Getting a mortgage may take longer under new rules

The goal is to make the mind-numbing mortgage process much easier for consumers to understand. It’s called Know Before You Owe, which sounds simple enough.

The means to that goal, however, is all-new paperwork and disclosure rules for lenders that went into effect this past Saturday and which some say could delay the mortgage process and cost consumers cash.

The standardized forms spell out exactly how much a borrower must pay for closing costs and how much each monthly payment will be as the loan ages and potentially adjusts, right up until its term ends.

Borrowers must get these new, standardized forms at least three days before closing on the loan, which is a shift from previous standards, which allowed changes to be made on a loan right up to and even during the closing.

Mortgage application process

“I think that’s a big one because consumers have been complaining about this left and right because they would get to the signing table and suddenly everything would change,” said Jason van den Brand, CEO of Lenda, an online mortgage refinance company operating in Washington, Oregon and California. “So you get quoted something and the loan gets locked, and you get to the closing table and suddenly the rate has gone up by a quarter percent, your fees have gone up $10,000 and you’re sitting there scratching your head going, what just happened?”

This is another outgrowth of the Dodd-Frank law, passed in 2010, designed to hold lenders accountable and protect consumers against what happened during the last housing boom. Back then, lenders offered borrowers loans with complicated terms, adjustments and penalties, without having to fully explain them.

Some borrowers didn’t even know their loans could adjust to higher payments or that the loans themselves were actually growing in size. Many of those risky loan products have been banned, but adjustable-rate loans are still perfectly legal and considered beneficial for many borrowers, as long as the borrowers know what they’re getting into.

The new rules (TILA RESPA Integrated Disclosure or TRID, if you really want to know) were completed two years ago, and the final date for implementation was even delayed three more months to make sure lenders could comply. At the heart of it are two forms, one providing the loan estimate and one the closing disclosure.

Those forms are designed to simplify the process for borrowers, but lenders have spent billions of dollars updating their systems to make sure they are complying, according to the Mortgage Bankers Association, which has a TRID Resource tab on its website. Some worry that even now lenders and real estate agents are just not ready.

“I think if we see a significant slowdown, and it doesn’t have to be that significant 30 to 60 [days] is pretty significant, if we see that slowdown start to happen, we’re going to see deals fall through and lenders change in the middle, and that’s the cascading effect that we are most concerned about,” said Mark McElroy, CEO of Pavaso, a digital closing platform.

Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), which is behind the new rules, reiterated in testimony to Congress last week that there will be something of a grace period for lenders to comply.

“Nobody believes that market participants are going to be trying to abuse consumers here; they’re trying to change their systems. So we’ll be diagnostic and corrective, not punitive, and there will be time for them to work to get it right and not be perfect on the first day,” said Cordray.

With the rules just 2 days old, Matt Weaver, vice president of mortgage sales at Finance of America Mortgage, a Blackstone Company, says it appears the sky has not in fact fallen, but he does expect to see delays, especially at the big banks, where closing time could stretch out to 60 or 75 days.

“There is a fee to extend rate locks. The question is, is that cost going to be passed on to the client. From an overall perspective, the market is saying slow down. It will all work itself out, but out of the gate we certainly are going to see some turbulence with the larger banks simply because of their volume,” said Weaver.

Independent lenders, like Finance of America, may have an easier time, as they control every aspect of the process. Weaver said his company hired additional staff and underwriters to be able to facilitate and narrow the time gap.

Realtors are most concerned, however, because the majority of those buying a home today are also selling a home, and time is always of the essence. Mortgage delays caused by the new rules could throw a wrench into some sales.

“When you are trying to brace them for a longer, drawn-out closing, that causes a panic,” added Weaver.

The best advice for borrowers is to prepare for delays, have all paperwork ready before even starting the process and possibly even spend the extra money upfront for a longer lock term.

Homes as ATMs It’s starting again

As home values rise, homeowners are gaining more equity on paper — and they’re taking it out in paper. Cash-out refinances jumped 68 percent in the second quarter from a year ago, according to Black Knight Financial Services. This is the highest volume of this type of refinance in five years.

“People realize that refinancing these funds is extremely inexpensive and that rates will eventually rise, so they’re capitalizing on the strength of home price appreciation,” said Ben Graboske, senior vice president at Black Knight Data & Analytics.

House and money

Mortgage holders have gained about $1 trillion in home equity collectively over the past year. On an individual basis, borrowers doing cash-out refinances are taking an average $65,000, which is comparable to what borrowers did in 2006, the height of the last housing boom. While the jump is significant, the volume is still nowhere near where it was back then. In fact, volume is still 80 percent below where it was at the peak in 2005.

That is not the only difference. Today’s refinancer is in a far more solid equity position in his or her home, compared with borrowers then, who used their homes like ATMs, pulling out every available dollar. Even after tapping equity, the average resulting loan-to-value ratio for today’s borrowers is 68 percent, meaning the borrower has only leveraged 68 percent of the home’s current value. That is the lowest level in a decade.

“That reflects real strength of price appreciation and consumer sentiment,” said Graboske.

The jump in cash-out refinances could be behind the strength in auto sales and home remodeling. The lack of homes for sale has caused many potential buyers to stay where they are, even though they have the equity to move up. In turn, they are using that equity to not only enhance their home but to add to its value.

Anecdotally, remodeling contractors have been swamped this year, with many putting off new projects for months just to keep up. Remodeling by owners is expected to grow about 10 percent next year, according to a new study by John Burns Real Estate Consulting. It could grow even more if interest rates rise more than expected.

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“This is because more homeowners will choose to stay in place and remodel rather than abandon their current low rate mortgage by moving,” according to researchers in the study.

Cash-out refinances were most popular in California, accounting for 30 percent of all volume, according to Black Knight. The next closest was Texas, accounting for 7 percent. These states have seen the most home value appreciation. Should home value appreciation slow or even flatten, those hearty loan-to-value ratios will shrink, but it is unlikely today’s highly cautious, litigation-leery lenders will allow borrowers to take out more cash than is prudent.

Mortgage applications surge 25% on regulation worry

Another roller-coaster interest rate ride, combined with anxiety over new mortgage regulations, caused borrowers to rush to their lenders last week.

Total mortgage application volume surged 25.5 percent on a seasonally adjusted basis for the week ending October 2nd compared to the previous week, according to the Mortgage Bankers Association (MBA).

An ad for mortgages at a Citibank branch in New York.

An ad for mortgages at a Citibank branch in New York.

Both applications to refinance and to purchase a home were almost equally juiced. Refinance applications rose 24 percent, seasonally adjusted, and purchase applications were up by 27 percent. Purchase applications, which are usually less rate-sensitive week-to-week, are now 49 percent higher than one year ago, an astonishing jump given that the latest reads on home sales show the market appears to be weakening. They are now at the highest level in five years.

“The number of applications for purchase and refinance mortgages soared last week due both to renewed rate volatility and as many applications were filed prior to the TILA-RESPA regulatory change,” said Lynn Fisher, the MBA’s vice president of research and economics.

The change is part of a move by federal regulators to further protect borrowers by forcing lenders to disclose all details of a loan at least three days prior to closing; it went into effect October 3rd.

The average loan size of applications in the weekly survey increased by 6.9 percent, driven by a 12.1 percent increase in the average size of refinances.

JPMorgan buys more mortgages from other lenders as market shrinks

JPMorgan Chase headquarters building

JPMorgan Chase, looking to stem falling revenue in its mortgage business as fewer Americans refinance, is increasingly buying loans from smaller lenders, a practice that competitors including Bank of America view as risky.

In the first half of 2015, the bank bought 62 percent of the $58 billion in home loans it added to its books, compared with 56 percent in 2014 and 37 percent in 2011.

While other big banks buy mortgages from other lenders, known as correspondents, JPMorgan has racked up the biggest increase among its peers in the proportion of loans it buys from others, according to data from trade publication Inside Mortgage Finance. JPMorgan is fighting for business in what has been a shrinking market.

According to the Mortgage Bankers Association, applications for U.S. home loans have fallen by about 25 percent since mid-January, when a temporary drop in rates spurred a small wave of refinancing. Since May 2013, when mortgage rates first started jumping amid fears the Federal Reserve would hike rates, application volume has fallen by more than 50 percent.

Fewer applications overall make it harder for JPMorgan to make as many loans directly to consumers in its bank branches. Still, JPMorgan’s willingness to buy loans from correspondent banks is a sign that banks are comfortable taking more risk in the mortgage market, nearly a decade after the housing bubble popped.

“As they gain more confidence about the environment, they go right back to the correspondent channel for more volume,” said banking analyst Charles Peabody of Portales Partners.

To be sure, Bank of America avoids the loans, because it doesn’t want to be exposed to bad decisions made by smaller banks that do the actual lending.

“There’s more risk in being that far away from the customer,” said D. Steve Boland, the Bank of America executive in charge of mortgage and auto lending. For example, a smaller lender could fail to verify a borrower’s income properly, and just sell the loan on to a bigger bank.

High degree of confidence

To minimize that risk, JPMorgan, like other banks, specifies exactly what correspondent lenders have to do to vet loans, and forces the smaller lenders to buy back loans that turn out to have fallen short of those requirements.

Greg Beliles, correspondent lending head at JPMorgan, wrote through a spokeswoman that the bank works with “experienced, well managed and high quality” lenders. Bank of America’s concerns may stem from its experience with Countrywide Financial, which Bank of America bought in 2008, the largest correspondent lender in the U.S. at the time.

Countrywide failed at least in part due to bad loans that it bought from correspondent banks and could not sell back to them. The Countrywide deal has been a huge millstone for Bank of America—the bank has paid some $70 billion in settlements and legal penalties linked to the financial crisis, much of which came from its acquisition of the lender.

Other lenders had trouble with correspondent loans during the crisis. Residential Capital, once the mortgage arm of Ally Financial, filed for bankruptcy in 2012, in part because of its exposure to correspondent lenders that were not able to make good on claims. Ally is the successor firm to GMAC, the car financing arm of General Motors.

No bundling

JPMorgan said it reviews every loan it buys in detail. That attention gives it a “very high degree of confidence in the loan quality we are purchasing,” JPMorgan’s Beliles wrote in his email.

He said JPMorgan keeps the bulk of mortgages it buys from other lenders on its balance sheet, rather than bundling them into bonds and selling them to investors. Banks like JPMorgan may be dialing up their risk taking a bit, but there is little evidence of a new bubble forming.

While a few small lenders are creeping back into products like subprime mortgages, bigger banks are by and large avoiding them. Delinquency rates on single family mortgages, which peaked at 11.26 percent in the first quarter of 2010, have declined fairly steadily ever since and stood at 5.77 percent at the end of the second quarter, according to data from the Federal Reserve Bank of St. Louis. In the last crisis, delinquency rates started rising in 2004, and by the third quarter of 2007, a year before Lehman Brothers failed, reached 2.76 percent, their highest level in 14 years. Correspondent loans can bolster a bank’s bottom line.

Eric Stoddard, the Wells Fargo executive who has overseen the bank’s business of buying mortgages from other lenders for almost 15 years, said it is cheaper to buy these loans than to make home loans in its branches.

The loans carry another advantage: the buying bank gains the right to collect monthly mortgage payments from the borrower, and receives a small monthly payment for its efforts. That right, known as a “mortgage servicing right,” can be a valuable asset, especially when rates are rising. One lender said banks who buy loans from him are taking less risk than they would be making their own loans because of their ability to force him to buy the loans back.

PERL, which has 200 employees and expects to make about $1.6 billion in home loans this year, sells about 60 percent of its loans to JPMorgan, according to founder and president Ken Perlmutter. “I think BofA’s a little foolish” not to buy loans, Perlmutter said. Bank of America, however, believes the risk isn’t worth taking. The bank, which serves one out of two U.S. households, doesn’t need to buy loans from other lenders if it has so many customers of its own.

“I’ve already got a relationship with the customer,” said Boland. “Our strategy is about capturing more of that relationship.”

Is this the end of HK’s stratospheric property price rises?

Residential buildings stand in the Choi Hung, front, and Kowloon Bay district of Hong Kong, China, on Tuesday, Aug. 25, 2015.

Hong Kong’s ever-climbing property prices have long made the city a global posterchild for unaffordable housing, but there are signs change may be afoot, if buyers would just believe it.

Hong Kong’s property prices have more than doubled since 2009, consistently ranking the city among the world’s most expensive property markets. But now, property prices are “quite vulnerable. It’s going up only because of a general consensus that it will go up,” Nicole Wong, an analyst at CLSA, said recently.

“In general, we are no longer in times of extremely tight supply,” she added, noting that the number of units under construction has risen sharply since 2011.

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She estimates 15,000 to 18,000 saleable units will be completed over the next couple years, a 40 percent increase on 2013-15. Wong expects developers’ pricing power will take a hit, especially as the primary — or new development — market’s premium over the secondary, or resale, market has shrunk from around 40 percent to 5 percent.

Developers have stepped up incentives to buyers, a September Deutsche Bank report noted, adding that secondary transactions were seeing lower average selling prices, sometimes at below-market levels.

That’s likely to be just the sort of news the city’s chief executive, CY Leung, wants to hear.

In March, he told the Credit Suisse Asian Investors Conference in Hong Kong: “We need to break the backbone of the housing problem,” and cited plans to add 480,000 units over the next 10 years. The city is planning to target developments in outlying areas, such as Kowloon East and East Lantau, as well as land reclamation projects between Hong Kong and Lantau islands.

The cost of housing in the special administrative region of China has been a source of deep discontent even before Britain handed over the city to the mainland in 1997.

The government, sensing creeping public outrage, resorted to draconian measures a couple years ago, including doubling the stamp duty, or property transaction tax, on many buyers, mainly non-permanent residents, to cool the market. It also raised down payment requirements, in some cases to 60 percent of the sales price.

“For many years, Hong Kong had a housing demand-supply imbalance,” Paul Louie, a property analyst at Barclays, said recently. “Since [Leung’s] term began, we’ve seen the government be proactive in increasing land and housing supply in the market.”

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Louie believes that based on the numbers, the supply-demand situation has reached equilibrium.

“In the minds of homebuyers, they still think there’s a shortage, but the numbers point to a different scenario,” he said. “Homebuyer psychology takes longer to reverse.”

Some expect a quick decline in prices. In a September 30 note, UBS forecast Hong Kong property prices would fall about 25-30 percent by the end of 2017, although that follows a 340 percent rise since 2003.

“This round of price reversals will be triggered by a deteriorating local economy,” Eva Lee, head of Hong Kong and China property research atUBS, said in emailed comments. “Price drops may come more gradually and over multiple years.”

One factor that may weigh is the currency, she said. Hong Kong’s dollaris pegged to the U.S. dollar, meaning its currency is strengthening even as most of its regional counterparts are tanking, making the special administrative region’s property more expensive for many potential buyers.

With the U.S. Federal Reserve widely expected to hike interest rates by the end of this year, that’s also likely to push up mortgage rates in Hong Kong, because the dollar peg means that monetary policy in the two countries is also linked.

To be sure, Hong Kong’s prices don’t show any signs of weakening just yet. The territory’s price index for July, the latest available, rose to 303.6, posting increases for 16 out of the previous 17 months.

Some don’t expect Hong Kong’s property will ever be anything but pricey.

Any price declines “might be just a short-lived respite as prices zigzag upwards,” said Alexander Karolik Shlaen, an economist and CEO of Panache Management, a luxury brands and real estate investment advisor.

He sees Hong Kong as a “super-tier” Chinese city. “Hong Kong is the most desired city for Chinese people,” he said, noting the mainland’s propensity for turning out millionaires and billionaires. “If just a few percent move to Hong Kong, it will drive the market for years to come.”

There’s some sign Chinese developers agree. In late September mainland-based Shimao Property beat local developers in a government land auction for a site in Kowloon Tong, the South China Morning Post reported. Shimao plans a luxury development on the site, the report said.

Don’t Wait Forever for ‘The One’

good-enough

When you’re dating, you can spend years searching for the perfect relationship only to—possibly—wait too long and miss out on something great. Suddenly, over your sad microwave meal and bottle of cheap red, you’re looking back on your life choices, wondering what could have been if you hadn’t been so darned picky.

Well, the same goes for house hunting. You can drive yourself crazy searching for your dream home. You’ve found houses that have come close, after all. So the perfect one is bound to appear soon, right?

Not necessarily. We know the hunt can be emotionally draining, but at some point you have to go from house hunter to home owner.

We’re not encouraging you to make a choice that will fill you with buyer’s remorse. But to borrow a line from the Rolling Stones: You can’t always get what you want, but if you try sometimes … you get what you need.

We can’t give you love advice (and trust us, you would not want us to), but we do happen to know a few things about real estate. Here are three questions to ask yourself; the answers will help you determine whether it’s time to settle on a home that might notbe what your dreams are made of.

1. Are my expectations realistic?

Everyone has a dream home. Mine is a Craftsman with Victorian high ceilings, art deco details, and a Mid-Century Modern feel. But here’s the thing. That Frankenstein of architectural styles doesn’t exist—and your dream home probably doesn’t either.

“There is no such thing as a ‘perfect home,’” says Ryan Fitzgerald, Realtor® and owner of Raleigh Realty in Raleigh, NC.

There’s always going to be something not so lovable in each house you view. The key to finding the right home is setting realistic expectations.

“You can find a home that meets almost all of what you are looking for,” Fitzgerald says.

Make a list of your dream features and amenities before you start house hunting—but be willing to let some of those features go once you start looking at properties. It helps to score each feature on a scale of 1 to 10—that way you (and your partner, if you have one) are on the same page about which amenities are deal breakers and which are simply nice to have.

2. How many properties have I viewed?

Once you’re house hunting, it can be nearly impossible to decide when you’ve looked at enough houses. After all, the perfect house could be listed any day now.

Go ahead and view online listings as much as you want. There’s no harm in real estate stalking in your spare time, but you should set a limit for actual viewings.

“If you go view more than eight homes [without finding anything], there’s a good chance you’re confused as to what you’re actually looking for,” Fitzgerald says. “You’re trying to piece together a home that doesn’t exist.”

If you find that you’re searching for your own Frankenstein (it won’t work, I promise), take a moment and ask yourself how many homes you’ve visited. Have you reached the (self-imposed) cap? If so, make a list of each property’s strengths and weakness, and then get ready to compromise.

3. What am I willing to compromise?

If you’ve set realistic expectations and looked at more than a few houses, it’s time to start making some tough decisions. It might feel like settling, but you’ll probably thank us later when you’re finally a homeowner.

Just make sure you’re not compromising on something you’ll regret later.

“If you’re going to compromise, do not compromise on location,” Fitzgerald says.

The real estate adage “location, location, location” bears repeating here. After all, a great house won’t matter much if you’re driving two hours to work every day or the only nearby grocery store closes at 7 p.m.

If you’re not sure where to compromise, ask your Realtor. That’s what they’re there for.

The exception to the rule

After months of searching (especially in competitive markets), you might feel the pressure to choose something—anything—just to achieve homeownership and stop throwing away your money on rent.

We’re going to contradict ourselves a bit here and tell you this: Sometimes it’s OK to keep looking. When you’re deciding on a home, you should always consider the current market, even if it means you’ll be shopping for a little while longer.

“If you are having trouble finding a home and you have proper expectations, don’t settle—especially if you’re in a hot market,” Fitzgerald says.

If you’re in a sellers’ market, homes can go quickly and you might just be missing the window of opportunity. It might make sense to wait a little longer than rush to try to beat out an overzealous buyer.

After all, competition can breed short-lived desire—and you don’t want to be stuck with a dud after the admirers have moved on to the next attraction.

The Case of the Missing Garbage Disposal, and Other New Home Horror Stories

under-kitchen-sink

You’re a bona fide open-house warrior. You’ve seen all the places, clicked pics and shot video, sent a few Snapchats, made pros-and-cons lists. You know these homes like the back of your hand.

Or do you?

It might seem safe to assume your new home will come with all the essentials, but house hunting is a blur and it’s painfully easy to overlook the small things. Sometimes even thebig things. Now that you’ve made an offer, do you really know what you’re getting?

Play it safe and check for these commonly overlooked features, pronto.

In the kitchen

It doesn’t take a lot for a kitchen to work smoothly, but if you’re missing a few key items you’ll wind up miserable.

Make sure the space has all the time-saving gadgets you need, including (but not limited to) the following:

  • Garbage disposal
  • Sink sprayer
  • Proper ventilation (preferably in the form of a range hood)

If the seller or builder is providing appliances, make sure that meanseverything, including the microwave.

“Microwaves are easily overlooked, because a vent hood can take its place,” saysChandler Crouch, broker in Fort Worth, TX.

And don’t assume everything you see is included.

“See that nice island? Double-check to make sure it’s permanent,” Crouch says.

In the bathroom

No, the bathroom won’t look exactly the same when you move in, and this may largely be a good thing. Most sellers will take the shower curtains, shower heads, and possibly the lightbulbs when they head for greener pastures. Still, some features should stay in place.

Check for these items:

  • Towel racks
  • Toilet paper holders
  • Shower curtain rod (maybe give it a good tug to make sure it’s sturdy)

Also, test the ventilation system. Make sure it works, and listen for any loud pops or pings that might indicate a problem. You’ll thank us later.

Throughout the house

Once you have a feel for a place, go back through every room and look for the little conveniences you might have overlooked earlier.

For example, will the gorgeous fireplace in the living room even work?

“Not all gas fireplaces have a gas starter,” Crouch says. “Some wood-burning fireplaces don’t have a chimney but still look totally legit.”

Check every room for grounded three-prong outlets. Two-pronged outlets are basically useless for today’s needs. Ideally there will be at least one outlet in the bathroom and one on each wall in every room.

Visually inspect the paint and caulking around windows and doors.

“It may seem insignificant, but every house needs new paint and caulk every 10 years or so,” Crouch says. “It’s costly and time-consuming. Check the remaining life.”

Outside

Sure, the lawn looks beautifully landscaped and you’re already planning a few debauched barbecued mahi-mahi/octopus shindigs on the deck next summer. But are you seeing the full picture? It’s easy to miss things outside (how can you screw up nature?!), but there are a few necessities you’ll want to take note of.

  • Check for a sprinkler system. This isn’t always advertised by the seller, especially if it doesn’t work properly. And a faulty sprinkler system can cause major problems, like excessive weed growth and foundation troubles, according to Crouch.
  • If the property is fenced, check for working gates. Don’t just assume you’ll have the access points you want.
  • Check along the perimeter for an outdoor spigot. You’ll want—no, make that need—water access in the front and back yards.
  • In the garage, check for an automatic door opener. No, seriously. “It happens. Some builders charge extra. People in foreclosure remove them. Old houses don’t always have them,” Crouch says.

Finally, don’t just assume everything that seems permanent is actually going to stay with the home.

“Not all sellers understand the rules,” Crouch says.

5 Essential Questions to Ask Before Buying a Mid-Century Modern Home

Eichler house

They’re those much-discussed, much sought-after, in some corners much drooled-over striking, iconic wood-and-glass structures with open floor plans, seamless integrations with their natural surroundings, and pedigrees from world-class architects whose very names—Eichler! Neutra! Wright!—send spasms of envy into the hearts of many home seekers.

Owning an architecturally significant home from what’s become a visually fetishized era, the middle of the past century, can be the culmination of a lifelong dream—or a total rehab nightmare.

For home buyers considering a Mid-Century Modern residence, it’s important to go in with your eyes open, and that means asking the right questions. We checked with some experts on the top things to ask before taking the mid-century plunge.

1. Is minimalism for you?

A typical home in an Eichler development, for example, is usually well under 3,000 square feet. There could be some built-in cabinet and closet storage. But with no basement or attic, there’s not a lot of room for tons of extra stuff.

So if you’re someone with a collection of every Playboy ever printed, or you like to display your troll collection, this may not be the best home choice for you.

“There’s nothing worse than a great Mid-Century Modern home cluttered with tchotchkes,” says Brian Linder of The Value of Architecture website. “It can get a little busy.”

2. Is it possible to add on?

If you plan to enlarge the small footprint of your home, check if there are building restrictions. Some Eichler developments in Northern California don’t allow second-floor builds.

“There may be design review guidelines,” San Francisco–based architect John Klopf says. Another point to keep in mind: “Some neighborhoods can be considered historic landmarks.”

Those communities may limit your dreams of a mid-century McMansion.

3. What’s the history of the home?

When you close, you’re not just getting a home, you’re investing in a work of art, notes Linder: “It’s an asset that maintains value and maybe appreciates.”

So if you plan to do any kind of renovation or restore the place to its original look, it’s helpful to see the initial plans for the home, and find out if the original architect is still alive to do the work. Or else you can hire a “building biographer” who will do this research for a fee.

It could be worth it.

“There is an idea of stewardship. Owners like to pass the baton to the next person who’s going to care about the place as lovingly as they have,” Linder adds. Plus, “it’s neat to know the history.”

4. Is all that glass safe?

Indoor-outdoor living, especially on the West Coast, is a signature feature of Mid-Century Modern homes. That means walls, windows, and doors of floor-to-ceiling glass. The look is inspiring. It can also be deadly. When they were built, many of these big windows and doors were made of plate glass—and they still may be. If so, an earthquake, falling tree, or even wild party antics can result in dangerous shards and exposure of your home to the elements.

“Today, codes are different,” Klopf says.

So be sure to ask, “Has the glass been replaced with tempered glass?” For energy efficiency and safety, double-pane glass replacements are typically the way to go. Otherwise, opt for a cheaper fix: safety film over the window.

5. Do we really need to renovate?

A home that’s 50 or 60 years old may be ready for some renovations. But be careful not to fall into a “remuddle” of a remodel. One mistake is to make updates that lose the details that make the property special.

“The architecture is what brings everybody in. It’s got all the right lines and angles,” explains Drew Marye, a Realtor® in Austin, TX. “So if your house has amazing original features, you’ll want to make sure you keep those because they have architectural value.”

He notes that when choosing architects or contractors, pick one who speaks Mid-Century Modern.

“I’ve seen horror stories,” he says, recalling Home Depot finishes and cabinets that don’t match.

Buyers of these homes, he adds, still “want the modern amenities. They want the high-efficiency HVAC; they want the dishwasher. You have to make sure you’re putting together those pieces in the right way.”

Yes, You Can Compete With All-Cash Buyers—Here’s How

money-breifcase

To some of us, all-cash buyers are the scourge of the superhot housing market: They swoop in, supervillain-like, and snatch up the most beloved and valuable properties from under our noses. Or at least the ones you might have loved, had you not been stuck with that pesky mortgage contingency.

Competing with cash buyers isn’t impossible, just difficult.

Sure, some sellers will take the major moolah every single time and there’s nothing you can do about it. But if you go in with a strategy, you might just have a shot. Here’s how to create one.

Figure out the seller’s goals

Determining what’s most important to your seller can be key to getting your dream home—even when you’re competing against an all-cash buyer.

“People often think that all sellers want the most aggressive, quick close, for the highest price. That’s not always the case,” says Shashank Shekhar, founder and CEO of Arcus Lending in San Jose, CA. When he sold his home earlier this year, the most important factor was getting back two months’ free rent, because he was also trying to buy.

“Even if the price was slightly lower but came with that offer, we would have taken that over all-cash,” Shekhar says. “Understanding what the seller needs is always the most important thing.”

Consider your contingencies

If you’re willing to forgo a home inspection or secondary appraisal, you may have a leg up over buyers who won’t.

“If you’re going to compete with a cash buyer, the contingencies may be a concern for a seller,” says Joe Petrowsky, a mortgage broker inManchester, CT. “If the prospective buyer is willing to eliminate the contingencies, that may be an incentive for a seller, especially if there are some issues with the property.”

This isn’t necessarily the best strategy. Without a home inspection, for instance, the property could have crippling issues that might have precluded you from purchasing, had you known. But if you’re dead-set on this exact house and you’re pitted head to head against a cash buyer, it might be an option to consider.

Of course, there’s one contingency you can’t remove: the mortgage. (Hey, if you could, you wouldn’t be reading this right now!)

Get pre-approved…

You can help soften your mortgage contingency by getting pre-approved—and offering a strong pre-qualification letter from your lender. If you’ve saved up a significant down payment and have excellent credit, this might be your winning strategy.

“The seller or their agent should understand there really isn’t a chance the loan will not go forward,” says Petrowsky. With great financials and a large down payment, your mortgage officer can go to bat for you with the sellers, promising nothing serious will happen in the delicate time between offer and closure to compromise their money.

“Make your offer as cashlike as possible,” Shekhar says. “The No. 1 reason transactions fall through is because the loan gets declined during escrow.”

… but make sure your mortgage broker is great

“I see pre-qualifications all the time that are not worth the paper they’re written on, because the broker doesn’t know—or hasn’t done—the due diligence on the prospective buyer,” Petrowsky says.

How can you make sure your broker is worth his salt? Both Petrowsky and Shekhar recommend researching online beforehand, keeping an eye out for any negative reviews indicating mortgages that fell through at the last minute.

You’re looking for someone who’s thorough: “We do a lot of due diligence to make damn sure that person is going to get a loan,” says Petrowsky.

After all, sellers often go with all-cash “because they don’t want to get in any hassles during the loan process,” says Shekhar. “Give them that comfort, that safety.”

Make it personal

If you’re competing against all-cash flippers, you already have a leg up: Most buyers don’t want to see the home they’ve loved and lived in destroyed or turned into another cookie-cutter development.

“It’s an emotional reason, but people are more inclined to give to people who use it as their primary residence,” Shekhar says. “They’ve lived in this home for all these years and want future homeowners to have similar kinds of memories.”

Try including a letter telling the sellers about yourselves—and your hopes and dreams for their property. Putting a face to a name—and a story to a face—can be a valuable way to secure the home you want.