Q. My fiancé and I are currently trying to purchase a short sale property. We’re first time home buyers , and we’re very nervous we will not be in a position to push the sale through fast enough to qualify for the First Time Homebuyer Tax Credit. How can we motivate the lender to get the approval before April 30th?
In my blog posting, I mention a list of questions that every Buyer and their Agent should ask of the Listing Agent before embarking on a short sale. It is perfectly appropriate for your agent/ Realtor to ask those questions.
In addition, it is reasonable and appropriate to ask if the lender(s) will approve in time for you to take advantage of the tax incentives, both state and federal.
If not, it is equally appropriate for you to modify your existing offer by the amount you would have received should you have had approval by April 30. This will generally motivate the lender to respond in a timely fashion, as they will not want to lose $8000.00 off their proceeds. The lender is simply looking at a bottom line, net number. They are incentivized to get the most from the short sale.
Be sure your agent puts this stipulation in writing and sends it to the listing agent, the seller, and the lender’s negotiator, specifying that “should all approvals not be received prior to April 30, 2010, we will reduce our total offer price from $xxx to $xxx.” If you can find the name and address for the head of the in house legal department for the lender, I would send it there as well. Now is the time to be agressive, without being obnoxious.
That should get you some movement. If you’d like a copy of my booklet, “A Buyer’s Guide to Short Sales”, or a copy of my list of “Questions To Ask The Listing Agent of A Short Sale”, please email me or call me directly.
Q. What is a per diem, and what is a reasonable, usual cost of a “per diem” to extend an escrow?
A. Per diem is Latin for “per day” or “for each day”. It usually refers to the daily rate of any kind of payment.With respect to a real estate transaction, it is an amount offered as compensation to one of the parties in order to get them to do something of value to the other party. Most often, it is used as an incentive to extend an escrow date, or it is used as a penalty for not closing an escrow on time.
THERE IS NO USUAL (SET) COST ON PER DIEM. Generally, per diem is calculated as the real cost of the party to offer an extension or request a penalty. It is based on the price of the property and the actual cost of extending the escrow for the other party. In the case of the seller, it will include Principal on existing liens, Interest on existing liens, Taxes and Insurance (PITI). This may include any swing loan necessary to extend the escrow date, or any penalty he must pay on the property he is purchasing. In the case of the buyer, it may be rent or PITI on his current property,plus any penalty he must pay to the person purchasing his property. It may also include any necessary monies needed to extend the buyer’s rate lock. Your escrow officer can calculate the number for you.
Remember, it’s all negotiable.
Q. I found a rental property I really love. How can I be competitive, and what will the landlord be looking for?
A. The standard information that is requested by most landlords is:
- Lease Application,
- A credit report to list your Fico Scores (dated within the past 60 days)
- Most recent 2 paycheck stubs
- Copy of Driver’s License or other means of identification
- First month’s rent and the security deposit in the form of a cashier’s check
All references and employment will be verified on application. To rent you will have to fill out a general application with references and income information. Usually to suplement this you will need to provide documentation of income as well for the past 6-12 months.
Perhaps the most imortant piece of information th elandlord will use is your credit score. Past evictions and erratic bill paying frighten landlords. If you have a poor credit history, you can offer to pay as many months as you can in advance. These days, renters have a lot of inventory and rents are trending downward, so landlords might be somewhat forgiving if you have good references and can show you have steady employment.
In a competitive rental market, landlords appreciate the following:
- Longer lease agreements. The more often they must lease a property, the more costly t is to them. Offer a two year lease, or even three if you can.
- Rent paid in advance. If you have it, offer 3 or even 6 months rent paid up front.
- A letter from your current landlord. It carries a lot of weight.
- A reference from your employer.