Today we did need to cover a few crucial things about purchasing a short sale and how to go about that process. If you are purchasing a short sale you might want to do a little exploration or have your broker do it for you. We would ardently advise getting a real estate agent to deal with it. They will probably know a little bit about the short sale method and be able to stand for your best interest.
Many people want to purchase a short sale because they tend to be better priced homes. The regular house for sale looks overpriced because they are not selling in this market. In a market where property values went down by as much as 40%, there are just certain properties that sell well. Short sales are those properties.
There are about five questions that you should ask the listing agent. Initially, you should inquire how many short sales they have closed because they will have a better idea how to close a short sale. The listing broker has to have the resolve to get through the lender red tape. Practice in closing short sales is more essential than a short sale designation. Then, inquire if the seller has given the listing broker the complete package. You do not want to put an offer on a short sale that doesn’t have a hardship.
Third, you might want to inquire how overdue are the sellers. If the seller has been in default for several months, the lender will be more provoked to sell. Also, you may want to inquire who the investor is. Some investors produce more hassles than others. Your buyers broker can help you through the program. You might also desire to identify who the servicer is. The servicer isn’t very important but it is another slice of information that you should think about gathering.
Today we are chatting about house sales, particularly nationwide numbers. We don’t usually care too much about national figures. It is essential that you go peek at your area figures because real estate is a local industry. However, sometimes the statistics are so unbelievable that they have to be brought to your focus.
According to the National Association of Realtors, pending home sales fell 30% in May from where they were in April. Granted, April was the end of the tax credit deadline. So that had some influence on the situation. We do not quite know what has happened from May to June.
Kevin and Fred were foretelling that this would occur as much as a year ago. In essence, we have been borrowing buyers from the future. With the incentive tax credit offered by the government, masses of people decided to purchase homes earlier than they would have.
This is just like what occurred in the first half of the decade. The banks were lending money to almost any person that sought it. Buyers that weren’t necessarily qualified or were not prepared to purchase a house stepped forward and bought properties. So, in both cases, there is going to be a delay time before home sales catch up.
The largest parts of this conundrum are supply and property prices. Because sales are downcast and inventory is going to amplify, prices will definitely plummet.
With adjustable rate mortgages and their imminent resets, house owners will be taking a closer look at their mortgage and the property value. For a few the payment will go down, but so will the worth of their house. There is a strong potential for an increase in strategic default. We haven’t seen the worst of defaults, unemployment and short sales. The worst is yet to appear.
We’ve had all of this feel good news with the last couple months of sales and pulling buyers from the future. We will be in a worse position from a nationwide perspective than we ever were in 2007.
Kevin and Fred are hanging out at Taco Surf in Pacific Beach, California. Fred in fact held his wedding reception at Taco Surf. If you are ever in the San Diego vicinity, you have to check out Taco Surf. The reason Fred is having such a late lunch today is because he has spent numerous hours this morning babysitting foreclosure sale dates.
The first folder, serviced by Metlife for Freddiemac, has been a nuisance during the entire progression. The first time we attempted to complete this folder, MetLife sought to foreclose. So, we went to Freddiemac and they gladly postponed the sale date. Nevertheless, the buyer on that deal fell through following inspections. At this moment we have a new buyer and we submitted that contract at the end of June. We have been working with Metlife to get them all of the papers that they needed until last week. Last week they notified us that they could not delay the foreclosure auction date because it was too late. So, this morning, Fred had to phone Freddiemac another time to get the foreclosure sale date delayed. Freddiemac, once again, willingly delayed the sale date and sent Metlife an email asking them to put off the auction date for an added 60 days because the bid on this house is more than the BPO. It surely makes you wonder what Metlife is doing in the short sale business.
The second folder, dealing with Chase, has been very testing. Fred was told last week that the auction date has been deferred and everything is fine. Fred has spoke to a few of people that have been very helpful and good, but the trustee has already told Fred that the house is going to foreclosure sale tomorrow. Fred called the trustee for the second time today and he inveterate that it is absolutely going to sale.
Finally, the Chase worker called Fred back and confirmed that the auction had not been delayed. Apparently, Chase postponed the auction internally, but Chase forgot to get consent from the financier. So, Chase had to go to the backer and ask for that they sale date be delayed.
We are not picking on any servicers or investors, but we would like other realtors to recognize that you must confirm foreclosure sale dates with the trustee. Trust no one in the banks and corroborate everything.
Fred has a pointer to speak about today. Kevin and Fred are back in the trenches yet again after being on vacation. However, because of the volume of files that they presently have and a few things that are happening within the Group 4610 squad, Kevin and Fred are individually negotiating a lot of short sales themselves. This made Fred recognize that when you are working with any volume of files you have to keep organized to set yourself up for victory. For instance, make some annotations as to what you just finished up within the file and some notes about what the next step is that you take.
When you work with a lot of files, it is almost unmanageable to keep track of where you are in each folder. So, provide yourself with notes to remind you of the stage of the folder as well as what you did last time and what needs to be done next.
Simple annotations can help you keep your files in order. What did i do previously? What happens at this moment? What will happen next? You need to be able to step into a folder in a moment’s notice. If you can not get into a folder knowing what to work on at once you are wasting days of time. With a goal of closing short sales in 60 to 90 days, you don’t have any time to waste.
This is precisely why you ought to have a work flow practice or task list. Hopefully you own a guide for how you close a short sale. If you do not have something like this go to the Shortsalepowerhour.com website and get the Crush It Package. It is the most comprehensive work flow and short sale operation management system you will discover. The value in the Crush It Package is far greater than the cost.
Also worth noting, Kevin and Fred will be in the Sacremento, California area for a Crush It meeting. If you are anywhere in the northern California vicinity, stop to see them. It is well worth your time.
Fred Weaver and Kevin Kauffman, Arizona’s supreme short sale squad, is talking about a hot article on the topic of strategic defaults. Apparently Experian finds that 19% of mortgage defaults in the second quarter of 2009 were intentional. First, the figures are fairly old. Also worth noting is the fact that there is no obvious description of who is strategic defaulting and who is not. It seems that, they are defining strategic by looking at financial and credit reports and assuming that the property owner could have paid their mortgage. This is 80% more than 2005, which is kind of obvious, isn’t it.
Kevin’s estimates are that current short sales that are strategic defaulters is approximately 50%. Fanniemae has a distinctive reaction to strategic defaulters which will be discussed tomorrow. However, before we do that, we ought to fill you in on something that you might not be aware of. Lots of of your bank servicers are pulling credit on your borrowers and you will probably have some conversations with negotiators regarding strategic defaults. The strategic default is no surprise now. So, naturally, it is being scrutinized even more.
Kevin and Fred were first talking about the strategic default in early 2008. There were a lot less people doing it then than there are now. We noticed it and thought it was extremely fascinating. In Arizona, people are realizing that the market has done nothing but get poorer. The solutions that the government and lenders have put out there have basically been political stunts.
At the end of the day property owners still own homes that are worth $200,000 that used to be worth $500,000. We aren’t saying that everybody ought to do it. Nonetheless, everyone ought to think about it because it is a intelligent business choice. Defaulting is a contractual option.
Mindset is the reason why intelligence and talent do not result in accomplishment. On occasion they can stand in the way of it. Mindset also notes that praising brains and talent doesn’t advance brains and talent but can put it in jeopardy. Mindset is a very basic notion that is all of the difference. Your mindset can be a fixed or a growth mindset. Mindset alone is not the solution.You may have a foolish frame of mind or a dysfunctional frame of mind or a whining mindset. The type of mindset you take makes all of the difference in the world.
The growth mindset is the difference between closing 90% of your short sales and closing only 20% of your short sales. Mindset goes both ways. It can be a positive consequence or a unhelpful effect.
In a fixed mindset people suppose that their talents and their brains are finite characteristics. They think that talent itself creates success without effort. They couldn’t be more wrong.
In a growth mindset, simple abilities can be developed through hard work and dedication. brains and talent are merely a tiny piece of the puzzle. This concept brings a resilience and a love of knowledge that is vital to do well at a high level.
Remember that 99% of the people in the universe do not think that they can be genuinely great so they just attempt to attain the mediocre lifestyle. There is more competition to be mediocre in this universe. If you went after something bigger you would find less competition and greater accomplishment. For example, when you drive to a job in the morning you have to deal with all of the other populace and heavy traffic on the highway. However, the extraordinary people don’t ever whine about traffic because they are either at a job before the traffic is heavy or they can go in to work after the traffic is heavy.
Welcome to shortsaleshift.com. Minnesota’s foremost short sale specialists, Josh Pomerleau and Sarah Willman are going to chat about why a bank would want to close a short sale.
One of the first queries we get from house owners that are going through foreclosure or beginning to miss their payments is “Why would a lender choose to do a short sale?”. Often times the property owners think that it just sounds to good to be true. In spite of this, there are a lot of reasons why a lender would choose a short sale over foreclosure. At the end of the day, it saves the bank lots more money to go through a short sale than to go through a foreclosure.
There are a lot of negative expenses associated with foreclosing on a property. There are legal fees. A lot of times the home owner will vacate the property. When that happens, the bank has to worry about people breaking into the house and stealing things. In addition, the general maintainence of the property is neglected. There are also cases where property owners will damage their house because they are upset with the lender taking their house from them.
The bank looks at it like this. It is much less possible that the property will be damaged when they close a short sale. It gives the house owner a feeling of finality by not losing their property. Then the property owner can move on under their own power.
Additionally, the bank will have to insure the property from all types of scenarios such as tornados and additional natural disasters. Those expenses are also unconstructive to the lender.
At the end of the day that is why the lender would want to close a short sale. The lender also needs to close on the property sooner than they could with a foreclosure. Getting that money from a short sale permits them to turn around and lend that cash out again. So, the time value of cash is worth quite a bit to the bank.
Through the short sale procedure, statistics show that the lender will get greater money from a short sale than they will from a foreclosure.
With a week devoted to Title procedure and padding the HUD, today’s attention is on dealing with a first-rate Title Agent. If you are wondering what you pad in HUD, this is where a trusted Title agent comes into the picture. Recognize that the reason you need to have this sort of Title agent is because they have to comprehend that occasionally you may need to pad a HUD a little more than other real estate transactions because you are dealing with a unique state of affairs referred to as a short sale.
A lot like the differences in real estate agents, there are differences with title agents that handle short sales. Remember that if you are working with an escrow representative that has been in the trade for 30 years and has always done things in one exact way, you will most likely get a little resistance. You may want to consider the mindset of the person that you are dealing with that won’t have to work outside of their comfort zone.
Other vital factors include the Title agents work ethic and urgency level. There will be times that you require a HUD ASAP to push back a sale date or close a buyer before they walk away. Lenders occasionally catch you off guard and you want a HUD in a couple hours. Guarantee that you have a title agent that can handle these demands.
Kevin and Fred have a typical process that permits them to get their HUD back in four business hours or less. Their escrow officer understands that when a HUD needs to be revised there is a transaction coming up very soon. Also, the escrow officers are constantly careful to evaluate the approval letters and keep the client informed and educated all through the procedure. They also present the final HUD to the lender for final approval. You must be on the same side working toward the same goal with your escrow agent.
The whole week has been used up chatting about strategic defaulters. One of the things that we have been paying attention on this week is who actually has the hardship. If you have not seen the last couple days of video, we believe the bank has the hardship since they stand to lose money if they foreclose on a house. Ultimately, as soon as a house owner decided that they no longer need to pay their mortgage, the bank is burdened with the hardship. This is a little detail that the lenders and real estate specialists need to be aware of.
Group 4610 has been fortunate enough to get a hold of some internal bank documents. The numbers from this inside document speak volumes about the lender choice to consent to a short sale. Also noted, on the second page of this document, is the cause for short sale or the hardship, as the world likes to refer to it. The hardship in this particular transaction was “tenant not paying.” Those are the actual words used in the bank document. So, what does this small internal lender document tell us? Hardship is mainly inconsequential to the bank. The statistics are the important part of the lender transaction.
The first page of this internal bank paper describes how much money the bank will receive if the house forecloses and how much they will receive if the lender accepts a short sale. Those are the essential facts in this matter. Perhaps the most telling sign of why your strategic default will get accepted is in the last couple lines of the second page of this internal lender paper. They just show the savings over foreclosure. The banks know this game. Savings over foreclosure is Forever the most important.
Kevin and Fred, the leaders of Group 46:10, Arizona’s best short sale squad, are talking today about pricing and listing. Before you shut the video off since you already understand how to list and price, hear them out. Depending on your market, you may not be experiencing the same stuff as Kevin and Fred are in Peoria. As a lot of of you know, the deadline for taking advantage of the tax credit has passed. What we are seeing right now in the market is a modest bit less enthusiasm from home buyers and home owners. The inventory is starting to grow and that normally leads to prices going down. When you notice that trend, you tend to have more disagreements with banks concerning the value of houses.
There are many of the same challenges in 2010 that we had in 2008. Banks love to look at sold comparisons. However, if you want to deal with the variation in the market you need to compare values with active and pending listings. Price yourself in front of the market if you want to sell the house.
At the moment, the BPO’s are coming back higher than what they ought to be in Kevin and Fred’s opinions. There have been talks with Chase bank where they have upped the BPO value because they disagree with the BPO agent’s value.
It is crucial to comprehend that there will be more BPO troubles in 2010. Other pieces of the nation may not experience these troubles if your market has only depreciated 10-15%. Nevertheless, in the Phoenix real estate market, with depreciation levels approaching 60-70% in some cases, there will be BPO issues.
The bank will perhaps make some errors and foreclose on some homes. Do not be shocked if it takes them a while to fix their own practices through this transformation in the market.