Fixers are still tougher to sell...

Many homeowners selling in this hot market still think that people will crawl out of the proverbial woodwork and buy their beat up house for top dollar. This is a bit of a stretch and even in this tight market with little inventory, the market can be cruel on fixers. The issue lies in a few factoids that are driving buyers decisions. First lenders are not real keen on fixers. Sure conventional loans will let some minor stuff slide but not like they used to prior to the crash in '09. FHA and VA lenders are even stingier on what they allow as 'fixer'. Most people still use financing to acquire a home.

Investors are not interested in paying top dollar for fixers. They tend to pay cash so they don't have to worry about lender guidelines and soft appraisals. But they want to "steal" it so they can turn a profit. That is the whole idea around the investors approach.

Sellers with pie in the sky dreams of getting full market value for their fixer as much or near what the neighbors fully restored and remodeled house just sold for, are going to get a kick in the teeth by the cold hard realities of a market that really wants clean move-in ready homes.

That said, fixers will sell. The market just wants to pay a little less for a home that needs a lot of work. These tight inventory conditions allow sellers to get 85-90% of the relative market value for a clean, move-in ready example of their home and that is a big bump up from a few years back when fixers were fetching only 50-70% of relative market value.

Additionally sellers need to be aware that functional obsolescence is still a thing even in a hot seller's market. One bath homes are not going to yield the kind of offers that a comparable two bath house will get. It may even shock people how much that second bathroom is worth to a great many buyers. Of course a third bathroom doesn't have as much extra "punch" as a second so worry not if you have two.

Sellers should consider doing some work themselves that they feel confident in doing and by all means a little TLC cleanup and some fresh paint can go a long ways toward pushing that value up. The rules of engagement don't really change as the market ebbs and flows. Curb appeal, clean and ready, and functional by modern standards, will always yield the best results.

Loan Changes Ahead

The regulators have decided to change the loan process again with new requirements on final HUD statements and disclosures that many in the industry feel will slow the process down by a few weeks. Right now a government backed loan product already averages nearly 6 weeks to close and potentially adding another two on the end could make that process a two month ride.

Borrowers whether using FHA, VA, USDA or Conventional products need to follow the loan officer's explicit instructions and most importantly in a timely fashion. This will become even more important when the new regulations are activated in August.

Conventional loans that currently close in 20-30 days will likely see close times increase to 30-40 days. Government backed products will likely nudge up against that 2 month window. Buyers need to be sure to ask for a long enough closing time to get everything complete and ready for recording.

All too often buyers are sluggish getting the required documentation into the lender and this causes delays that could result in having to ask the seller for an extension. In this robust seller's market asking for an extension could end up in causing the whole transaction to end.

Buyers need to follow the advice of the loan office and act quickly on getting requirements fulfilled so the loan is funded on time and without complications. The added issue is that inspectors, appraisers and other professionals involved in the process are all quite busy right now and they may need several extra days to complete their process.

Buyers simply need to stay on top of the process and respond promptly and they will be in their dream home before long.