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Lenders usually charge the prevailing prime mortgage rates to borrowers with lower credit risks as reflected by their finance home improvements. The mortgage business landscape transformed as technology made it possible to automate credit checking and underwriting procedures, thereby significantly reducing the time and expense involved in these processes. Furthermore, the use of credit scoring systems made it possible to speed up the evaluation of mortgage applicants’ risk profiles and increase the volume of applications processed.

On June 29th Federal Financial Regulators in a long-awaited policy statement on loans urged for banks, credit unions and their mortgage subsidiaries to verify income, assets and employment on all loans to borrowers with imperfect credit histories except in special cases where borrowers could demonstrate substantial financial reserves.

The policy course of action, which took effect without delay nationwide, also instructed lenders to underwrite adjustable-rate sub-prime mortgage applicants at the “fully indexed” interest rate, not at a deeply discounted teaser rate. During the boom years, many lenders had lured credit-impaired home buyers into adjustable-rate mortgages featuring discounted fixed payments for the first two or three years.

The consumer will in general welcome these new guidelines, but I believe they won’t make a dent in the continuing sub-prime crisis or put a stop to lenders from issuing new mortgages with deadly features. Adoption of the guidelines state by state is going to take months, and in the meantime, a lot of consumers will still be getting loans with the same old harmful features.

In the meantime, I advise home buyers to adopt their own smart mortgage guidelines:

- If you’ve had credit problems and your current income just barely qualifies you to buy the house and you are pre-approved for a short-term discounted-rate loan, resist the temptation even if a loan officer or broker is pushing you to sign.

- Insist on an escrow account if you have marginal credit. It means higher monthly payments, but it guarantees that you won’t end up owing thousands in property taxes that you don’t have the cash to pay.

- If your loan officer says that agreeing to large prepayment penalties is the only way you’ll ever get a mortgage, shop around more. In a competitive marketplace, you may discover that you’re not viewed as sub-prime by every lender, and you did not need to be hog-tied by any prepayment penalties.

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When facing a large number of potential problems, it is wise to avoid as many as you can. Luckily in this case, a few simple procedures will do the trick. When finding a good company to do your repairs a important step is to check how long the company has been in business by asking for a copy of their operating license. Logically, the longer the company has been in business, the more trustworthy it is.

You might also want to try ValueStar’s service. They research the financial status of the company to ensure they have the resources to complete the job and any additional work. You are going to want to be assured that the company is going to be around within the next year in case of possible following up work.

Another good idea is to get some references from past and recent projects. Such projects should have the information you need to get an idea of the contractor’s ability to meet your needs and standards.

Afterward positive references, ask for a detailed estimate of the work to be performed and materials required. Also ask for estimated date that the job will be completed and possible reasons for additional costs.

You need to sign of any future changes that charge for more money that was not included in the original quote. Also never pay until work is completed to the original agreed circumstances.

And last but not least, make sure your contractor has the needed insurance. Without the insurance you would be liable for any injuries that happened during the job. ValueStar also insists that contractors have a sum of $1 million in general liability to cover any possible damages that occurred due to accidents.

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Here are some tips that you might want to use if you happen to make or receive a lowball offer.

To the Sellers:

While as a home seller it is to have a personal affection towards your homes, try not to feel insulted when someone gives a low offer. Look at it optimistically in that they are interested in your property.

To begin with, you should try to understand why the homebuyer’s offer is so low. In several occasions it is their misunderstanding of the condition of the house. One dislikable aspect might cause them to think that several other things need changing when they actually don’t. Also try to make sure they know all the positive facts about your house.

Even if the offer is far below a price that you can permit, still make a fair counteroffer instead of your lowest acceptable price. Homebuyers often make lowball offers in anticipation of further negotiation.

Another important tip is to ask your homebuyers or their agent if there are any other factors of the deal that are of importance such as closing costs, move-in date, or owner financing.

Try to find other services that you can offer to keep the asking price. Such services could include furnishings or other things that you no longer need. Try different lures, anything that might work as long as you make money from doing it.

Making low cost fixes and upgrades to your property can also increase the price of your house. Homebuyers are often impressed by home improvements and could cause them to offer more.

If you continue to get lowball prices then perhaps it is time to study the facts and ask yourself a question. Is your home higher in price that other similar homes? If so then it is time to take it off the market and let things cool down for a bit. Perhaps go on and fix a few of the grievances that the potential homebuyers have expressed. When you are complete and re-list, be sure that the quality of the house can explain its price.

To the Buyers:

When looking at a real estate, always compare it to similar houses to ensure a fair asking price. Asking prices decently higher than other houses provide you with more negotiation room.

Also check the history of the house and how long it’s been on the market, as well as the changes in price if there are any. If it has a long history of price cuts then perhaps it is as low as the home sellers are willing to go.

View the public records that can be found online using sites such as RealEstateABC.com and Trulia.com. Public records will reveal how much the owner originally paid for it. Home sellers who have owned the property for a number of years will have the most negotiation ability, while those who have only owned it for a short amount of time might actually owe more than the worth of the house.

Try to understand the home seller and figure out the reason of the sale. Often times, home sellers are more willing to accept a low offer when they have a good reason or need to get rid of the house. You also might find ads that express their willingness to sell the house.

Keep in mind that the majority of sellers believe that their home is better than others. By making a low offer, they can get the idea that it is not necessarily true, especially if you or your agent justifies your offer by making claims that extra amounts need to be spent to make the house worthy of the asking price. Such claims could include needed remodeling or fixing.

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Though to exclude listings, the brokers must exercise objective criteria. This criteria is suppose to include type of property, the location of the property, compensation presented to agents that find a buy, or the level of service given by the company providing the listing. Such policy would then exclude brokers with limited service from other and better brokers.

In contrast, it also asserts that multiple-listing services must provide all kinds of listings available to participating broker websites. And it is up to the brokers, not the MLS to chose which listings are suitable for the individual broker sites.

In recent months, the Federal Trade Commission has cracked down on multiple-listing services that excluded certain kinds of listings from their computer feeds to local brokers’ sites and national sites, such as Realtor.com. Several MLS operators have agreed to end such practices. But the new Realtor policy may encourage more local brokers to leave discounters’ listings off their sites by making clear that the level of service provided is an acceptable reason for exclusion.

In the past months, several multiple-listing services received a severe crack down from the Federal Trade Commission. These multiple-listing services excluded specific listings to small local sites and larger sites including Realter.com. Many MLS operators have decided to put an end to these multiple-listing services. However now with the new realtor policy, such local brokers may feel encouraged to exclude discount listings from their sites depending on the level of service provided.

“We spend a lot of money advertising our Web site to the public, and we have a right to put what we want on our site,” says Harley Rouda Jr., chief executive of Real Living Inc., a brokerage chain in 15 states that is based in Columbus, Ohio. He states that his company has already been allowing its local offices to keep listings from rivaling companies on a case-by-case basis. Rivals are unhappy that with the policy in that “can spend more money to promote their own websites”.

Because of the policy, there are a number of problems, one being that viewers of a local broker website are most likely unaware of discounter listings. Though Mr. Rounda has assured that buyers that sign representation agreements with Real Living Inc. will be presented with information for all offerings that could appeal to the buyer.

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