Choosing the Right Financing Option For Your Buyer

by Peter Thomas Ricci

Jason Shapiro is a broker/principal at Rising Realty in Chicago.

In today’s ever-changing real estate and mortgage market, one always needs to make sure that they are looking out for their client’s best purchasing options. Whether a buyer is financing, or paying cash, is always a factor in what type of properties one is going to look at and, ultimately, purchase.

With mortgage rates at historic lows, buyers are looking for the most attractive financing options available, and it is important to choose the right mortgage broker or bank to achieve that purpose. Having the right relationship with a broker and bank, with trust based on experience or a good referral, is key in obtaining the most appropriate financing option for a particular buyer.

One of the biggest factors in determining whether a property is financeable is the condition of the property. If the property needs some rehab (whether that means a new kitchen, appliances, paint and carpet) to bring it up to financeable standards, it may be necessary to pursue an FHA 203k renovation loan. There are several Fannie Mae homepath and 203k renovation loans that can help buyers obtain financing for properties that need rehab work to bring them to livable standards.

If an agent is showing properties to a potential buyer, especially condos or homes with HOA’s, it is essential that the agent conduct due diligence on the existence and health of the HOA. If there is no HOA, the chances of getting financing is almost nil. Properties with no HOA’s almost always are sold with cash buyers and at significant discounts as a result of the lack of an HOA.

It is important to also check for any city violations on the property as well, especially regarding porches in recent years. This can be done online on the City of Chicago’s home website. Condo purchases have become a risker investment for homebuyers as they risk buying in a building where other owners may be in foreclosure or late in paying their HOA payments, thus increasing the risk of a failed HOA down the road that they will have to deal with.

Cash is and always will be king when purchasing a home and is a powerful negotiating tool. In a market where it’s very difficult for buyers to obtain financing due to poor credit, unemployment and possible prior foreclosure history, more sellers are taking lower cash offers over higher financed offers for the higher certainty that the property will close.

Sellers have become more conservative in today’s market and don’t want their properties sitting on the market for long periods of time, waiting for buyers to be denied financing. In a market that continues to hover at the bottom, it is still a buyer’s market, but choosing the right financing strategy will continue to be a big factor in the ultimate purchase price.

Jason Shapiro is a broker/principal at Rising Realty in Chicago; he can be reached at:

Office: 773.897.0614
Fax: 773.395.9553
Cell: 847.910.0567
E-mail: jasons@risingrealty.com

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