Archive for December, 2015

New settlement statement for real estate closings

Wednesday, December 30th, 2015

Effective Oct 3, 2015 the former settlement statement referred to as HUD1 will no longer be used for real estate closings. The replacement form is call the ‘Master Settlement Statement’. This is a simple one page document that shows all of the numbers related to the sale of real estate. Below is an example of what to expect at your closing. If the buyer gets a new mortgage loan, the loan charges will also appear on this form.

This all comes about because of the financial meltdown and the Dodd-Frank Wall Street Reform and Consumer Protection Act rules that the U.S. Consumer Financial Protection Bureau now requires. In addition to the new settlement statement, buyers will receive new/additional disclosure forms from their mortgage company. All of these changes simplify the home sale process

New Settlement Statement

FHA appraisers don’t look at Zillow

Friday, December 11th, 2015

two properties Under Contract with FHA financing. Both appraisals come in below purchase price. In the previous post (2991Dalton Ln, Austell, GA and  2054 Summer View Pl, Marietta, GA) I talked about how fast these two properties had a buyer. The sale prices were just below the Zillow estimate, so I thought everything would work out well, not so.

Dalton was appraised at $135,000, more than $10,000 below the sale price and more than $20,000 below Zillow. Through FHA, the buyer only needs a $5,000 down payment. In this case, the buyer was not able to come up with the additional money, so the deal fell apart. With rents up, this property will be rented for one year and I’ll try again next year.

Summer View appraised at $130,000, more than $5,000 below sale price and more than $7,000 below Zillow. In this case, the buyer came up with a little more cash and the seller lowered the price. Property to close on Dec 15th.

Now, with FHA appraisals, once you have an appraisal done, that appraisal is still good for 120 days. That means, in the case of Dalton, if I try to sell the property again with a buyer using FHA financing, that is the appraised amount FHA will use. In other words, it is impossible to sell for more than the FHA appraised price in the next 120 days. Luckily, there are more renters out there paying more and there are more investors paying cash, so something good will happen very soon.