Are you an FHA or VA buyer, buying a home in this San Jose 2012 Real Estate Market? If so, this blog is for you.

Many first time home buyers today are hearing the words, "Sorry, we didn't get the house" from their Realtors more and more these days. These are difficult words to hear when you have your hopes up high and really love the property.
The real estate market in San Jose is extremely competitive under the 350K price tag because investors are snapping these properties up. They primarily target single family homes in decent areas with good schools. The buyers who are buying their first homes also want the same thing.
Why are so many investors buying right now?
These investors understand that the US economy is starting to pick up. Stocks are doing well, interest rates are low, employees have more job security, and the housing crisis may be almost over.
FHA buyers are often overlooked
Here's the issue. Many first time buyers do not have a 20% down payment and they have to rely on an FHA loan. These FHA loans have many restrictions on what can and cannot be purchased. Often these FHA lenders have 1 or 2 appraisers who are sent out to the property to appraise the property. When it comes to a condo purchase things get extremely restrictive for the FHA buyer.
Many times these appraisers come in lower than the purchase price. These are deal killers. Many appraisers come from various areas outside of San Jose and do not understand the local market or home values. Often times these appraiser point out things about the property that are unacceptable and need to be repaired. These can also be deal killers. For example, a few years ago I listed and sold a home in downtown San Jose. This home was built in the 1930s and had a detached garage. The paint on the garage was flaking off the exterior of the garage. One of the lender conditions in order to fund was to repaint the garage and remove the paint chips from the ground. My seller complied, however, this may have been a deal breaker.
Those buyers who find themselves pre-approved with an FHA loan or a VA loan are having to really compete. Most sellers will look at these offers last because they have potential pitfalls with appraisals and repairs.
If you are an FHA or VA buyer, here are some tips to help you win over the competition:
1) Work with a Realtor who knows the local market. This is crucial. If you are trying to buy a home in Evergreen and your working with a real estate agent in Saratoga, maybe you need to rethink your approach. Here's what I mean. The neighborhood agent has a better chance of getting your offer accepted because he tours homes regularly, knows the values associated with the schools, and networks with other agents and sellers. The networking is the most important. This is precisely how I've helped many FHA first time buyers get their offers accepted. Its not WHAT you know, its WHO you know.
2) Be Flexible. If you are rigid and narrow in your thinking, you'll most likely be a renter for the next several years. If you become a renter, good luck. Renters are not happy paying lots of taxes to the IRS and getting a rental increase every year. So be flexible in what you expect for the amount of money you are willing to pay. Some buyers want a lot and are not willing to settle. It's ok to want a lot, but sometimes you have to settle. When I get buyers who want the 350K house with a payment that "feels" like rent. I smile and tell them, "Yes. And so does every other renter out there." Get real. You can't get a Los Gatos home at a Los Banos price.
3) Be Aggressive. Since you know that your FHA offer may not be the most desirable, you have to do something else. What will make the seller want to accept your offer over a all cash offer? Price - Plain and simple. Offer more money than the others. What else can you do to be taken seriously and get your offer accepted - bake cookies? come on really.
4) Don't Give Up! Its a numbers game. I recently worked with an FHA buyer and made 7 offers on different houses. She was upset that we did not get the offers accepted every time, but she didn't quit. She didn't quit on her dream of home ownership and she didn;t quit on me as her agent. On the 8th offer, we go it accepted. We will close escrow next week.
I hope that these tips have inspired you to beat these investors and cash people at their game. We need to get more first time homebuyers in homes and help the housing recovery. Don't get me wrong, investors help the economy, but not like first time homebuyers. These homebuyers buy furniture, hire licensed contractors (ie. plumbers, electricians, roofers), and they make the schools and neighborhoods stronger because they live there. I have a special place in my heart for first time homebuyers because I remember buying my first home in Cambrian. My wife wife was pregnant with our firstborn and we purchased our home with only 5% down. That down payment of $8,650 was the best investment I ever made.
If you need help buying your first home in the San Jose area, please give me a call at (408) 460-8401. Thank you for reading my blog.
Half of all the distressed sales for SFH in 2011 in San Jose were between 200K and 400K. 





