VA Loan, New Home Construction and Price Negotiation (Orlando, Homestead: short sales, foreclosures)

[mistiliah]

My husband and I are looking into new home contruction. We are both military veterans and are wondering how using a VA loan will go with this this. Also, we want to know about price negotiation in the Orlando area. We are pre-approved for a home loan through the VA (which is backed by the government, so it's guaranteed to the seller). How will this affect price negotiation? We don't want any upgrades, but we are hoping to take almost $30K off the price.

[Dee2e]

Originally Posted by mistiliah

My husband and I are looking into new home contruction. We are both military veterans and are wondering how using a VA loan will go with this this. Also, we want to know about price negotiation in the Orlando area. We are pre-approved for a home loan through the VA (which is backed by the government, so it's guaranteed to the seller). How will this affect price negotiation? We don't want any upgrades, but we are hoping to take almost $30K off the price.

You didn't say what area you are looking for but most agents who work with builders know what a builder will deal. Look for builder inventory homes.

[cfIfan]

I can tell you in terms of knocking prices off homes, in this market, many of the builders i deal with have already majorly discounted their homes and wont discount them any further. The only incentives you see now are they may offer you some free upgrades to seal the deal. The other incentive you also see is that if you use their inhouse lender they typically pay upto 3% of the closing costs. Obviously, you already have your loan in place so this wont apply to you, but i have had clients where the builder agreed to pay the 3% towards closing costs to seal the deal. As an example KB Homes base prices are already extremely low, simply bacause the home is basically a bare bones house with no upgrades what so ever, they make their money in the design studio where they even charge to upgrade lightt switched to the nice rocker ones as opposed to the horrible cheap ones. Engle have slashed prices accross the board. In the area i specialize they were selling 3600 sq ft homes for over $600,000. Now their base model of that size is around $380,000.

Any negotiations to be had are in free upgrades and closing costs on new build homes. On resale you will have more opportunity to knock down the price, but you need to make sure you have a good agent who can source the competetively priced properties from all the over priced ones, and i would recommend keeping clear of short sale/Foreclosures, as the bod process is time consuming and you may not even be successful at the end of it, some of them need alot of work, and many are still over priced even for shorts/foreclosures.

Hope this helps

[crissyq]

I HEAR THE TAXES FOR VETERANS ARE EXEMPT TO A PERCENAGE AS WELL. SO YOU COULD REALLY GET GOOD MONTHLY PAYMENTS. NO ONE EVER DID CLARIFY THAT TO ME WHEN i ASKED ABOUT IT BEFORE. BUT MAYBE YOU CAN FIND SOMEONE WHO WOULD KNOW ABOUT THIS. MAYBE THE FLORIDA BANKS OR ORLANDO TAX ASSESSORS.

[GregTraub]

Alot of things CFIfan has said reign true, but every builder and sometimes every community are different. To negotiate your best deal you should simply find the realtor that has the most experience in the areas you are looking AND experience working with builders.

Now, the way you worded a few things confused me a bit. "We are pre-approved for a home loan through the VA (which is backed by the government, so it's guaranteed to the seller)." The VA guarantee's nothing to the seller, the VA guarantee is only to the Lender that originates your loan. They guarantee that lender a certain percentage of the Loan from loss too the lender, lowering the lenders risk of loss which translates to higher Loan-to-Value's with VA loans, with somewhat better interest rates usually. So the question is, have you actually spoken to a lender, had your credit report, provided income and asset information, or have you only received your VA certificate that says you are eligible for VA financing. The two are VERY different things.

For crissyq's question, Veterans, depending on % of disability I beleive, can exempt an additional $5000 of taxable value on their Homesteaded property. So in addition to your 50K homestead exemption, a veteran can exempt 55K. I beleive there are other exemptions and larger exemptions that may be available, it's been a while since I looked up all the new tax law and exemptions as they pertain to veterans, so I may be a little off. All you have to do is call up your counties tax assesor and ask about what exemptions you may qualify for. You can apply for these exemptions at anytime, so If you forgot or didn't know to file for them when you first purchased a home, you can file for them anytime.

[crissyq]

Thanks Greg

[crissyq]

What area do you specialize in? I know you live in WInter Garden, but what do you think about that one on Amberbeam for 299k. I called the agent but he died, so I called the agent that cartus assigned to us and she said its a short sale and could take months to close. I had it saved in my favorites since way before I even left Texas back in early May. How long to you think it could take before anyone can buy it? Just doesnt make sense that if someone wanted to buy it why it should take so long.

Originally Posted by cfIfan

I can tell you in terms of knocking prices off homes, in this market, many of the builders i deal with have already majorly discounted their homes and wont discount them any further. The only incentives you see now are they may offer you some free upgrades to seal the deal. The other incentive you also see is that if you use their inhouse lender they typically pay upto 3% of the closing costs. Obviously, you already have your loan in place so this wont apply to you, but i have had clients where the builder agreed to pay the 3% towards closing costs to seal the deal. As an example KB Homes base prices are already extremely low, simply bacause the home is basically a bare bones house with no upgrades what so ever, they make their money in the design studio where they even charge to upgrade lightt switched to the nice rocker ones as opposed to the horrible cheap ones. Engle have slashed prices accross the board. In the area i specialize they were selling 3600 sq ft homes for over $600,000. Now their base model of that size is around $380,000.

Any negotiations to be had are in free upgrades and closing costs on new build homes. On resale you will have more opportunity to knock down the price, but you need to make sure you have a good agent who can source the competetively priced properties from all the over priced ones, and i would recommend keeping clear of short sale/Foreclosures, as the bod process is time consuming and you may not even be successful at the end of it, some of them need alot of work, and many are still over priced even for shorts/foreclosures.

Hope this helps

[Dee2e]

Originally Posted by cfIfan

I can tell you in terms of knocking prices off homes, in this market, many of the builders i deal with have already majorly discounted their homes and wont discount them any further. The only incentives you see now are they may offer you some free upgrades to seal the deal. The other incentive you also see is that if you use their inhouse lender they typically pay upto 3% of the closing costs. Obviously, you already have your loan in place so this wont apply to you, but i have had clients where the builder agreed to pay the 3% towards closing costs to seal the deal. As an example KB Homes base prices are already extremely low, simply bacause the home is basically a bare bones house with no upgrades what so ever, they make their money in the design studio where they even charge to upgrade lightt switched to the nice rocker ones as opposed to the horrible cheap ones. Engle have slashed prices accross the board. In the area i specialize they were selling 3600 sq ft homes for over $600,000. Now their base model of that size is around $380,000.

Any negotiations to be had are in free upgrades and closing costs on new build homes. On resale you will have more opportunity to knock down the price, but you need to make sure you have a good agent who can source the competetively priced properties from all the over priced ones, and i would recommend keeping clear of short sale/Foreclosures, as the bod process is time consuming and you may not even be successful at the end of it, some of them need alot of work, and many are still over priced even for shorts/foreclosures.

Hope this helps

Actually, I do know builders that will deal on price in addition to incentives, closing costs and even down payment.

While many are down on short sales and foreclosures, if the buyer has the time, there are some good deals to be had.

You are correct that many need lots of work but many are brand new homes where the seller did not strip the home bare. Again, time and patience pays.

[cfIfan]

In my experience, the only time i have seen builders willing to do deals are on inventory homes, and many builders have cut right back so they have minimum if any inventory homes. If you find a builder who is willing to do a deal, snap it up because you wont typically find it.

[GregTraub]

Originally Posted by crissyq

what do you think about that one on Amberbeam for 299k. I called the agent but he died, so I called the agent that cartus assigned to us and she said its a short sale and could take months to close. I had it saved in my favorites since way before I even left Texas back in early May. How long to you think it could take before anyone can buy it? Just doesnt make sense that if someone wanted to buy it why it should take so long.

Unfortunately I've become a bit of a specialist in short sales and foreclosures...I say unfortunately because they are a huge pain in the butt, but the best prices are found in these types of properties.

If the short sale you were looking at is still "active" on the market then you can put an offer in whenever you want, the seller usually accepts the offer quickly and you are then under contract, easy as pie. The time comes in after you and the seller have a contract, the contract has to go to the bank, or bankS, that hold mortgages on the property. Since the seller is selling the property for less than what is owed they have to negotiate with their banks to release their mortgages for that amount and take a loss. It makes sense that if someone wanted to buy the house the bank should accept it to avoid having to go through the expense of foreclosing....however, One banks have to make sure releasing the mortgage will actually cost them less than foreclosing and selling it themselves, Two, banks are big companies that have to follow many rules and guidelines that don't always operate under common sense, and Three there is simply such an emense volume of these short sales people are requesting the banks simply don't have the man power to deal with them all quickly.

It WILL take at LEAST an additional 30 days to hear a yes or no from a bank on a short sale, and you can bet it could take 3+ months depending on the complexity of the deal and the experience of the listing agent. There's just no way around it. If you do consider purchasing a short sale, just make sure you have an agent on your side (a buyer's agent) and one that knows how to structure your offer and the deal, to protect you during the purchase, most importantly how to keep an out for you during the process to make sure you can be free to buy a different property should you find another during the months it takes with the short sales.