All Forum Posts by: Dalton Summers

Welcome!

@Laura Winters No offense to you or Dan (from California), but we're talking about Ohio real estate law. If I've got this wrong, I'd appreciate it if you could point me to the section of Ohio Revised Code or law that says a Seller can't sell the property when there's an earnest money dispute.

I don't believe that's correct. A termination and a mutual release for earnest money are two different things. It sounds like the contract terminated due to an appraisal contingency that the parties couldn't renegotiate. Just because both parties are disputing who gets the earnest money shouldn't prohibit a Seller from putting their home back on the market.

Also, here's my "cheat sheet" for appraisals and reconsiderations of value (ROV).

BEFORE THE APPRAISER ARRIVES:
1. Multiple Offers or Over Asking Price? If Yes: Send the top three offers to the appraiser before they visit. This can demonstrate market demand for your property.
2. Provide Comparable Sales: Provide the appraiser with your selection of the three best comparable sales. Just include the address, sales price, and date sold.

IF APPRAISED VALUE IS LOWER THAN ANTICIPATED:
You may be able to request a Reconsideration of Value (ROV) from the lender. I suggest reviewing the appraisal for accuracy and here are a few key points to consider:
• Stronger Comparable Sales: Are there better comparable sales that should’ve been used? This is your best opportunity for a successful reconsideration of value.
• Clerical Errors: Are the square footages, bedrooms, bathrooms, and lot sizes accurately reflected? For the subject property and comparable sales?
• Off-Market Sales: Were any off-market transactions missed? Check county auditor sites or Realist’s public records for this data.
• Adverse Features: Do any of the comps have issues not considered in the appraisal, such as proximity to a high-traffic road, sewer plant, or power lines?
• Recent Sales: Have any new, more relevant comparable sales occurred between the date of appraiser’s visit and now? If so, they may still consider including them.
• Sales Recency: Did any of the comparable sales close more than three months ago? A time adjustment may be needed for accurate valuation.
• Arm’s Length Sales: Were the comparable sales used in the appraisal arms-length transactions? Beware of comps that might skew the value, like those from multiple properties sold simultaneously, or seller-financed deals, which aren't appropriate for comparison.
• Geographical Competence: Is the appraiser familiar with the area? If they're located two or more counties away, their expertise in the local market may be limited. The lender will likely ask how many appraisals they’ve completed in the area of the subject property. If there are too few, the appraisal may be deemed deficient.

And as a last-ditch strategy (and assuming the Buyer has a Conventional/DSCR loan), the Buyer can decide to work with a different lender and the new lender will order their own appraisal.

Can't entirely know what your contract says as it relates to the earnest money, but I'd put some pressure on the listing agent and listing brokerage. If it's also an agent/owner, I think a call to listing broker will get things sorted out quickly.

https://codes.ohio.gov/ohio-revised-code/chapter-4735 (Section 4735.24)

Good luck!

@Patrick Drury Haha, let's stop at 2 people who have been the exception/outlier that I described. We're getting away from the point. However, I'm open to some legitimate data that suggests most investors purchase an investment property before they buy a primary.

To be more clear, I'm suggesting you consider buying a 1-4 unit property as a primary residence. Pretty sure OHFA DPA allows for multi family. I've got an FHA grant that allows borrowers to purchase a duplex as a primary. Maybe save that down payment and use those funds to purchase your next investment property a month or two later. In that scenario, you've potentially got 8 doors and used the same amount of funds. Better yet, spread that $120k in funds across as many rental properties as makes sense.

@Adam Bartomeo And that's why they're your ex-business partner. Kidding, but that kind of investor is probably an outlier. I doubt there's more than 10% of investors who start with an investment property rather than a primary residence.

It always surprises me when I see folks buy an investment property before they buy their own primary. I understand the exceptions with people who live in CA and NY, but I see it here in Cleveland too. Buying a primary first will likely give you the best opportunity to qualify for free/cheap money like Down Payment Assistance, grants, and mortgage tax credits. It’s also a safer place to start as a first time homebuyer and there’s no reason to not take advantage of the perks available to you now. You will find it harder to qualify for any of those “perks” after you have a property in your name. I know that’s boring and not the home run that you may have had in mind, but it’s something to consider. Best of luck!

Have you considered using a down payment assistance (DPA) loan/grant for this purchase? Because it's unlikely that you'll ever qualify for DPA after you own a primary residence. Usually best to use free/cheap money. I have a DPA forgivable grant that should work. Or, there are OHFA (Ohio Housing Finance Agency) DPA programs that might also be able to help. Ask your lender about that, or I can refer you to someone who can do OHFA DPA. Friendly reminder that loan guidelines typically allow you to use the theoretical or real income from the other unit (the one you're not going to occupy) to help you qualify for the mortgage. I add that because you may be able to qualify for a higher price point which may impact what kind of home you decide to purchase. If you decide to use my DPA grant, I might suggest refinancing after you make 6 payments. For example, the DPA grant will give you the entire 3.5% down payment which might be $8-9k. Use those 6 months to remodel/update the property, then refinance into a Conventional loan and maybe have enough equity to remove the monthly PMI too. Best of luck!

Needlessly complicated. Also, I don't think you can get a loan for a manufactured duplex. Never heard of it. And I don't think anyone else will be able to get a loan if you decide to sell it in the future - which obviously impacts its value.

Yes, you can do Conventional, FHA, VA, and USDA loans to purchase existing or new manufactured homes. We can help with anything from singlewides, doublewides, triplewides, modular, and CrossMod. I want to note that there are additional lending guidelines that are required for these types of homes, and will highlight some of those key differences.

So first, what's a manufactured home? It is a home that was built in an indoor facility, delivered to the homesite, and placed on a permanent foundation. Some people will mistakenly use the word MOBILE home to describe a MANUFACTURED home, but those are very different things when it comes to financing them. If it was built before June 15, 1976, it is a mobile home. Most lenders out there (myself included) cannot finance mobile homes. If it was built after June 15, 1976, it is a manufactured home and is built to the construction standards that HUD, Housing and Urban Development, set at that time. Again, the manufactured home is placed on a permanent foundation and is not meant to be moved more than that one time. The only time is should have moved is when it left the manufacturers facility or dealership and when it is placed on the homesite. There is one exception to this rule for VA borrowers, but it requires additional inspections to confirm the home is functional after having been moved more than once.

There are some additional guidelines or requirements for the manufactured home itself that us lenders might have to satisfy prior to closing. First, it’s important to know that manufactured homes are seen as a slightly riskier investment and consequently have a slightly higher interest rate. For example, if today’s interest rates are 7% for a stick-built home, the interest rate might be 7.25 or 7.5% for a manufactured home. So when you see that less expensive price tag on a manufactured home (in comparison to a similarly sized- and priced stick built home) please remember that your monthly payment might be more expensive. And please don’t think that lenders are only “picking on” manufactured homes because condos also have a similar pricing adjustment to their interest rates. Closing costs are typically $1.5k higher and your homeowner's insurance will be more expensive. And good luck finding homeowner's insurance on manufactured homes that are ~25 years old. Foremost and American Modern seem to be the most popular insurance companies for manufactured.

Additionally, the home cannot be in a mobile home park, it cannot have been previously installed at another homesite, should be on a permanent foundation and/or fastened with hurricane tie-downs. Any kind of hitch or wheels must have been removed. The home must be de-titled so it’s “real” property. Full utilities must be present and meet local standards. And, it cannot be on more than 10 acres. Those are just some of the more common issues that we run into when trying to finance manufactured homes. There are a variety of guideline requirements we have to consider based on the property itself or even the loan type. For example, there are different requirements if it’s a single wide or if it’s a double wide. And those requirements might be different if you’re using an FHA loan or a Conventional loan.

Give me a shout if you want to know more about a specific loan scenario.