Archive | February, 2013

How a Redfin Alert Saved us $6,000 on Our Duplex

6 Feb

Let me set the scene: redfin-logo

  • There are a row of identical duplexes, and several of which are up for sale as foreclosures under Fannie Mae’s Homepath program.
  • The 1st property we bid on ended up in a 6-way bidding war. Our best offer was $145k, which was lost to a bid that was “substantially higher” than ours, according to the seller’s realtor.
  • For the 2nd property we bid on, there were also multiple offers but we won the contract with a $150k final bid.
  • 2 weeks before our closing, we received an email alert from Redfin for that first property. It had closed at $143k… $2k LESS than our bid on the same property!

Whaaaa?

This was especially confusing because we were told that the inspection results were really a take-it-or-leave-it situation; there was no room for negotiation.  We contacted our realtor, who contacted the seller’s realtor, who confirmed that the original bid was much higher than our own, but that the final sales price was adjusted lower because of the appraisal value.

So the obvious next question – well what did our appraisal come in at?  Here’s the catch – I was previously told that our lender was forbidden to request an appraisal because it was a Homepath property. Come to find out, Homepath properties can have a conventional loan or a variation of a conventional loan called a Homepath loan.  It was the Homepath loan that prohibits an appraisal by the lender.  We had no idea our mortgage broker was assuming a Homepath loan – all of our paperwork says conventional, not realizing a Homepath loan is also a conventional loan.

Once we figured out what was going on, we immediately ordered an appraisal (which came in at $144k), submitted the appraisal and contract price adjustment to Homepath, who immediately rubber stamped the new price.  Apparently their take-it-or-leave-it policy doesn’t apply to the appraisal like it did for the inspection.

End results: $6,000 savings (less the price of the appraisal) all thanks to our Redfin alert from that first property!

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What are Rental Criteria and Why Do I Need Them?

4 Feb

In anticipation of having vacancies of fill, the hubby tells me we need to make rental criteria. Rental criteria is simply a document listing the guidelines you will use when deciding whether rental applicants are approved.

This wasn’t something I intuitively wanted or needed – of course I’d run a background check, criminal check, employment verification, and then determine whether this applicant would be an appropriate tenant. Common sense really. What I wasn’t considering was the CYA component – the rental criteria isn’t really for ME, the landlord. Instead, there is a very real possibility that a landlord or property manager could be inaccurately accused of rejecting a tenant for a protected reason – race, religion, etc. – and if that ever happens the rental criteria is our first line of defense to defend against those claims.

Another handy application of rental criteria is to allow tenant to remove themselves from consideration before applying if they do not think they will meet the rental criteria. This saves both the landlord and the prospective the tenant time and money by avoiding unnecessary screening or application fees.

I started by searching for other rental criteria examples online, and then incorporated the wording from each that best described my desired tenant. It was important to me that the criteria was written to be read by an average person, and not written like a contract with excessive legalese. Those types of documents usually put a bad taste in my mouth, while a polite version will provide the same protections. There is no “right” tenant criteria – it could vary greatly by property and landlord. And honestly, we’re not sure whether our criteria is too restrictive, but this seems as good a place to start as any.

When a prospective tenant leaves requests an application, we’ll also give them this rental criteria document to review and sign at the same time. I’ve also added the rental criteria as a page on each property’s website.

You can Download Our Rental Criteria Here, or view the text below:

Rental Criteria

We are delighted that you are interested in leasing our property! In order to determine eligibility, all applications will be reviewed in the following areas:

General:
• One completed application is required for each person 18 years of age and older.
• There is a non-refundable application fee of $39 for each application. This fee is payable by check and must accompany the application in order to process. For example, 2 applicants = $78 total.
• Please make sure all information on the application is completed in full, signed, and dated.
• Incomplete, inaccurate or falsified information will be grounds for denial.

Rental History:
• Twelve (12) months of verifiable rental history or home ownership. Rental history must be with a non-relative landlord.
• No evictions or eviction actions.
• No outstanding money owed to a landlord, property management company, or utility services.
• Proper notice given to current or previous landlords.
• No reports of excessive late payments, damage to the property beyond normal wear, unfulfilled lease obligations, excessive noise complaints/disturbance of neighbors, and NSF checks.
• We reserve the right to deny your application if, after making a good faith effort, we are unable to verify your rental history.

Employment History & Income Requirements:
• Twelve (12) months of current employment or twelve (12) months in a similar job, validated by pay stub, employer contact, or tax returns. Please include a copy of your most recent paycheck stub with the completed application.
• Self-employed persons will need to show proof of income through tax returns.
• Gross income (including co-applicant) shall be a minimum of three (3) times the rent amount.
• Rent plus your other monthly debt payments may not exceed 45% of your monthly gross income.
• Income may include sources other than employment.
• Ability to pay all deposits and rent in full, prior to move-in.

Credit Requirements:
• Established credit history.
• Credit Score (FICO) must be no less than 650.
• All credit accounts must be in good standing.
• No bankruptcies.
• No recent repossessions or charge offs.

Criminal Records:
• Criminal record searches will be conducted, and may result in the denial of your application.
• Must not be convicted of a felony, have a drug conviction, or be a registered sex offender.
• No convictions for the manufacturer or distribution of a controlled substance.
• No convictions for crimes that would constitute a direct threat to the health and safety of an individual, the property, or the property of others.

Occupancy Limit:
• Two persons allowed per bedroom, plus 1 additional person per unit.

I.D. Required:
• Each applicant over 18 years of age will be required to produce a photo I.D. (e.g., a driver’s license or other government issued photo identification card).

Pets:
• Pit bulls, Rottweilers, American bulldogs, German Shepherds, and Dobermans have homeowner’s insurance limitations. We require proof of renters insurance with $100,000 in liability protection to rent to tenants with these dog breeds.
• All pets must be approved by management, and will require a $200 pet fee per pet plus signed animal addendum.

Note: applicants who do not meet all of the criteria may be considered with a co-signer, larger deposit, or last month’s rent. These exceptions will be considered on a case-by-case basis.

We do not discriminate on the basis of race, color, religion, sex, national origin, disability or familial status.

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Applicant                                                          Date

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Applicant                                                          Date

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Applicant                                                          Date

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Applicant                                                          Date

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