House #14: Second Contract

April 27, 2010 · 10 comments

It was a good weekend for us — not only did we get a full-priced offer/contract on The Escher House, but we also received a full-priced offer on The Pine House!

This offer came from a buyer who is using the NACA loan program that we became familiar with back when we were selling The Hat Trick House. If you recall, NACA is a loan program for low-income borrowers, often with sub-par credit. Buyers go through counseling, and have to provide proof of steady employment and rental payment for the previous two years. In addition, they get loans that require no downpayment, no buyer-paid closing costs, and interest rates as low as .25% (yes, one-quarter percent in some cases!).

While it sounds like a recipe for lending disaster, in reality NACA borrowers default less than 2% of their loans, making it probably the safest loan product in the country. In addition, inspections and appraisals are easy (they’ll loan up to 110% of the appraisal price), and the buyers have already gone through underwriting by the time they get their approval letter, meaning that from offer to close is only a couple weeks. I still find it amazing that there are loan programs like this, but as a seller, I love it, and I love having NACA buyers make offers on our properties.

The only catch with this particular buyer is that she hasn’t yet received her final approval from NACA. She expects it this week, but who knows…

So, we put a stipulation in the contract that basically said that we can continue to show the property, and if we get another offer, we can back out of the contract on 24 hours notice without any penalty. That gives her 24 hours to get her NACA approval, or we are free to work with another buyer. No risk on our end whatsoever…

I’ll let you know when she gets her NACA approval (or if things change), but we’re hoping to close this one by the end of May…

10 responses to “House #14: Second Contract”

  1. Don Hines says:

    Howdy J
    I had forgot about NACA! I investigated how to get involved with them and bring lease purchase customers to their program. I didn’t even get through their door. I just figured you had to wait for them to come to you.
    How is you lease purchase going? You haven’t mentioned it in a while.

  2. J Scott says:

    Hey Don –

    I’ll be writing about the lease purchase deal later this week…long story short, we think they’re getting approved with NACA in the next month or two!

  3. Sarah says:

    How is the NACA deal turning out for you? Just curious b/c I had a very bad experience with them, in which it took several months for the deal took to close, and the communication was terrible and very unprofessional. Not sure if this is a local problem (I live in Jacksonville, FL) or if it’s across the board with NACA. I even attended a NACA Realtor Training Course and became very educated about their services and processes, and was an advocate until this bad experience happened. I sell new construction homes as my full time career, and the NACA transaction was on a new construction home, not on a rehab home. The customers wrote their contract in July 2009, we built the home for them in 5 months, it was completed and ready to close in December 2009, and it took until late February 2010 to close (about 11 weeks longer than it should have taken). It seems to me that NACA is understaffed, has a high turnover rate of employees, and has too many files going on at once.

  4. Shae says:

    Hey J! I was just glancing over at the categories and noticed that there was one lonely home that had not been sold yet….#14. Are you going to lease this one?

  5. Shae says:

    Also J…can you please add a “Subscribe to comments” plug-in to your blog ( I’ve been going around the past month making this suggestion to the blogs I frequent because sometimes I forget to come back and check for responses! Thanks for considering!

  6. J Scott says:

    Hey Shae –

    First, great suggestion on the comment subscription — it’s been added!

    As for this house, we’re not planning to lease it. It was purchased out of our 401K, so for various reasons having to do with IRS regulation, we need to sell it, as leasing would be difficult. Hopefully once things start picking up again this one will sell…

  7. Shae says:

    Thanks for adding the comment subscription and thanks for the update on #14. It will sell. Have you considered a price job to get some attention on it again or is it not worth it to do that yet?

  8. J Scott says:

    Hey Shae –

    We dropped the price a bit, and normally we’d consider a bigger price drop after this amount of time (3 months). But, I think the situation is more that there are very few buyers out there in any price range as opposed to this house being over-priced. In other words, Carol and I are pretty sure that — based on our market — the house wouldn’t sell any faster if we dropped the price (unless we did a really big drop, which we don’t want to do). We’ve actually started getting some interest again in the past two days, so hopefully that’s a good sign!

  9. Shae says:

    Makes sense. Hope you’re able to get your buyer soon! Hey, by the way…two more plug-in recommendations for you 🙂

    TweetMeme Retweet Button

    Both of these will make is super easy to share your blog posts with others via Twitter and Facebook with the simple click of a mouse 🙂

  10. […] House #14: Second ContractApr 27, 2010 … It was purchased out of our 401K, so for various reasons having to do with IRS … Hey Shae -. We dropped the price a bit, and normally we’d … […]

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