Pacita's Quick Bytes of Real Estate: June 2008

Until I became a REALTOR, I didn't realize just how hard being a REALTOR can be ---- and I don't mean physical work, either. It's grueling mentally, emotionally, and yes, physically.

I've always used realtors when I bought and sold my own properties, and now that I am a realtor myself, I have a brand new appreciation for our professional men and women.

When I was trying to describe a typical day in a realtor's life, I found that we have to:

• Keep abreast of legal developments affecting our industry nationally and on a local level.
• Continue taking and completing several educational seminars and courses
• Stay on top of the market activity in our service areas --- buyer's market? Yes, but still multiple offers, too!
• Recognize the trends and when the market turns
• Learn new ways of doing business ---- short sales? Natch!
• Abide by the rules of our MLS boards, and by the Ethics Code for our profession.
• Sharpen our marketing skills --- for example, internet marketing has overtaken print as the most effective way to promote our properties. For folks who were techno-phobic, it is now a matter of survival.
• Stay in good physical shape --- these knees are taxed several times by having to bend to open lock boxes located so low to the ground, go up several flights of steps, put up our open house signs, lug our portable laptops, and keep long hours.
• Bounce back with a smile and new resolve when faced with a rejection. NEXT!
• Be masters of communications when dealing with nervous or upset clients who need constant reassurance and guidance
• Be organized amidst mountains of paperwork, follow ups, return calls, presentations, pictures, multi-media postings
• Have an artist's eye when taking pictures of our listings for posting on the MLS and the internet, especially when there's no time to hire a professional.
• Be creative when preparing promotional materials like electronic and print flyers to attract potential buyers to our listings
• Be smart about our budgeting since we will always have high and low points. We should invest our time and energy in activities that will reap the most rewards
• Practice efficient time management ---- ever hear of the 24-hour realtor?

To my co-realtors, my hat's off to you.

Time and time again, some folks think that buying a foreclosure would be a breeze, and that they can submit a lowball offer. They must have seen, read, heard that they can get foreclosures for 30-50% less than list price. Remember, REO or bank owned listings are at, or nearly at the bottom price that the bank would approve.

I have submitted offers on behalf of several clients who, regardless of what the list price is, automatically come up with prices significantly less than list price.

Before writing the offers, I always give them a brief history of the property, how much it sold for last, what its appraised value is, how much was owed, how much the lender foreclosed, and most importantly, how it compares with other properties that have just recently sold, are pending, or active. This kind of information, I thought, would open their eyes on what a good offer might be.

After several misses --- when competing offers bid higher, or with better terms --- they are beginning to see the light.

The worst one we missed out on was on a nearly new 4200 sq ft house that sold for $1.2M in 2005, and was being foreclosed and listed at $749K. My client insisted on offering $700K even though I told him there were three other competing offers and after I gave him the background on the house. I was surprised when we were countered by the bank at $730K. My client said he will only go up to $720K. Well, needless to say, it sold at $730K to another couple. When my client's wife heard about what it finally closed at, she freaked! This is a couple who could have afforded to pay cash for it if they wanted to.  But for the difference of $10K, they passed on this fabulous house.

It's a learning curve....a buyer's market doesn't mean a low ball market. ALWAYS give it your best shot. You may not get a second chance. So think positive: think BEST and HIGHEST offer!

Good luck, all!

Yesterday, I did what I haven't done in a very long time:present an offer to a seller in a formal setting, and by appointment. I was the eighth to submit an offer on a 3 bedroom/2 bath detached family home by a lagoon in Alameda. And this is a regular sale listed at $750,000.

Although my beautiful island city has not suffered the same drastic fate as other cities reeling from the sub prime crisis, we have had our share of a market softening. Nonetheless, we find that there are serious buyers who are taking a very close look at our city primarily due to its location, excellent climate, fabulous homes, proximity to San Francisco/Oakland, and good schools.

When a home comes on the market and it is priced well, people recognize the value, and bid. Early part of this year, I found myself in multiple offer situations at least three times, one of them on a house that received 11 offers. All three were regular sales.

And what is also interesting is that in many short sales and foreclosures on which I submitted offers in Oakland, San Leandro and Hercules, I am also encountering multiple offer situations.

Knowing this, I always caution my clients that to get a fighting chance, we should always submit our best and highest offer after factoring in the necessary information (comps, market situation, etc).

What is it like in your market?

AGAIN!

Gosh, why is it that some listing agents, upon acceptance by the seller of an offer on a short sale listing, they sound so discouraging when another agent calls about the listing!

Today, I called an agent to get information about his short sale listing. He hemmed and hawed, and said there's already an accepted offer on the property. So I went through a list of questions, starting with whether or not the lender has accepted the offer. The answer is no. They are just now getting ready to send the offer.

Because of his hesitation, I asked him if HE wrote the offer, or if someone from his office wrote it. He said no. So why on earth would he discourage anyone else from showing the property, or write an offer?

I had to remind him that as long as the lender hasn't formally accepted the offer. that if other offer come in that may be even better than the one they have in hand, that he should present that offer, too.

And...as long as the seller hasn't given written instructions that they should no longer accept offers, that they should entertain offers as they come in.

And... that it is to the lender's benefit to have higher offers presented to them.

I guess the answer will always be "It depends"

A couple of my clients are truly struggling to keep up with their monthly mortgage payments and are finding themselves deeper and deeper in the hole (charging daily expenses to their credit cards because they want to reserve their cash to make the mortgage payment).

In another case, a 62-year old retired teacher has spoken with a couple of attorneys, one of whom said he can't qualify for a short sale because he hasn't missed a mortgage payment yet. This may no longer be true. One of my favorite resources is Elizabeth Weintraub's columns, in this case, about "Qualifying for a Short Sale."  She writes that:

"It used to be that lenders would not consider a short sale if the payments were current, but that is no longer the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems at the pass."

Another concern is having assets --- savings, IRAs, notes, stocks, etc. In the case of this retiree, his monthly expenses are more than what he is taking in. Some lenders may not grant a short sale because he has savings....but those savings are getting depleted. It seems to me that this is enough of a hardship. And as such, he should qualify to sell his place as a short sale.

Your thoughts? 

There are so many short sales today that they now consist most of my business, both at the listing and selling side.

Educating clients is a priority. It is an absolute must to set expectations. Since short sale listings take a lot more energy and time than regular listings, I wanted to make sure I have a clear plan or template. I don't want to reinvent the wheel, so I put together a package of info gleaned from various resources for my listing clients.

My package consists of:

• Q & A on avoiding foreclosures to let buyers know there are recourses available to them
• Q & A on how to do a short sale if it's inevitable
• Outline of process (seller accepts, but lender has final decision) and possible timelines
• Cover letter to clients
• Seller's to-do list
  • Financial information (income, expenses)
  • Lender information (loan number, balance, lender address and contact info)
  • Hardship letter samples
  • List of information to back up hardship (2 years' tax returns, 2 recent pay stubs, 2 most recent bank statements)
  • Lender payment coupon
  • Copy of Notice of Default if already received
  • Address and loan/account number(s) for loan(s)
  • Authorization to receive and convey information (authorizing me to call lender on behalf of clients)
• Listing agent to-do List
  • Check list of all forms required for listing agreement and disclosures including Short Sale Listing Addendum (California)
  • Estimated Seller Proceeds
  • Listing agreement forms
  • CMA (Comparative Market Analysis)
  • Marketing Plan
• Information on Mortgage Debt Forgiveness Act of 2007
• Copies of articles about Short Sales

What am I missing?

Have to vent. So frustrated.

FEBRUARY  There's a short sale listing, waterview, that came on the market back in February. Within a week, it went pending (per our MLS, if offer is accepted by the seller, they have to post it as pending within 24 hours). At the same time, the listing agent put in remarks that the seller doesn't want any more offers because they received so many. The MLS showed that the winning agent is from out-of-area (not member of our MLS).

MAY   While waiting for short sale approval, they held some open houses (not to sell the property, but to generate new business). In May, another agent from the same office as the listing agent, told prospective buyers(a couple of my out-of-town clients with whom I have an informal relationship) who wandered into the open house, that he, as an agent with the listing company, can write an offer for them. So they had him write the offer for them, unbeknownst to me.

JUNE  This week, they called me up to see if I can help them find out the status of their offer. They haven't received an acknowledgement, acceptance, rejection, counteroffer. As disappointed as I was, I told them to call the agent who wrote the offer for them. They're not happy with the agent and said they felt misled and that they feel the agent merely wanted their business not for this property, but for another should they not get this one.

JUST CHECKING   Since I have another client who expressed an interest in this property but was discouraged from writing because the confidential remarks stated no more offers would be entertained as of February, I did some checking. I found out from the assistant of the listing agent that indeed, they entertained another offer in May, and that the winning offer was from one of their agents --- this is contrary to what is shown on the MLS. I called the listing agent, and he was rude, told me that that whatever shows up on the MLS is correct,  but the MLS shows it was sold by an out-of-area agent.

VENTING    So, what this tells me is that they stopped looking at offers in February, but when one of their agents submitted an offer in May, they entertained it! So what about the rest of us agents who wanted to submit offers in between but were told we couldn't?

Interesting article from New York Times. Thought this would be cause for thought and amusement.

http://www.nytimes.com/2008/05/31/business/yourmoney/31money.html?ex=1213070400&en=689e01eef8031ac2&ei=5070&emc=eta1

BUSINESS / YOUR MONEY   | May 31, 2008
Your Money:  Negotiating for a House? Start With 'Dear Seller'
By RON LIEBER
A sample letter that buyers who fear overpaying might send to homeowners and a reply that confident sellers could fire back.

Hi, all.

This is a question we are asked so many times that I'd really like to offer positive answers with links to articles/videos that say it is a good time.

There was a great articel in a February 14 2008 issue of Time Magazine http://www.time.com/time/magazine/article/0,9171,1713483,00.html

But it seems the message is being drowned by continued stories of doom and gloom.

So if you have run across articles and videos that say it's a good time to buy (and not just from NAR), I would really like to have that link.

Maybe we can build a list of such articles that we can post on our respective websites.

HELP?