, Mrs. Buyer asked Lori if she and I would represent them in the transaction. Mrs. Buyer knew we had a proven track record when it came to protecting their interests. Mr. & Mrs. Buyer gave up the commission that would have been paid to Mrs. Buyer as a licensed real estate agent because she knew, that even though she was a licensed agent, she was not ready to take on any problems that might come up with the builder or any one on the builder’s team.

Lori & I agreed to represent the buyers but insisted that we credit some of the commission back to Mr. & Mrs. Buyer because of their loyalty to us and because they had that much trust in our ability to watch their backs in this next transaction.

On March 14th 2006 we met with the buyers at the builder’s office for the drafting of the contract. The site person was visibly annoyed that the buyers had successfully gain competent buyer representation. The buyers had settled on the purchase of a builder spec (inventory home). The builder was offering an $80,000 discount from the finished home price of $380,000. Plus the builder was offering 3% of the purchase price ($11,400) toward buyer closing costs if the buyer would use the builder’s lender. The house was set to be completed by March 29th 2006, only 15 days from the date of the contract.

The buyers agreed to use the builder’s lender so they could take advantage of the 3% toward their closing costs. The $80,000 discount was not tied to the use of the builder’s lender.

During the contract writing, the builder’s site sales person wanted to introduce into the document set a specific document that prohibited the buyer form using alternate financing if the closing date was within 30 days from the contract date. Lori insisted that this addendum would not be part of the document set. The builder’s site sales person was adamant that the document be included. Lori threatened that the buyers would leave the building and purchase in another community if the builder’s site sales person was going to insist that this document be part of the doc set. The Site person folded and the financing document was eliminated from the document set.

To set the stage it is necessary to let you know that the buyers have FICO scores that are near perfect. Nearly the best one can achieve in the credit world.

The contact documents were completed, Lori reviewed all of the necessary documents to confirm that all was contractually in order. Lori also reviewed the Commissioner’s Report, a document that must be presented to EVERY buyer before he/she signs a commitment to purchase a new home from a builder. All was in order.

On March 27th 2006 the buyers called us to let us know that they had received their loan documents for review over the weekend. They were alarmed to see that the terms of their financing had been railroaded. The loan documents, for the buyer’s 80% / 20% loan, delivered by the builder’s lender disclosed a first mortgage interest rate of 7.5% and a second mortgage rate of 11%. The buyers were very confused.

Once again, Lori & I were called to the rescue. We examined the documents and were completely exasperated with the obvious “Credit Rape” of two very well qualified buyers. There was absolutely no way that buyers of this caliber should be set up with loan fees that were so outrageous.

Before making a call to the loan officer’s office, I had Mrs. Buyer call Coldwell Banker Mortgage and USAA Mortgage to obtain competitive loan quotes. USAA delivered a loan quote of 6.875% for a 100% loan product. Coldwell Banker Mortgage delivered a loan quote of 6.375% for a 100% loan product. Both loan quotes were clearly better than the disaster that the builder’s lender was trying to sell.

I placed a call to the loan officer in an attempt to uncover what could have possessed her to write such an incredibly off the wall loan platform. The loan officer was very annoyed that Lori and I were involved with this part of the process. She challenged our intervention and refused to have any further conversation with me on the phone.

I gathered up Mrs. Buyer in to my car and off we drove, right down to the builder’s lender; walked into her office and asked to speak with her, in person. She kept us waiting for nearly an hour. I’m certain she expected that we would get tired of waiting for her and would leave the building. Nothing like that even crossed my mind. This loan officer was on a mission to commit an incredibly moral impropriety and I was hell-bent on keeping that from taking place. Finally, the loan officer got tired of trying to out wait us and she came into the lobby. She agreed to meet with us in a small conference room.

I presented the two quotes from the two competing lenders; each had been prepared on an industry standard Good Faith Estimate HUD form. The loan officer was visibly unnerved by having to deal with me and even more frustrated that I had forced the showdown.

She postured herself with a condescending tone to her voice and resistant body language. I told the loan officer that she would have to let me know within the next hour or two, (it was now about 2:00pm) if she was going to either meet or beat either of the two competing loan quotes. This is the conversation that followed:

Loan Officer: “Well… I don’t know if I can get you a response by then…. I have to call Denver”.

Me: “Who in Denver do you have to call… let’s get them on the phone now to resolve your quote”

Loan Officer: “I don’t know who I’m calling”

Me: “You mean you don’t know who you need to talk to about your quote for these rates”

Loan Officer: “I mean that I have to call my loan processor”

Me: “Let’s get him or her on the phone”

Loan Officer: “I don’t know her name”

Me: “Ok… there must be someone there in authority, give me a name. I have people in Denver who can be at your corporate office in less than 30 minutes”

Loan Officer: “I’m not going to make that call”

Me: “My buyer and I have to know within the next hour to hour and a half that you are or are not going to match or beat one or both of these competing loan products”

Loan Officer: “Since you didn’t come in with an appointment I don’t think I will be able to help you within that time line”

Me: “Ok… how about the builder’s general sales manager? Let’s talk to him”

Loan Officer: “I don’t know who that is and I don’t think he will see you”

Me: “Ok, so you don’t know who the builder’s general sales manager is, but your pretty sure that he will not see me? Ok… I guess I’ll have to work with that”

With the conclusion of that short and utterly useless conversation, I thanked the loan officer for her time and took the buyer with me back out to the lobby. I asked the receptionist to locate either the builder’s general sales manager, designated real estate broker or the loan officer’s supervisor.

Within a minute or so, a gentleman greeted us. He was the loan officer’s boss. The head cheese. The Big KaHuna. The Top Dog. He greeted me and the buyer and invited us into his office. He had the buyer’s file on his desk.

KaHuna: “What seems to be the problem?”

Me: “I don’t think we have a problem. I think there has been a misunderstanding”

KaHuna: “How can I help?”

Me: “My client has received two completive loan quotes that blow the builder’s lender current loan quote out the door. I think you can do much better than your quote and prepays even match or beat the two competing quotes that are in front of you”

As he begins to look over the buyer’s file, KaHuna: “Why do you have a loan like this. This makes no sense!”

Four (4) minutes later, our buyer had an 80% / 20% loan, with an Interest Only Front half with a 3 year rate lock at 3.88% and a Back Half loan of 8.5% fully amortized for 30 years with a 20 year balloon and a monthly payment that was $1,000 a month LESS then the loan originally quoted by the builder’s loan officer.

KaHuna promised that he would have the loan documents redrafted and that our buyers would close no later than March 31st 2006.

Today at 3:00pm, March 31st 2006 our buyers picked up the keys to their new home. They couldn’t be happier and they are even more convinced that there is no instance that any one, shopping for a New Construction Home, should ever try to enter that arena on their own.

Are either of these builders, the builders you wanted to engage on your own and without FREE Buyer Representation, paid for by the builder?

For obvious ethical reasons, we cannot disclose the names of these two builders, but… we are pretty sure, if you ask them, the Mueller’s will be happy to share that information with you. They are not tied to the same Realtor constraints that Lori and I are.

Our buyers are Joshua and April Mueller. You can reach April at april1013_98@yahoo.com and Josh at jwmueller99@yahoo.com to verify these stories or ask further question about the value of Buyer Representation in New Construction.

CLICK HERE TO READ, “WHY SHOULD I HAVE MY NEW CONSTRUCTION HOME INSPECTED”

Have a GREAT day and happy house hunting... but... we hope you decide to take advantage of your Arizona Statutory Rights to Buyer Representation... It's a Jungle Out There... and... don't forget... here in the Wild, Wild West, we still carry guns

Exploring Loan Platform Options

Hello again folks,

Not too long ago, a client asked us some interesting questions about Loans and Loan Platform Options. We thought we would share that post with you...

Our clients wrote:
"...We have been contacted by our Builder's lender about approval for a loan. They recommend doing an 80/20 with no down payment at 6% and 8.125% respectively (Loan will be ~$185.000). We have yet to get their papers in the mail, and also were planning on asking USAA if they could match or beat this. My question to you, is should we be looking at an 80/20 as our only option for mortgage? Or would a traditional 30 yr convertable and 3% down payment with mortgage insurance be a cheaper option for us?..."

While the Builder's lender has set you on a relatively accurate course, those directions could use a little tweaking... LOL

It is true that money is very inexpensive at this moment in time, it has been our experience that 80/20 loans are not necessarily the best product for all buyers. You should indeed check with USAA about what loan programs they offer, but you should also check with Preferred Mortgage, a Coldwell Banker Residential Brokerage affiliate lender at 888-315-6194. Keep in mind that, perhaps one of the most important and impacting portion of your loan platform, is the type of loan you secure. Oh yeah... wanna really help your sleepless nights... ponder this... there are hundreds of types of loan programs that you could research... perhaps even thousands... how's that for a head scratcher??

Consider this scenario; You do not intend to make this home purchase the last time you ever purchase a home. This will be a 'stepping stone' home... something to build some equity with so you can move up to a larger home in the future. You will most likely live in this home for three to five years and then make a move up. If that in fact takes place, then there are numerous types of loan platforms you should be looking at but... least of all a fully amortized, fixed rate 30 year mortgage. Like Danny Davito said in his hit move, Other People's Money... "Why should I use my money when there is plenty of Other People's Money to use!!!"

Let's explore some options:

The 80/20 loan- Arguably one of the most used loan platforms in today's lending arena. One of the beauties of this type of Hybrid Loan is that the federally required "Mortgage Insurance Premium" referred to as MIP is waived because the Buyer's first loan is for only 80% of the appraised value. (all this of course if the loan is a federally insured loan, I.E. a Fannie Mae or Freddie Mac loan) However, of late, 80/20s have come under extreme scrutiny by many loan underwriters. Appraisals are often challenged by the underwriter, forcing a 'review appraisal' to take place, sometimes at the expense of the Buyer. Some lenders require dual instances of Title Insurance to be purchased by the Buyer, dual instances of Loan Origination Fees, dual instances of Underwriting costs, dual instances of Mortgage Broker Fees and a whole host of other additional dual instances of fees. There are of course, those lenders who do not charge these additional fees into the transaction; but consumers have to hunt for them, or be allied with a Realtor (hummmm - that must be us!) who can put them in touch with such a lender.

Two other popular Hybrid Loans are the 80/10/10 and the 80/15/5- Both of these loans, like the 80/20 eliminate the need to carry the federally required MIP. However, they typically require the buyer to come up with some down payment money of their own. The 80/10/10 is two loans, a 1st for 80% of the appraised value of the home and a 2nd for 10% of the appraised value of the home, supplemented by 10% down payment of the Buyer's own funds. The 80/15/5 is similar. There are again two loans, the first of 80% of the appraised value and the second for 15% of the appraised value, supplemented by 5% down payment of the buyer's own money. Both Hybrid Loans eliminate the need for MIP. However, these loans too, can be laden with additional costs.

Perhaps one of the most important features to be aware of during your search for a loan is the PPP (Pre Payment Penalty). Usually, as long as the consumer's credit score has a minimum of a 625 FICO Credit Score, there is little reason to subscribe to loans with PPPs. If you do choose to engage a loan with a PPP, be sure you fully understand EXACTLY what the pre payment penalty is and how it functions within the construct of the loan. (usually the sum of 6 months of the loan payment).

LIBORs and other Interest Only Loan Platforms: Interest ONLY loans such as the LIBOR, COFI and CODI are very popular for short term investments, say... 3 to 7 years.

About Interest Only Loans

An interest only loan is a great tool to consider when searching out your financing options. This type of loan allows you to pay the interest portion of your payment for the first 10 years of the loan, and greatly reduces your required mortgage payments. Because the value of your home is going to increase (in most cases) regardless of how much money you pay towards the principle of the loan, an interest only payment frees up cash that can be used to maximize 401K contributions, to put money into an IRA or other investment, to save for college or to pay down debts.

In most situations, interest only loans are some type of adjustable rate mortgage.

This option should be cautiously considered and is not for everyone. An interest only loan makes the most sense for someone who is . . .

• borrowing more that $200,000 (although not required)
• putting down at least 10% (although not required)
• planning on being in the house for 3-7 years
• financially disciplined to take advantage of monthly savings

LIBOR (London Inter Bank Offered Rate)

A Libor Mortgage Loan is also commonly referred to as an "Interest Only" Loan or "Interest Only" Mortgage. Most libor loans have "Interest Only" payment features to them and are tied to the current rate of the popular Libor Index. In order to understand all your libor mortgage options (including those with "interest only" payments) you should consult a Libor Mortgage professional, like USAA, Preferred Lending and/or Pacific Funding Group.

CODI (Certificate of Deposit Index)

Some financial analysts feel a CODI loan is better than Other Adjustable Interest Only type loans

A CODI loan is based upon the most stable index currently available. Simply put, it is the aggregate sum of what banks are paying to their depositors on their 3-month CD accounts. As we know, these short-term CD's generally offer a very low rate of return. Currently, the average rate paid by a bank on a 3-month CD is approximately 1.40%. Here's how it works: we take the daily average of these 3-month CD's and add those daily values together for one month. We then divide that sum by the number of days in the month to reach a monthly value. Next we add that current monthly value to the previous 11 months and divide by 12 to give us the current CODI Index. Right now that aggregate index is 1.820% and dropping. Over the past 9+ years, CODI has been as low as 1.820% and as high as 6.53%. The average of the past 9+ years is 2.90% and STILL DROPPING! By comparison, the 30 year fixed rates have swung between 5.875% and 9.25%!

The CODI index is however the most stable in the industry and has demonstrated a linear downward trend. The loan although variable can be structured to emulate the properties of a fixed for a moderate period of time

COFI (Cost of Funds Index)

This stands for “Cost of Funds Index”, and is determined and calculated every month by the Federal Home Loan Bank of San Francisco. According to the web site of that Bank:

The 11th District Monthly Weighted Average Cost of Funds Index (COFI) is one of many indices used by mortgage lenders to adjust the interest rate on adjustable rate mortgages. The monthly COFI reflects the actual interest expenses recognized during a given month by all savings institution members of the Federal Home Loan Bank of San Francisco (Bank).

It should be noted that the cost of funds index (COFI) is not an interest rate; it is an index. Well... that is just a little bit about some of the loan options that many Arizonians are taking advantage of. Only you can make the absolute decision as to which loan product is best for you, but be sure to engage the counsel of a competent lender. Let me know when you will be speaking with each lender and I will set up a conference call with you and me and the lender on the phone together.

Hope this information is helpful to you.

Be sure to check in with us any time you have a question or just want to chat about what is next in the process: and... for goodness sake... please don't make any decisions without checking with us first. We have been doing this for nearly 20 years... but this may be your first outing... LOL

Bye for now... till our next posting...

Lori & "G-II"

Expansive Soil in Arizona

EXPANSIVE SOIL… So… what’s all the fuss about?

Sooo… what’s all the fuss about Expansive Soil… and what the heck is it anyway?

GREAT questions… and glad you asked…

Remember… way back in the Paleozoic Era, when Dinosaurs roamed the earth? Well… they also took up residence here in Arizona. Then… came Global Warming, the Ice Age and who knows what else… oh yes… we had that huge meteor hit the state in up-state Arizona… that couldn’t have been too helpful… Right!?!... and… don’t forget Sunset Crater one of the oldest inactive volcanoes in the state, or is it really inactive… Hummmm… I wonder?

And then… the Dinosaurs disappeared… Well… not all of them… LOL

I guess what I’m trying to share with you is just this… we Arizonians, that includes our ancestors, the Dinosaurs, have lived with all sorts of natural geologic inconveniences, and that includes expansive soil.

That said… this is a little bit of information about Expansive Soil. The soil in Arizona, in some parts of the state, has “clay like” tendencies. Specific areas of the state are prone to “clay like” tendencies, sometimes referred to as “EXPANSIVE SOIL”. It is not unusual for a home/building in Arizona to exhibit signs of settling by evidence of cracks in walls, doorways, garage floors, patio decks, drive ways, roof tie-ins and a number of additional locations in, on and around the home/building. The Registrar Of Contractors, sites any gap/crack in foundations or walls etc. That exceeds 3/16th of an inch in width is considered unacceptable and requires the attention of professionals to examine the cause of such cracks.

If a consumer purchases a home from resale inventory, the Buyer should always ask the Seller for a copy of the “Commissioners Public Report” for that subdivision. If the Buyer is purchasing a new build home, then the Builder is obligated to provide a copy of the “Commissioner’s Public Report” to the Buyer prior to the Buyer signing any contracts. In any case… no site sales associate, working for the Builder nor any real estate agent should ever issue a verbal warranty or claim as to the cause or nature or origin of these physical conditions, whether visible or hidden or whether disclosed or undisclosed.

It is the responsibility of a prospective homeowner to satisfy his or her concerns by securing an independent assessment of the home/building and the structural integrity of that home/building. A licensed, bonded and insured (PE) Professional Engineer or (PEF) Professional Engineering Firm should tender such assessments, in writing to the party or parties raising such concerns. A list of State Certified PE’s or PEF’s can be found on the Professional Registration Roster’s web site. Additional information can be obtained from the Arizona Registrar of Contractors and at the United States Department of Agriculture’s NRCS (Natural Resources Conservation Service).

¨ If the prospective homeowner has concerns about the condition of the soil under, near or around the subject property, it is suggested that the prospective homeowner contact one of the following agency locations to inquire about those conditions of concern.

Higley
Wilson, Robert W. Resource Soil Scientist Chandler Soil Survey Office 18256 E. Williams Field Rd. Suite 1 Higley, Arizona 85236
Phone: 480-988-1078 ext. 106 Fax: 480-988-1474 Voice mail: 9011-1875 e-mail: rwilson@az.nrcs.usda.gov

Tucson
Breckenfeld, Donald J. Resource Soil Scientist Tucson Resource Support Team 2000 E. Allen Road, Bldg. 320 Tucson, Arizona 85719-1596
Phone: 520-670-6602 ext. 242 Fax: 520-670-5123 Voice mail: 9011-1465 e-mail: dbrecken@az.nrcs.usda.gov

Flagstaff
DeWall, Alfred A. Resource Soil Scientist Flagstaff Resource Support Team 1585 S. Plaza Way, Suite 120 Flagstaff, Arizona 86001-7102
Phone: 520-556-7305 ext. 229 Fax: 520-774-2780 Voice mail: 9011-1605 e-mail: adewall@az.nrcs.usda.gov

§The 1997 National Resources Inventory (NRI) is the latest in a series of inventories conducted by the U.S. Department of Agriculture's Natural Resources Conservation Service (NRCS), formerly the Soil Conservation Service. It provides updated information on the status, condition, and trends of land, soil, water, and related resources on the nation's non-Federal land. The 1997 NRI is unique in that it provides a nationally consistent database that was constructed specifically to estimate 5-, 10- and 15-year trends for natural resources from 1982 to 1997. The 1992 NRI was instrumental in providing data on natural resources for the USDA publication.

ADDITIONAL INFORMATION
In order to maintain the structural integrity of your home, long after you close escrow, proper planning and maintenance of the finish grading, pool and landscaping are the responsibility of the homeowner. Many builders recommend the homeowner take the following preventative measures;

1. Make sure that positive drainage away from your foundation is maintained
2. No landscape plantings should be placed within 2 feet of the house.
3. Landscape plantings within 10 feet of the house should be limited to low water usage plant types
4. Do not over water plants near the foundation, patios or fence walls.
5. Care should be taken when backwashing pools to ensure excess water is not allowed near the foundation, patio or fence walls.
6. Care should be taken when adding pool or landscaping improvements to ensure that any mounding or grade changes direct surface water away from the home and are in conformance with the general grading plans of the home site.
7. Regularly monitor water on your lot after rains or normal watering to ensure these maintenance items are being followed

Lori & I hope you found this information helpful and useful. Remember… Expansive Soil is not a bad thing… It’s only bad if certain construction rules and end user rules are not followed.

Till our next posting... Bye for now…


¨ http://www.az.nrcs.usda.gov/soils/tss.htm ¨ http://www.az.nrcs.usda.gov/soils/flagsso.htm ¨ http://www.az.nrcs.usda.gov/soils/tucsonsso.htm
§ http://www.az.nrcs.usda.gov/nri/state.html

Learn a little bit about VA Loans

From time to time we field questions from clients about the lending process. The following post is a Q&A session, about VA loans, that occured between one of our clients who relocated from Italy. We think this exchange and the information contained within will be helpful to you as you begin the process of searching out an appropriate loan package.

In an Original Message on
Saturday, February 22, 2003 2:19 PM Michael wrote:

Lori and GII,

Question - (I'll trust your judgment). I am researching other financing options since I called USAA and they verified that they are unable to guarantee closing < 60 days.

Yes... my wife and I too keep track of USAA's closing time lines... problem right now is that with rates so low, they just can't seem to separate the Refi clients from their pool of new mortgage applicants...

While trying to nail various lenders down with all the applicable information on fees, timeframe and everything, one wrote the following:

"VA loans normally the sellers pay all of the VETS cost if not I would suggest you use a very good agent who can make this happen for you....."

This is the first I heard of this - not even the on base home buying seminar mentioned this. What is your perspective?

Mike and Nathalie

Well... now you've entered into a neck of the woods that Lori & I know very well. First let's take the lender's statement,

"VA loans normally the sellers pay all of the VETS cost"

There is some accuracy to in this statement. The VA, by federal mandate, forbid and prohibit VA buyer's paying certain types of fees. VA Pamphlet 26-7, 8.20 of Chapter 8 identifies these specific fees. A section of that pamphlet reads:

The lender's flat charge is intended to cover all of the lender's costs and services which are not reimbursable as "itemized fees and charges." The following list provides examples of items that cannot be charged to the veteran as "itemized fees and charges." Instead, the lender must cover any cost of these items out of its flat fee.

---

· Lender's appraisals
· Lender's inspections, except in construction loan cases
· loan closing or settlement fees
· document preparation fees
· Preparing loan papers or conveyancing fees
· Attorney's services other than for title work
· photographs
· interest rate lock-in fees
· postage and other mailing charges, stationery, telephone calls, and other overhead
· amortization schedules, pass books, and membership or entrance fees

· escrow fees or charges
· notary fees
· commitment fees or marketing fees of any secondary purchaser of the mortgage and reparation and recording of assignment of mortgage to such purchaser
· trustee's fees or charges
· loan application or processing fees
· fees for preparation of truth-in-lending disclosure statement
· fees charged by loan brokers, finders or other third parties whether affiliated with the lender or not, and
· tax service fees.

---

This is by no means the list of items in it's entirety... but it gives you a good idea of those fees you, as a VET, simply cannot pay. However... equally true is... there is nothing written into the statute that pushes these fees onto the Seller, or any other party to the contract. Thus... who pays these fees is the lenders problem. The VET is insulated from paying these fees.

Now... that said... why would you ever think it was just that simple? cause it ain't. There is a caveat to this mandate of fees a VET cannot pay. If the names of these fees are not listed in the closing statement, or on the lender's GFE (Good Faith Estimate) the caveat goes this way... the lender can charge the VET up to 1% of the loan amount as an allowable fee to be paid by the VET to the lender. This is the "flat fee" referred to above.

The education, required of a Realtor, to help their client process through a VA transaction is more complex than it may seem on the surface. A Realtor who does not fully understand the nuances of the VA loan may overlook items and/or contents of the lender's loan program that could unfairly impact the VA Buyer's out of pocket expenses. For example, most Realtors think that the VA Buyer can pay courrier fees. That is incorrect, the only time a VET can pay such fees is if the loan is for the refinance of an existing property. Some Realtors think that the Seller MUST pay the 'non-allowable' fees associated with a loan, I.E., those fees listed above that the VA Buyer absolutely cannot pay. As we have discussed above, this is an inaccurate assumption and, if not processed correctly during the negotiation stage of the transaction could cost the VA Buyer the home, thus loosing out to a competing Buyer.

Ok... now for the next part of the lender's comments. The lender writes,

"...if not I would suggest you use a very good agent who can make this happen for you..."

The lender has all the good will wishes for his prospective client, however... it is not as easy as it seems. Depending on the "Market Conditions" a Seller could be encouraged to support the VA Buyer's costs in their entirety or some portion of them or the Seller could opt to support none of them. And too... the Seller could refuse to pay those fees that the VA Buyer cannot pay by mandate of the VA Lending Rules.

So, what's a VA Buyer to do? First... the lender is absolutely correct... The VA Buyer should engage the services of a Realtor who understands the VA Loan Arena. Realtors who specialize in this area of our industry constantly update themselves with the latest information about the VA Lending Platforms,
maximum VA loan amounts for the particular part of the country they sell homes in and in general keep their finger on the pulse of the market as the market might be responding to VA Buyer's offers.

In our market and in your price range, it is often difficult to encourage the Seller to support all or even a portion of the VA Buyer's closing costs AND... include a discount of their property from the list price. Example of Buyer Costs: (for a home in the $160,000 price range, Buyer's Closing Costs could run between $2,500 to $4,000 depending on the loan product the Buyer selected and the points, if any, associated with the loan).

It is more practical that a Seller would agree to assist the VA Buyer with the VA Buyer's closing costs, including those fees the VA Buyer cannot pay, if the Seller was offered close to or exactly the list price of the property, assuming the property is valued within the "Market's Value Response Zone", I.E., the home will appraise for the agreed upon sales price.

Now that you have had a very cursory over view of the VA Lending arena, here is a nugget that you can take to the bank!

Over the past 6 or 7 months, most of the VETs we have represented in their real estate purchases, here in the Valley, have opted to not use the VA Lending Platform. That is because money is currently so inexpensive, that if the VET has the capitol resources to fund as little as 5% down on their purchase, the loan platforms available to today's Buyer's can save the VET Buyer up to and in some cases more than $100.00 per month in a house payment. There are loan programs that can even provide an escape from the dreaded MIP (Mortgage Insurance Premium) associated with conventional loans with less than 20% of the purchase price tendered for down payment.

Check out options such as 5/1 and/or 7/1 ARMs. Check out too, the LIBOR (London Interbank Offered Rate) loan One of our most recent VET Buyer Clients is closing next month and has selected this type of loan. He purchased a $176,000 home here in Avondale. Be sure to have
all of the nunaces of the LIBOR explained by the lender you select; for if you don't fully understand
why it is so attractive to the VA Buyer who is not going to be in their home more than 3 to 5 years, you could get the "Be-Gee-Bers" scared out of you. Also ask about "Piggy-Back" loans. These are conventional loans that help eliminate the mandate for MIP. You will see that any one of these loan platforms can be demonstratively more advantageous than a plane old 'Vanilla' VA Loan.

Since USAA is not going to be able to support your mortgage needs at this time and while you are
checking out your loan options, check with two of our preferred lending sources. Pacific Funding, Mark Schmidt at 800-245-6722 ext. 102 or you can reach Mr. Schmidt via e-mail at
mschmidt@pacificfundinggroup.net or... Coldwell Banker Mortgage, Rosemarie Cox at 602-565-6948 or you can reach Rosemarie via e-mail at Rosemarie.Cox@mortgagefamily.com.

In today's Hi-Tech Internet world, another extremely important part of a lenders abilities is to be able to harness all of the Internet technology available today. At this time, USAA will not be able to close you on time, that is if you are looking to close in a normal 30 day contract window. USAA also does not offer a 100% On-Line application process. Coldwell Banker Mortgage and Pacific Funding Group are our most trusted Mortgage Affiliates. Both lenders offer On-Line loan processing, offer competitive loan pricing (i.e. rate and points packages) and can in fact close your loan in a timely manner. Both lenders are featured on our web site. Pacific Funding can be reached at Pre-Approve
Me for A Home Loan with Pacific Funding Group and Coldwell Banker Mortgage can be reached at Pre-Approve Me for A Home Loan with Coldwell Banker Mortgage. Both lenders also offer a Rate Watch link too. We would suggest that you point your web browser to each of the links above and make your on line application. Also, send us a phone number that you can be contacted at, include the country code, and then let us know when you have completed the on-line process with each lender. We will then have representatives from each lender call you so you can discuss your particular needs with each of them, in a personal one-on-one phone conversation with a real live person.

Both of these lending sources offer products that are, in our opinion, extremely competitive to their market and, even more important to us and our clients is their superior integrity and attention to our clients. If the inevitable human attribute, "Fallibility" should show it's face during a transaction in that the "Fallibility" was present at the lender level, both of these lenders have stepped up in the past to cover our clients inconvenience even if it meant a monetary outlay of the lenders dollars. That kind of integrity is extremely difficult to find in the Mortgage Market today. Heck... it's a shark fest out there and you, the consumer, are the 'chum'.

"...This is the first I heard of this - not even the on base home buying seminar
mentioned this. What is your perspective?"

It is not unusual that you did not hear about this at a home buying seminar. You have only been at this loan/home buying stuff for several months, perhaps only several weeks. We do this all day long, 365 days 24 X 7. In our 15 years in the real estate business, we have helped over 1,100 families buy and/or sell real estate.

There are over 1,000,000 Realtors in the National Association of Realtors. There are between 70,000 and 75,000 Realtors here in Ariozna, many of them in Maricopa County and several thousand
in the Phoenix Association of Realtors. In all of those numbers, there are but a handful of Realtors who truly understand the VA Loan Platform or the VET Buyer's needs.

Lori and I do understand. That is so for several reasons. First, over 17 years ago, we were mentored by one of the best Realtors in the State of Florida. Next, I am Retired USAF. I made it a point to learn how to take care of our own many years ago and I do that on a daily basis. And last, but not least, Lori & I stay current with as much financing data as we can find. Every day we scower the Internet looking for new and/or updated information on different loan options for our prospective and current clients. And... we check in with our preferred lender pool to get a feel for the Bond Market, one of the economic indicators that has a huge impact on interest rates.

While many seminars are just chock full of great and useful information, you would have to make
a career of attending every Buyer Seminar you could locate to be fully aware of all that is available to the consumer... or... you could be come a Realtor .

You ask great questions... Your questions prove that Internet Buyers are more savvy than the average Buyer. Today's Internet Savvy Buyer has a wealth of resources to pull data from. Only thing missing is the element to convert the DATA to Information. That is where your Realtor comes in...

---

Well... now... you may have some answeres to questions that you hadn't even thought to ask... ;o) Hope we have helped just a bit...

Lori & "G-II"

Let us know what kind of a home you are looking for

Lori & "G-II"