Look, assumable loans are basically eye candy in real estate because they’re so rare, but they’re actually starting to happen more. So, let’s talk about it. This post won’t go into details about requirements or how the process works, but I want to highlight this tiny but growing trend in the Sacramento region.
UPCOMING SPEAKING GIGS:
2/09/24 PCAR WCR Event (11:30am-1pm (more details))
2/13/24 Downtown Regional MLS Meeting 9am
2/19/24 Matt the Mortgage Guy YouTube Live
3/11/24 Yolo Association of Realtors (YAR only)
3/19/24 WCR Gold Country (details TBA)
3/21/24 2024 Market Update for Brent Gove Team (big event free)
3/26/24 Orangevale MLS meeting 9am
3/27/24 SAFE Credit Union Lunch & Learn (TBA)
4/11/24 Lindsay Carlisle Event (private)
4/25/24 HomeSmart iCare Realty (details TBA)
5/9/24 Empire Home Loans (details TBA)
5/15/24 Investor Meetup (details TBA)
6/11/24 Elk Grove Regional MLS Meeting 8:30am
6/13/24 Sacramento Realtist Association (details TBA)
WATCHING THE TREND & SPOTTING UNICORNS:
Loan assumptions are uncommon, but they are starting to happen more. For perspective, there were 23 reported loan assumptions in MLS in the midst of over 18,000 sales since 2023. I found these by exporting the “assumed” category under buyer financing for MLS sales. I do suspect there were more that were not reported too. All that said, half of these took place in the past 90 days, so this is something to watch while conceding they are still unicorns.
WHAT TYPES OF PROPERTIES ARE BUYERS ASSUMING?
The price point is all over the place, and these are not just starter homes. On average, units spent about four months from listing to closing, so this process has NOT been quick. Keep in mind, both VA and FHA loans can theoretically be assumed (and USDA), but the loan servicer still has to approve it. This is the hard part because approval is NOT always a given. This is why it can be such an uncertain process. I wrote more about loan assumptions here.
TELL ME MORE ABOUT THE SELLERS PLEASE
Ten of these units had an FHA loan and thirteen had a VA loan. The majority of sellers purchased in 2020 and 2021, but there were a number that bought much earlier, but they had refinanced when rates were really low a few years ago. In fact, one seller bought in 2016 and another bought in 2002.
HAVE YOU DONE A LOAN ASSUMPTION?
I’d love to hear any stories in the comments. Have you successfully done a loan assumption? Or have you tried, but it didn’t work? What made it work or not? Any insight you can share?
MORE IF RATES REMAIN HIGH
Here’s a look at buyer financing in the Sacramento region over the past ninety days. I’ll be watching this closely, and I’ll report on assumed loans in addition to everything else. If rates remain elevated, it’s possible to see more loan assumptions ahead. However, these could be more prominent during slower times of the year too. Anyway, we’ll see what happens this spring.
NOTE TO REAL ESTATE FRIENDS:
Loan assumptions are still unicorns, but today’s market requires creativity to get deals done, so this seems like something to know and watch. It’s also good to have some stats for buyers and sellers to see both rarity and that it has taken about four months. Anyway, keep your head down, keep learning, and find ways to be a part of the market that is happening. The only thing we can control is our mindset and how we show up.
ONE LAST THING:
I find when I bring up this topic, I tend to get some people bent out of shape because they think I’m saying it’s easy and common to assume a loan (sorry if you didn’t read the post). I think some would rather this topic not get brought up, but we are better off having conversations like this. In other words, let’s talk about the market that is happening – even the tiny parts.
Thanks for being here.
Questions: Any stories or insight to share? What stood out to you about the stats above? Should I keep pushing these stats out?