Pacita's Quick Bytes of Real Estate: Pacita Dimacali - e-PRO, SRES, CDPE, MBA East Bay, North CA real estate (Gallagher & Lindsey)

Here's a headline that caught my eye: NAR Defends Brokers Price Opinions BPO) for Short Sale Program

Had I not run into bad BPOs done by agents who are absolutely NOT familiar with the area, or who did not bother getting additional information from the listing agent, I may agree with NAR's position.

But like bad appraisals done by out-of-area appraisals, one can expect bad BPOs done by clueless agents. Following cases come to mind:

• BPO agent didn't know property was a fixer. Agent drives by property that although it was on the MLS as vacant and on lock box, didn't bother going in. As such, he did not know the property was a fixer.
  • Result? The BPO agent priced the property at $500K when it was only worth $300k at that time. The listing agent contested the BPO, produced the contractor's estimate of $200K to bring the property to livable conditions, and to code. Luckily, the negotiator acquiesced.

• BPO agent never saw the property. Agent lives 30 miles away in a different city and different county. He calls listing agent for help. Listing agent produces internal/external photos, neighborhood photos, information about possible HOA litigation, reactivation of railroad tracks and number of foreclosures and short sale in the neighborhood that have driven prices down. All these support the all cash buyer's offer.
  • Result? BPO agent uses the materials but ignores the rationale for decreasing market value. He prices property at $425K when it was worth only $385K. Listing agent contested BPO and produce more evidence to support lower price. Unfortunately, the negotiator refused to budge, even after being told the BPO agent never even saw the property! 

If BPO agents only knew how much damage they can cause by performing inaccurate BPOs for short sales!

I've done BPOs  --- and fortunately, the BPOs I handled are for properties in the city where I live --- so I am more than familiar with property values here. I have also declined taking assignments in areas where I don't feel qualified enough to do a good job.

Having worked on several successful short sales, it's necessary to evaluate which projects went smoothly and which ones hit a brick wall. We can't control or manage certain bank processes, but we can certainly ask the sellers to cooperate better

The ones that took longer and were painful to manage and execute had these in common:

• Sellers believe their property is worth more, and refuse to list at the recommended price
• Sellers questioned why we need so many documents
• Sellers balked at giving copies of their financials (bank statements, financial statements, tax returns, pay stubs) --- regardless of how many times we explained why the banks will need these documents to justify approving the short sale
• Sellers refused or were slow to give everything we need --- and when they did, it's one document at a time
• Sellers contacted the lenders previously and provided the same information when they applied for loan modification, and they think they won't have to do this again for a short sale
• Sellers were late to respond to urgent need for updated documents -- complaining that they have provided these before. But if the short sale negotiators don't get around to the file until 2-3 months later, those financials will no longer be current
• Sellers don't maintain the property as well as they should --- thinking they'll lose the house anyway. And the condition of the property is such that prospective buyers are turned off.
• Sellers rented out the place to uncooperative tenants who refuse to show the property even with adequate notice
• And when we do get offer(s), sellers are again slow to respond or to sign, and take it very personal when the offers are not as good as they think

Dear Seller

You are financially in trouble. We're trying to help. So let us help you. Remember that your objective is to get a buyer as quickly as possible. But if your place is a wreck, how can you possibly attract a buyer who will have to endure months of waiting for the short sale to be approved?

And since we're asking the banks to "forgive" your loans, why won't you comply or cooperate with their requirements?

RELATED POSTS

OPEN LETTER to Short Sale Sellers. If you really want to sell your property....

RED FLAGS: Are short sale sellers selling, just or stalling?

SHORT SALE PRIMER for sellers --- setting the groundwork and expectations

In the past few months, I received many inquiries from sellers who want to know more about short sales. What is it? What is involved? How do we go about it? What is its effect on the credit score?

So I started providing my version of a PRIMER ON SHORT SALES  which I tweaked as I went along, picking up information from various resources as well (such as Nolo.com)

_________________________________________________________

DEAR SELLER

Short sale is not an ordinary way to sell property and in fact, it is quite involved and time-consuming. But it can be and has been done. It is preferable in many respects to a foreclosure.

WHAT IS A SHORT SALE?

Short sale is a type of pre-foreclosure sale in which the lender allows the property securing a mortgage or deed of trust loan to be sold for less than the full amount due, and accepts the proceeds from the sale as payment in full. The lender may allow a short payoff sale due to factors such as the borrower's deteriorated financial circumstances, the property's physical condition, and local real estate market conditions.

Before clear title to real property is transferred from seller to buyer, all liens and encumbrances including, but not limited to, mortgage(s) or deed(s) of trust, judgments, property taxes, and costs of sale must be paid. While under no legal obligation, the lien holders must agree in advance and in writing to facilitate the short payoff sale.

Note: if you have delinquent homeowner association fees, your HOA can/may/will file a lien against your property and even issue a notice to foreclose. So it is best to continue paying your HOA because these fees can interfere with the short sale process.

HOW DO YOU QUALIFY FOR A SHORT SALE?

Regardless of what many short sale pros may have you believe, most lenders will approve a short sale only as a last resort to foreclosure for the following reasons:

•  
  • Borrower's insolvency
  • The proposed purchase price is more than the lender would be able to sell the property after foreclosing on the loan
  • The value of the property has decreased to an amount that is below the loan balance due to local and national economic conditions, OR
  • The property was refinanced at a higher value based on an inflated property appraisal report, OR
  • The property is in such a physical condition that it is not financially feasible for the lender to put it into a marketable condition.

Regardless of who stands to benefit from a short sale, most lenders have a very stringent hardship test that the financially distressed homeowner must meet in order to seek relief in the form of lender-approved short sale.

WHAT CONSTITUTES HARDSHIP?

Reasons why people apply for a short sale

•  Unemployment
• Reduced income
• Divorce
• Separation
• Medical bills
• Too much debt
• Death of spouse
• Mortgage payment increases
• Business failure
• Job relocation
• Illness
• Damage to property
• Military service
• Incarceration
• Decline in market value (needing to sell, but property is worth less)

WHAT MAKES A SHORT SALE SUCCESSFUL?

A successful short sale involves the following steps:

• Prequalification of the homeowner, the property, the real estate market and the lender to determine if it would make financial sense for both the borrower and the lender to agree to a short sale
• Researching and gathering information, documents and data to be submitted in support of the proposal to the senior and junior lien holders (generally lenders)
• Marketing the property to find a ready, able and willing buyer/investor
• Preparing a compelling proposal indicating the benefits the lender(s) (and other lien holders, if any) stands to gain from the short sale versus allowing the property to go to foreclosure
• Submitting the proposal to the lender(s) and any appropriate entity and/or individuals
• Negotiating terms for approval
• Closing the deal.

 TAX  EFFECTS AND OBLIGATIONS

This is something you should discuss with your CPA and real estate attorney.

In the meantime, here are couple of links you should read to understand how short sale is taxed or not

FEDERAL http://www.irs.gov/individuals/article/0,,id=179414,00.html

CALIFORNIA http://www.ftb.ca.gov/aboutFTB/newsroom/Mortgage_Debt_Relief_Law.shtml

ARE THERE OTHER ALTERNATIVES?

Temporary Loan Relief Alternatives:

• Forbearance   is an agreement to temporarily let you pay less than the full amount of your mortgage payment during the forbearance period. Mortgage companies may consider forbearance if/when you can show that funds from a bonus, tax refund, or some other source will let you bring the mortgage current at a specific time in the future.
• Reinstatement occurs when you pay your mortgage company the total amount you are behind, in a lump sum, by a specific date. This is often combined with forbearance.
• Repayment plan is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
• Loan Modification is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable. Common loan modifications include:

Adding missed payments to the existing loan balance

Making an adjustable rate mortgage into a fixed-rate mortgage

Extending the number of years you have to pay

Permanent Loan Relief Alternatives

• Assumption permits a buyer who qualifies with the existing lender, to take over your mortgage debt and pay the mortgage payments. As a result, you may be able to sell your property and avoid foreclosure. This should not be confused with "Subject to" where a buyer takes over your payments without the lender's consent.
• Short Sale. If you can sell your house but the sales proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a Short Sale where they will write off the portion of your mortgage that exceeds the net proceeds from the sale.
• Deed In Lieu of Foreclosure if you agree to voluntarily transfer title of your property back to your mortgage company in exchange for cancellation of your mortgage debt.  This option may be unavailable if there are other liens on your home, such as judgments from other creditors, second mortgages, or tax liens.
• Bankruptcy.  Most definitely, please consult your attorney and CPA. This has the same adverse effect as a foreclosure. Here's a link to an article titled "How bankruptcy can help with foreclosure"

Be aware that transferring your home to a third party will not have the same result as transferring it back to the original lender.

 ­­­­­­­­­­­­­­­

SETTING EXPECTATIONS

Short sale is anything but a "short" process

PATIENCE!

Selling a short sale property is a long tedious process

Getting a Loan Negotiator assigned to the case will entail many phone calls and other means of communicating

This is a more involved process than a regular sale

List price must be very aggressive in order to attract the biggest pool of buyers

The quicker we get an offer, the better the seller is protected from foreclosure

Offers tend to be lower than list price. Sellers should not take it personally

When an offer is submitted, Seller can accept...but Lender makes the final decision

PATIENCE!

It Is not unusual to wait 3-6 months for the lender to respond to an offer --- accept, reject or counteroffer. Lender may override the Seller's decision

Seller will not pay selling expenses, and will not receive any funds from the sale

Lender pays sales commissions, back taxes if any. But lenders may refuse to pay delinquent HOA fees, fines and attorney fees

SPECIAL NOTES TO THE SELLER

•  You are not responsible for selling expenses. The Lender pays the realtors to list and sell the property.
• You will NOT get any sales proceeds from the sale
• Set your ego aside about how much your property is worth after what you paid for it, improvements you made, etc.
• Remember, that time is of the essence. You only have so much time to try to sell your property as a short sale.
• Get all the required documents as soon as possible so that your realtor can begin communicating with the lender and marketing your property
• Price the property aggressively to attract the largest pool of buyers so that you can get sell it quickly.
• You can accept (ratify) the contract and you can send this off to the lender; but if another offer comes in that looks better than what was accepted previously, the lender can override the your decision, and accept the offer that is financially better for the lender.
• Offer isn't ratified until the lender accepts the offer ---- and that's when the initial deposit is usually transferred into an escrow account, and the timeline of the contract begins
• Always encourage and entertain back up offers.

SHORT SALE PROCESS

SELLER

• Sellers engage Realtor to list property
• Sellers inform Lender that Realtor is authorized to contact Lender on their behalf
• Sellers work with Realtor to prepare Short Sale Package to justify short sale and convey this information to the Lender
• Seller prepares home for sale, and for Realtor to list the property
• Seller compiles documents that the short sale lender requires for a complete short sale package. Typically, these documents are:
  • Hardship letter
  • Financial worksheet showing seller's income and expenses
  • Two months most recent mortgage payments (all mortgages)
  • Two months most recent most recent checking account statements (all borrowers if separate)
  • Two months most recent savings account statements (all borrowers if separate)
  • Two months most recent other account statements (all borrowers if separate)
  • Two years  most recent tax returns (all borrowers if separate)

REALTOR

• Gets letter of authorization from the Seller
• Provides must-do checklist to Seller
• Compiles all necessary documentation and disclosure for a short sale
• Prepares comparable market analysis
• Activates listing on the Multiple Listing System (MLS)
• Markets the property for sale
• Notes on the listing that this is a short sale  with price and sales commission subject to lender approval

OFFER

• Offer is submitted to Seller who can/will accept, reject or counter offer
• Upon acceptance by the Seller, Realtor forwards the contract to the Lender for final approval of short sale and acceptance of the contract, and includes the complete short sale package (seller's documents, comparable market analysis, copy of the listing agreement, letter of authorization from the seller)
• In the interim, and until the Lender formally accepts an offer, other offers will be reviewed and submitted as appropriate. Seller doesn't have to submit all offers and can choose which one(s) to forward to Lender.
• If another offer is submitted that in the eyes of the Lender is financially better for the Lender's bottom line, Lender can accept that offer instead of the one the Seller accepted

LENDER

• Lender makes FINAL decision, and can override Seller's decision
• Waiting for the Lender's final approval can take up to 45 days or longer.
• The Lender reviews short sale package and may require other documentation to complete the sale
• Lender will appoint a Loan Negotiator to the file
• Loan Negotiator advises Realtor that Lender will get a BPO (Broker's Price Opinion) which is similar to a drive-by appraisal by a broker/realtor assigned to the case by the Lender
• Negotiator may accept, reject or counter the offer based on the BPO

SAMPLE SHORT SALE TIMELINE

Here's a look at the timeline from late payment to foreclosure.

DAY 1   It's the first of the month, and the mortgage payment is due. The borrower misses the payment.

DAY 16-30   A late charge is assessed. The company that processes the borrower's payments (called the mortgage servicer) begins to attempt to make contact with the borrower to find out why the payment is late. File is sent to the Collection Department.

DAY 45-60  The servicer sends a "demand" or "breach" letter to the borrower pointing out that terms of the mortgage have been violated. The borrower is given 30 days to resolve the situation by paying the delinquent amount.

DAY 90   Notice of Default.  Foreclosure proceedings start with a Notice of Default (NOD). The document is recorded at the request of the lender by the trustee and is recorded in the county in which the property is located. The recording of Notice of Default gives "Constructive Notice" to the public.

After the recording of the Notice of Default, in the state of California, the borrower and junior lien holders are given proper notification and the borrower has 90 days to bring their account current. This period is referred to as the Reinstatement Period.

DAY 180   Notice of Trustee Sale.   If the borrower does not reinstate their account within the 90 day period, the lender will authorize and instruct the Trustee to record the Notice of Trustee Sale (NOS).

DAY 196   5 Business Days Before the Sale Date.   Right to Reinstate expires.

DAY 201         After 21 days of the recording of the Notice of Trustee Sale, a foreclosure sale can take place at public auction. The property may be sold to a third party bidder or revert back to the lender for a specified amount.

REALTORs are a good source of clients for service companies like electricians, plumbers, handymen, cleaners, roofers....

• If the service personnel perform well, they will receive steady referrals from the realtors and their clients.
• And in most businesses, repeat clients and referrals are their bread and butter.

With that in mind, here's an episode that illustrates how NOT to do business with a REALTOR.

Last Friday, I called an Alameda roofer to do a roof inspection on a duplex. Got hold of the owner's son who said he would do it. And no, he didn't need me to meet him at the premises since he didn't know what time he can get there. So we arranged to have him pick up the check from my office which was literally just a few blocks away from his office.

At 2:30 pm the roofer called and said he couldn't get in the gate. So I rushed over from another appointment to meet him. Turns out he merely needed to put his hand through the railing on the gate to turn the key. But he didn't figure it out, and he didn't even try. There was a sheepish look on his face when he realized it.

Monday, I called the office twice to ask when I would get the roof inspection report. Usually, it only takes one day to get it. No one called me back.

That night, I emailed the office to say that it's the third time I'm following up, and would like to know when I would get the report.

The next morning, owner responds that it is not the third time, and that I didn't pay him, and that I should find another roofer. I told him that:

• I called twice and left a message
• I had told his son the check was waiting for him at the office since last Friday
• He had already done the inspection, and all I want is the report

His response? "Go find another roofer."

Think I would ever use this roofer again? Think I would refer him? I was so incensed that I told the other realtors in my office who agreed that this roofer was out of line.

Classic case of someone cutting off his nose to spite his face!

I've been using Fidelity Agent (loaded on my computer as well as my smartphone iphone) for a while now. It's been a terrific tool.

See:

Fidelity Agent: a WOW tool for answers for quick answers and calculations for real estate and

First Time Buyers need CMA and PITI calculations ---and good photos for a good first impression

The latest version now even provides a quick HUD statement, and includes computations for short sales!

See this youtube video that explains the HUD in just 3 minutes. See how it works.




This is so inexpensive to upload, but the benefits are worth a million bucks. Why doesn't everyone have it?

REALTORS: if you haven't learned how to manage a short sale, not only as a buyer's agent but as a listing agent as well, then you're way, way behind the learning curve.

Fire sale?

With the number of people facing preforeclosures, we are surely going to hear from property owners seeking guidance on what to do

This week alone, I received three inquiries from property owners who are looking for help. This is all new territory for them and they have a lot of questions. I prepared a standard response that I am tweaking as I go along to address their concerns.

Last week, one of my co-realtors received a call from a friend who wants to just walk away from his home because he's underwater. My co-realtor invited his friend to meet with him and discuss options that are available to him.

Do you know what to do?

All around me, my co-realtors are all buzzing about the challenges we are facing everyday dealing with people who don't understand or don't know how to do a short sale, much less prepare a short sale package for submission to the lenders.

Are you prepared to comment on what you see, hear and read about the market?

In the media, we are besieged with stories and opinions of what to do. Recent Examples

Short-Sale Program Will Pay Homeowners to Sell at a Loss - NYTimes.com

Let the housing market stand on its own - MSN Money

Bubble Meter: Mort Zuckerman on housing

Should You Consider a 'Strategic Default' on Your Mortgage?

And when there's information overload, people will seek out folks they can trust and have one-on-one conversations with.

As a REALTOR, are you prepared to comment on the stories people read?

Do you know how to support or counter ideas like Strategic Default?

If not, it's time to get down and get your hands dirty. Learn how to do a short sale from beginning to end. You'll be all the better for it, and you will be more helpful to your clients. Who knows, your next client may even be YOU!

I have a short sale listing that has an all cash offer. Just waiting for approval pending a BPO.

Doing the work of a BPO (agent (I have done BPOs so I know how to do it)

Remember that a Broker's Price Opinion (BPO) is performed by another agent that the short sale lender engages to do a comparable market analysis of the property.

BPO agent calls me and says he's not familiar with the area and doesn't know anything about the market environment. So he solicits my help. He lives in Marin County, and didn't want to drive to Oakland CA.

Since it's my listing, I am naturally motivated to help as much as I can to simplify and expedite the process.

So I took all the pictures, inside, outside, and in the neighborhood. Pulled up comps, provided information on every single one (defined the type of sale), even pulled up info from www.ForeclosureRadar.com for other properties in distress. Provided links to story lines that may affect the property values.

He called/emailed a couple of times requesting more information which I was happy to provide. For the most part, I was sure that the comps and background info supported the all cash $385K offer for the property which shows nearly a 70% drop in market value and equity.

What did the BPO say?

Today, I followed up with the short sale negotiator who said the offer is too low, per the BPO which suggests countering the offer up to $425-430K or approximately $50K more! This property isn't worth that much today.

Wish I could have seen what the agent submitted. That agent knew ZILCH about this property and the area. So how could he think that it would be worth more, inspite of the abundance of information I sent him supporting and justifying the offer?

Hoping against hope, I wrote the short sale negotiator and provided all the information I gave previously to the BPO agent. Nonetheless, I informed the buyer's agent (as well as the back-up buyer's agent) of what the short sale negotiator wants. I truly pray one of them will stick around and write a higher offer per the BPO.

However, at this junction, since both of the buyers actually rent at the same complex, they are intimately familiar with the property and know it's not worth as much as what the short sale lender suggests as a counter.

This is just as bad as having an out-of-town appraiser do an appraisal on a property he is not qualified to appraise!

Are there short cuts to blogging?

Haven't been blogging on ActiveRain lately. Instead, I've been visiting Facebook, answering questions on Trulia and Zillow. All of these take time and energy, And I'm finding that in the late hours of the evening --- like right about now --- I'm still tap, tap, tapping away on my laptop, wondering where did all this time go?

From time to time, when I blog, I may revise the format, rephrase a few times, then post the same subject matter on other sites where the audiences are different.

And I know that we can set up our blogs in such a way that we can automatically tweet or show up on Facebook.

But I can't help but wonder if there are other shortcuts or tips on how to maximize your market reach with a minimum of time

During the ActiveRain camp in San Francisco, I heard one of the speakers mention that he prepares his blogs days at a time, then program it so that the blogs appear at a given time/date. That's good for folks who are so inspired that they can come up with various blog topics at one sitting.

Some ActiveRainers are such prolific writers and contributors, that I wonder if they've ever had writer's block.

What's YOUR suggestion and time-saving tips?

Why not?

In my neck of the woods, it's a seller's market. Inventories are low. Buyers are actively looking. Multiple offers are fairly common because there are fewer properties to show.

Agents who want to use the old-fashioned (and in our area, fairly effective) way of getting prospective clients through open house, here's an idea:

If your agency doesn't have enough listings for you to hold open, then call a reputable REO listing agent and see if you can hold HIS or HER listing open. And yes, you can pick and choose which properties you want.

It can be done and is being done.

One of our agents called an REO listing agent for a truly magnificent property near the beach. The place was mobbed by curious onlookers which included potential buyers. She picked up at least two prospects from the that particular open house.

Another local agent has been doing this for sometime.

It helps forge a relationship with the REO agent, it helps the local agent find new business, and it allows the prospects to view the property on weekend.

Win-win scenario.

The last couple of days, I had two accepted offers on REO properties. And both times, the request came back that the bank won't accept digital signatures.

• Buyer's bank, Bank of America, wants "wet" signatures. The buyer is putting down 20%. It's not an FHA loan. But they want wet signatures on the contract.

• Foreclosing bank, Wells Fargo, wants it. Again, my buyer is putting down a significant amount -- 30%.

What's with these lenders? What is the rationale for not accepting electronic signatures? They'll accept faxes but not DocuSign or EchoSign?

Or is it a matter of some folks just haven't gotten the message that digital signatures is LEGAL?

Haven't these folks seen the benefits of digital signatures? Starting with less or no paper and being green?

RELATED INFO:

Electronic Signatures Act signed into law June 30, 2000

During a panel discussion consisting of representatives from different lending institutions, one of our presenters prepared and shared this matrix regarding FHA.

What many didn't know, and it should be shared with potential buyers, is that an FHA loan is assumable.

That alone is a HUGE benefit favoring FHA buyers and future sellers. Why? We are expecting the interest rates to go up. Much as we would like it to stay where it has, the signs are pointing to the increase.

As such, anyone with a low and fixed rate of 5%, and who has plans to sell in a few years, may find himself in a very favorable and enviable position of being able to offer his property with a lower and assumable interest rate.

So....suck it up. Deal with the hassle of getting an FHA loan. In the long run, it may be worth it!

Very good information to share with folks who are thinking of, or only qualify for an FHA loan.

RELATED INFO:

How to assume a loan

Assumable loans

Assumability: A hidden potential value to FHA Loans

When the deals get complicated and challenging, we extol the benefit of dealing with an experienced agent.

However, let's keep in mind that we were all at a point when we had absolutely NO experience and very little knowledge. But we all managed to rise about that challenge.

How did we do it, and how did we survive?

EDUCATION, PERSISTENCE AND RESOURCEFULNESS (and working like a dog!)

1. We chose an agency that provided and continue to provide classes and seminars
2. We attended and continued to attend classes on various topics. Most recently, one finds an abundance of classes and seminars on distressed properties (short sales, foreclosures)
3. We identified mentors who took the time to help us, not by doing things for us, but by showing us how to do things, how to manage situations, what extra steps to take, cautioned us on what to look out for, showed us by example
4. We sought out other people who excelled, and tried to emulate them
5. We sought new technologies and programs to help make us more efficient 
6. We networked....even if we started by "lurking" in the background i.e., simply observed, we were like sponges, soaking up all the good information
7. We investigated. We didn't take things at first glance or at face value....we researched to validate what we found
8. We shared our successes and failures with people who can analyze the deltas (what we need to change) and the pluses.
9. We prepared our own presentations and packages, and always tweaking them to make them better, relevant,  time-sensitive, and appropriate.
10. We stay current with the latest news affecting our industry. We inform our clients as needed (as in the case of the extension and expansion of the home buyer tax credit, where interest rates are headed, etc).

EXPERIENCE --- what type of experience?

Although we still advocate working with an experienced agent, it truly depends on the agent.

Working with an agent with 20 years of experience but who stays at status quo won't be as helpful as working witn a one-year but gung-ho agent who is immensely more resourceful and more educated than the veteran.

Also...just because someone has only one year experience in real estate doesn't mean he doesn't have other life experiences that serve him well. For example, a financial analyst or a marketing/sales executive or a teacher may be in a better position to help educate clients, than someone who has done nothing but real estate.

I say this only because when it comes to short sales, I am guilty of telling people to deal only with experienced short sale agents. But until 3 years ago, I had no experience in short sales either, but managed to do one quite well because I was empowered by the education and guidance I had received throughout the process.

BE A MENTOR!

Go easy on our "less experienced" co-realtors. In our office, we are constantly helping and guiding each other. If one agent gets a short sale listing or sale, he is NEVER without a short sale guardian angel on his shoulder.

This is hairy.

By the time I received a call about a potential short sale listing, the seller has already received a Notice of trustee sale in 3 weeks.

The seller's daughter had tried for 6 months to get ther loan modified, but it wasn't until Dec 31 2009 that they were told their applicatoin was denied.

January 25, they received a Notice of Trustee Sale scheduled for February 22, 2010.

She frantically searched for someone to help with the short sale from the time she received the Notice.

Feb 5, she called and told me that she found me ia the internet. We decided to meet in the afternoon.

LISTING THE PROPERTY AS SHORT SALE THREE WEEKS BEFORE THE TRUSTEE SALE

After meeting with the client, a sane agent would probably have said that this couldn't be saved.

But there was such desperation and angst in her face that I told her I would try. We signed the listing agreement, I posted on the MLS the listing for sale later that afternoon, and posted it on other sites, most notably Craigslist and Vflyer. I had to price it very aggressive, especially since there was a bank-owned property two doors down that was just posted a couple of days earlier.

By 9 am the following morning, I received three requests to show the property at 11 am. And by 1 pm we received an all cash offer and three other similarly good offers and terms. Sellers accepted the best and highest all cash offer.

Since then, there was a flurry of phone calls to Chase --- to their Loss Mitigation Department, their Foreclosure Department, their assigned trustee service. Fax after fax after fax.

THREE DAYS BEFORE TRUSTEE SALE...

Feb 19,  2 weeks after I listed the property, and just three days before the trustee sale, we received good news: we have a short sale negotiator. The representatives from the short sale department have already sent a note to the trustee to postpone the sale.

Whatever black hair I had left had all turned white. Now if the stress would have allowed me to lose 20 lbs, I would have welcomed it (Darn! No such luck!)

And we are just beginning with what could be a long, long journey.

Folks....please, please, please...don't wait until the last minute to get help! Many times, even Superman can't help.

RELATED TOPIC

9 Ways to avoid foreclosure

Agents: please remember that how you behave towards other agents, how you treat clients, whether they're yours or someone else's, reflects on ALL of us in this profession.

These last few days, I saw where some agents behaved very badly or didn't handle their responsibilities well. Fortunately, there are some who made up for these bad seeds.

THUMBS UP

After so many horror stories about REO agents being so unresponsive, recently, I was treated to two good experiences:

*** A phone call! Although the news wasn't good, this agent took the time to personally call and let me know what the situation was like and why my offer wasn't accepted (too low in a multiple offer situation). Good feedback goes a long way.

*** Keep hope alive! Another agent called me to let me know that although my offer was not accepted, it seems that the buyer in first place was hesitating. As such, he still submitted my offer as a strong contender, to the asset manager, should the first buyer back out. There is hope!

THUMBS DOWN

*** Unfriendly agents. A new broker in town told me that "I had a run-in with another broker, and it wasn't so friendly.  I don't get it. I'm just a small fish in a small pond doing what I want to do, sell homes and help people buy homes."

*** Unresponsive agents. After so many phone calls and emails, the listing agent finally responds that they have already accepted an offer on a short sale. Yet, it still shows up as active days later!

*** Unprofessional/uncaring agents.

• Agents from out-of-MLS area who take a listing but don't bother to list it with the local MLS.
• Agents who don't post even ONE picture of the property.
• Agents who don't put a lockbox even on a vacant property, insisting they be called for access, but won't respond in a timely manner

What's wrong with these people? Don't they know that real estate is a people and relationship business?

Some property owners attempt to do loan modifications on their own. We already know this isn't easy. The property owners are already in an unhappy frame of mind, and in their distress and confusion, may not be doing the loan modification correctly. Or maybe they didn't reach the right parties.

By the time they seek professional help, it's too late. The property is scheduled for trustee sale. Although we've heard of some lenders acquiescing to requests for postponement, there are those who won't stop trustee sales. Chase, for example, won't stop trustee sales, with very few exceptions.

More than once, I have run into folks who, by the time they asked for help, it was too late....the property was already given a Notice of Trustee Sale.

Going through the record of recently foreclosed homes in my area, I did a cursory review and found that many of these homes that were foreclosed were never even listed for sale as a short sale.

Did the sellers try a loan modification?

Did they do a strategic default or exit?

Did they try to do a short sale, and did they hire a knowledgeable and experienced realtor to help with the short sale?

Did they try other means to prevent foreclosure?

What's really going on?

Spread the word. There is help for property owners facing foreclosure. But don't wait until it's too late to ask.

In case the buyer is on the fence, and not sure whether or not to jump in and buy now or later

Here's something to think about (Source: Steve Harney's Keeping Current Matters)

Know What the Experts are Predicting for Interest Rates in 2010

If we look past just the price of a home, we know that the buyer will be concerned with its overall cost. We then realize how important the financing component is to the purchase. Where are interest rates headed in 2010? Here is what people in the know are predicting:
 
HSH & Associates: rates will nudge closer to 6% than 5%
Moody's Economy.com: 6 percent that sounds about right
Washington Post: 6 percent by the end of 2010
Barry Habib of Mortgage Market Guide: It could be as high as 6.5%
Morgan Stanley:7.5 percent to 8 percent

Related articles:

• Morgan Stanley Sees 5.5% Note as U.S. Faces Deficits
• Investors see mortgage rates rising as Fed wraps up buys

And for a historical view of interest rates the past few decades, see:

• National Average Mortgage Rates - Historical Data
• 30-year Fixed Rate Mortgages since 1971

SO....HOW WILL THIS AFFECT THE BUYER?

Scenario: $500,000 purchase price, 1 % loan origination/discount point, conventional loan,  in Alameda CA.

What is your estimated PITI (principal, interest, taxes and insurance) payment per month?

With a 5 % down payment, the difference between a 5% interest rate today, to the lowest predicted increase up to 6% by the end of the year is $298/month more or $3,576/year.

It used to be that to illustrate how little or insignificant the difference is in prices, we compared them to the cost of a cup of coffee --- that's when coffee cost mere "pennies".

Today, it's a different story. So let's use Starbucks coffee.   A "venti" sized coffee at Starbucks costs about $3.50. So taking the cost of $3,576/year for the difference between interest rates of 5% versus 65, that's 1,022 cups a year or nearly 3 cups a day.

Extended Home Buyer Tax credits

And...let's not forget that qualified buyers may receive tax credits if they are in contract by April 30 and close by June 30, 2010:

• First time home buyer tax credit: $8000 tax credit
• Move up/repeat buyer tax credit: $6,500

Hmmmm .....

REALTOR Magazine wanted to know why sales associates like their broker and their company. I am only too happy to tell them why.

I'm happy and proud to participate.

My broker, Michael Studebaker,  and company gave me my first chance to become a realtor. When no one would hire someone who did not have experience as a realtor yet, Gallagher and Lindsey  in (Alameda CA) not only took in other realtors-to-be like me but also provided a whole curriculum to prepare us. We had classes, guest speakers, case studies, and more. They provided training that helped us pass the mandated tests and get our licenses.

My broker frequently invites different people to present during weekly sales meetings. Guests have included real estate accountants, real estate attorneys, city officials, school superintendents, developers, community advocates. With their help, we stay in tune with the community, keep up with development in the real estate industry, and become better informed and knowledgeable --- and hence, better serve our clients and become better members of our community.

Additionally, he holds regular classes on many topics. During regular brown bag lunches, we have an opportunity to share ideas (or vent if we need it).

My broker is eager to embrace new ideas, and encourages us to pursue other ways to market our services. He searches and employs technologies like Docusign and efax, and implements use of various marketing techniques via Vflyer, craigslist, etc. He hooks us up with webinars such as those hosted by ForeclosureRadar.com; shows us how to utilize market metrics/charts we can pull up using Clarus; teaches us how to get connected via Facebook, Twitter, YouTube, Zillow and Trulia.  From time to time, he will even pay for classes like e-PRO, and seminars that we attend such as those by Inman. He subsidizes programs ---- for example, every one of us can customize and enhance our listings on REALTOR.com. Like a proud parent, my broker's focus is on education.

Thus, our team is constantly evolving, learning....we do not stand still.

We are encouraged to be active in community programs, and we do. Some are active soccer coaches. Some participate in Habitat for Humanity and Meals on Wheels. We host Frank Bette Art Center  art exhibits at our office. We volunteer during community events. Every Christmas, the company goes all out to "adopt" a needy family. The spirit of giving is alive and well.

One can walk in our office and can immediately feel the very strong spirit of camaraderie and care. We are all willing to help and look out for each other. Where else can one say, with sincerity, "We've got your back" ?

This is a great place to work!

In case you missed this....The Washington Post published the winning submissions to its yearly neologism contest, in which readers are asked to supply alternate meanings for common words.

The winners:

      1. Coffee (n.), the person upon whom one coughs.

      2. Flabbergasted (adj.), appalled over how much weight you have gained.

      3. Abdicate (v.), to give up all hope of ever having a flat stomach.

      4. Esplanade (v.), to attempt an explanation while drunk.

      5. Willy-nilly (adj.), impotent.

      6. Negligent (adj.), describes a condition in which you absentmindedly answer the door in your nightgown.

      7. Lymph (v.), to walk with a lisp.

      8. Gargoyle (n.), olive-flavoured mouthwash.

      9. Flatulence (n.) emergency vehicle that picks you up after you are run over by a steamroller.

      10. Balderdash (n.), a rapidly receding hairline.

      11. Testicle (n.), a humorous question on an exam.

      12. Rectitude (n.), the formal, dignified bearing adopted by proctologists.

      13. Pokemon (n), a Rastafarian proctologist.

      14. Oyster (n.), a person who sprinkles his conversation with Yiddishisms.

      15. Frisbeetarianism (n.), (back by popular demand): The belief that, when you die, your Soul flies up onto the roof and gets stuck there.

And the pick of the literature:

      16. Ignoranus (n): A person who's both stupid and an asshole.


The Washington Post's Style Invitational also asked readers to take  any word from the dictionary, alter it by adding, subtracting, or changing one letter, and supply a new definition.

      This year's winners:

      1. Bozone (n.): The substance surrounding stupid people that stops bright ideas from penetrating. The bozone layer, unfortunately, shows little sign of breaking down in the near future.

      2. Foreploy (v): Any misrepresentation about yourself for the purpose of getting laid.

      3. Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period.

      4. Giraffiti (n): Vandalism spray-painted very, very high.

      5. Sarchasm (n): The gulf between the author of sarcastic wit and the person who doesn't get it.

      6. Inoculatte (v): To take coffee intravenously when you are running late.

      7. Hipatitis (n): Terminal coolness.

      8. Osteopornosis (n): A degenerate disease. (This one got extra
      credit.)

      9. Karmageddon (n): its like, when everybody is sending off all these really bad vibes, right? And then, like, the Earth explodes and it's like, a serious bummer.

      10. Decafalon (n.): The grueling event of getting through the day consuming only things that are good for you.

      11. Glibido (v): All talk and no action.

      12. Dopeler effect (n): The tendency of stupid ideas to seem smarter when they come at you rapidly.

      13. Arachnoleptic fit (n.): The frantic dance performed just after you've accidentally walked through a spider web.

      14. Beelzebug (n.): Satan in the form of a mosquito that gets into your bedroom at three in the morning and cannot be cast out.

      15. Caterpallor (n.): The color you turn after finding half a grub in the fruit you're eating.

 

Good payment history and credit score of 820 don't mean a thing

Homeowner is current on her payments. Was late just once, and paid the late fee. Her most recent credit score is 820. Being self-employed, her income dropped the last year, while her adjustable rate re-set and increased by nearly $500/month.

She applied for loan modification. Completed her paperwork. She indicated she wants to keep her home,  but is asking for relief, and hoping her monthly payments will be adjusted to give her some breathing room.

Application denied!

Loan modification respondent denied her request, said that the homeowner doesn't make enough money to cover her mortgage. Adding salt to her wounds, the respondent told her to do a short sale.

That's it. No further discussion. No effort to do a work-out plan even on a trial basis. No review of the financials. Although the homeowner had a good track record and her payments are current, it didn't matter.

There seems to be a lack of sensitivity and finesse from people who receive and handle loan modification applications.

Any suggestions?

What next? With the proliferation of do-it-yourself and hire-a-loan-modification-expert information on the net, this homeowner is unable to decide which lifeline to grab.

Will begging work?

Headline: Government Mortgage Plan Aids 7% of Borrowers

"The rest will either won't send back all the required documents or will be deemed ineligible according to the government's formula."

Headline: Flaws plague foreclosure relief program

What is the government's formula?