Your Local Lenders may serve up the tastiest Loans!

Shop your local Lender market Local Lenders may serve up the tastiest loans.. 

Local Lenders may be the answer for Borrowers..

I always ask all my Short Sale potential Buyers to be pre-approved by a local Lender, Franklin Loans.  I receive nothing extra from this, I get nothing from this referral other than the knowledge that the Buyers can qualify for their Loan through a Local Lender that I have worked with for many years.  Local Lenders have an eye for the local market.  If you’re an out of state or out of town or out of country borrower, it’s not as important to you perhaps, but if you do live locally, a local Lender can often really help you out.  If you have an extremely high credit score..again not as important, but so many Buyers now have dings, lower credit scores due to a Short Sale of their own in their past, a job loss or transfer..any number of variables…

Local Lenders tend to place more weight on factors other than credit score when assessing loan applications (from REALTOR mag.)  They look at how long applicants have been with their current jobs, how often they make deposits into their savings, do they have a history of late payments, of over drawing their checking, and many other factors.  This can often tell them more exactly whether or not this potential borrower can truly afford the Loan payments.  So..if you’re looking locally, why not shop around and use a local Lender that has been servicing and under-writing loans in your market for years?  You might be pleasantly surprised!

Short Sale, Foreclosure, REO; What’s the difference?

Short Sale VS Foreclosure confusion Short Sale & Foreclosure confusion.. 

Short Sale, Foreclosure, REO; what’s the difference? 

Wow has our world of real estate changed!  Most dramatically since 2007 when the term “Distressed Properties” started appearing in the media.  What the heck did that mean?   Your house was distressed?  It didn’t feel well, it’s plumbing was whacky?  What exactly was everyone talking about?    Most everyone now knows that the term “Distressed Properties” encompasses Short Sales, Foreclosures and REO’s..properties that are distressed because in the current market, the homeowners are upside down on their mortgages (owe more than they are valued at), and this causes the property to become “distresssed”.

A Short Sale is not something that I would wish on anyone, yet it is certainly the lesser of two evils when compared to the Foreclosure.  The biggest plus of a Short Sale VS a Foreclosure is NOT a lesser impact on your credit score.  That MAY occur if I can get the deal closed in 4 months or less.  But no matter how diligent I am, I cannot make the Lenders or my negotiator work any faster than they want to..and that sets the timeframe.  However..now that there is a history of Short Sale VS Foreclosure data out there, it has become apparent, that a Short Sale on your record vs. a Foreclosure is clearly different. 

 Should you go apply for a new Loan, the Lender looks much kinder upon a Short Sale (it shows that you took action BEFORE the lender had to repossess the property or sell it through auction).  Lenders will look at a home buyer with a Short Sale on their record for a new loan within approximately 24 months.  A Foreclosure is probably going to shut that door for approximately 7 years!  Fantastic reason alone to stick it out with a Short Sale.

SHORT SALE:  Before Auction.  Owner’s Lender agrees to sell the property for less than the amount owed against the property.

FORECLOSURE:  Before Auction.  Owner has stopped making payments, Lender has given notice of intent to sell at Auction unless payments are brought up to date.

REO:  Real Estate Owned.  Foreclosure property bought by the Lender at Auction when no other bids satisfied the Lenders’ note.  Lender normally sells these properties through their REO division, or a Broker.

In our Valley through 2010, approximately 50% of home sales were “Distresssed Properties”, so they are having a definate affect on our market.  It has been interesting to watch Short Sales move through certain neighborhoods of our Valley cities.  From the first Short Sale in a neighborhood approx. 4 years ago to today..there are fewer and fewer and more and more standard sales happening.  Are the markets appreciating?  Very few..but they are no longer depreciating in many, many neighborhoods and that’s a great sign.

A true Short Sale Story; this happened yesterday..

short sales can wear you out Give in to Short Sales! 

A True Short Sale Story; this happened yesterday. 

Chase may be one of the first ‘BIG’ lenders in 2011 to start digging into their Short Sale Cases and trying to figure out what to do to unload more of their non-performing assets..hmmm..what a novel idea!  They now have a “Pre-listing” team.  This means that Short Sale List Agents, can actually contact them BEFORE the home is active, and get the Short Sale ball rolling.  I haven’t done this yet, but am looking forward to trying to figure out this latest attempt to speed things up in 2011.

Something very interesting and unusual happened yesterday with CHASE.  I got a call to ME on my own personal CELL from a CHASE negotiator.  She didn’t have any of my files so it wasn’t anybody that I had been working with.  She was calling me on a Short Sale that CHASE had turned down in October because “your Seller is not in a Financial Hardship”.  On this particular file, I had brought them an offer approx. $20,000 ABOVE market value (CASH), and my Seller was bringing $10,000 more CASH to the closing.  As most of you know, if CHASE turned the deal down, the home (vacation) goes forward to the Foreclosure Sale.  My Seller turned off all utilities, pool and landscape maintenance, and stopped paying HOA’s.  Why should they continue to maintain a home, hoping to Short Sale it, when the Lender has determined that the home would be better off vacant, rotting and open to Vandals as it heads to the Foreclosure Sale???

So..to continue my story.  This negotiator asks me if my Seller would like to Short Sale this SAME home!  CHASE has apparently, “changed their guidelines for hardship”, and would like me to Short Sale the property.  Could this perhaps have something to do with the Foreclosure mess, (where IS that original note, Mr. Lender?), or has CHASE simply written off this loan as of December 2010, paid their CEO’s their Bonuses based on the inflated note values in their 2010 portfolios and are now willing to dump these properties without the hassle of foreclosure?  I’m just saying…

So..my Seller says “yes!”  I call the Buyers’ Agent, who, bless her, has already written 3 offers with this buyer on this home..each lower as time progresses.  She writes an offer $15,000 lower , (way to go CHASE!), and we’re off and running. 

That’s one file..then I ask this same mysterious and wonderful voice on the phone to check another rejected CHASE Short Sale for me.  One loan, primary Res, an egotistical maniac for a negotiator who would NOT order a new BPO even though his came in $125,000 ABOVE market value, and bless THIS woman..she looks at my next file.  “yes,” she says.  I agree.  (I almost stopped breathing at this point..who IS this woman?)  I will order a new BPO for this one, and we will keep this offer active and continue to work this SHORT SALE. 

 ”Understand,” I tell her. “My Seller is so disgusted, that she will NOT deal with this same negotiator, and if he is assigned to the file, you can pick up your keys on the front porch of ANOTHER abandoned home.” 

“This call is being monitored so I cannot respond to that comment, but I assure you, this Short Sale will be assigned to a different negotiator.” 

OK..so that’s TWO Short Sale files that were stuck in the Short Sale bank mud, and are supposedly moving forward again..fingers crossed, and eternally hopeful..I begin my daily follow up on my Short Sales with two NEW (not really) files..keep you posted…

Ten things that irritate Real Estate Clients..

Rage at the Realtor Rage at your Realtor? 

 Here are 10 things that frustrate, irritate, and infuriate Realtors’ clients:

1. TARDINESS.  Being late is stealing the Client’s time–not to mention erroding their confidence.

2. FAILURE TO RETURN PHONE CALLS, IGNORING their needs & concerns, and spending EXCESSIVE TIME handling OTHER BUSINESS, and chatting on the phone with friends & family while in their presence.  When I’m with a live human being, I let my phone go to voicemail..period!  Call them back later..

3. OFFENSIVE LANGUAGE.  Language you cannot use in front of your child, your minister, your grandmother, or Nun IS LANGUAGE YOU SHOULDN’T USE.

4. LACK OF PREPARATION is obvious, offensive and costly.  It screams “This woman doesn’t think I’m worth the effort!”

5. CONSTANT SELF-PROMOTION is not professional, and CRITICIZING YOUR COMPETITOR is unacceptable.  My Clients want to know I am confident and competent, but beating them over the head with my resume, experience, credential, etc., IS JUST PLAIN BORING!

6. TALKING DOWN TO THE CLIENT is a BIG MISTAKE–implying that you know more than them is never good.  My job is to educate and guide my clients, but Buyers and Sellers are no longer ignorant of most aspects of the housing market.  The Internet has changed that.  People can check out almost anything via the Web..expect it.

7. MAKING PROMISES YOU CANNOT KEEP.   I  promise EFFORT, HONESTY and ATTENTATIVENESS TO MY CLIENT’S NEEDS, and I keep that promsie.  I do not promise closing dates, easy moves, and smooth closings; a good ways to get egg on my face. 

8. DIVULGING CONFIDENTIAL INFORMATION [about the client or another party to the transaction]. 

9. ‘Be Slow to Speak” when it comes to expressing CRITICAL & JUDGMENTAL COMMENTS.  Remember your grandmother’s advice:  “If you can’t say something nice about someone, then don’t say anything.”

10. Learn to LISTEN.  This is the biggie.  LISTEN.  Hard to do, but clients will always reveal what they want if I can just LISTEN.

(Courtesy of R. Fred Cope via Activerain)

“Standard” Sales should pick up in 2011

short sale predictions

Happy 2011 for Sellers!

Past is prologue, they say. And that’s certainly true when looking forward to what the housing market will hold for home sellers next year. WalletPop’s predictions for sellers in 2011 are:

1. More Distressed Homes Come on Market, but ‘Regular’ Deals Have Cachet

The number of homes repossessed by banks dropped off pretty dramatically at the end of 2010, partly because of the robo-signing foreclosure freezes, and partly because the average time between initial mortgage default and foreclosure has stretched out to as long as 16 months in some states, 22 months in others.

Lenders appear to have slowed the rate of foreclosure filings in an effort to:

  • avoid responsibility for carrying the costs on some foreclosed homes
  • let soon-to-foreclose homeowners take care of their homes
  • avoid flooding the market with foreclosures

Most of the voluntary foreclosure freezes have now been lifted (exception: JPMorgan Chase), so we’ll start to see those homes with temporary reprieves come back into the foreclosure funnel.

Short sales and foreclosures will continue to constitute a large number of the homes being sold. Foreclosures and short sales made up 25% of the homes sold in the third quarter of 2010, which was a 25% decline from Q2, and a 31% drop from the third quarter of 2009.

At the same time, foreclosure activity–the homes which received notices of default and have their homes scheduled for foreclosure auction–rose in 65% of U.S. real estate markets. So next year, we’ll see an uptick in the numbers of foreclosures that make it onto the market for sale. (Fortunately, the numbers of new defaults are down, which assuming the job market also improves, could mean a deeper, overall market recovery coming down the pike–but way down the pike, like 2012.)

Those planning to sell their homes in 2011 should know that foreclosures and short sales will still be around, maybe even in larger numbers than they are now. And they’ll still be offering deep discounts; in fact, the most recent numbers show that the average foreclosed home sells for 32% less than the average non-foreclosure.

The saving grace? The robo-signing scandal has made buyers fear that they may not get a clear title if they buy foreclosures; the crazy delays in getting short sales approved by banks has turned other buyers off from those properties, too. So, individually-owned homes will continue to grow more attractive to buyers next year. But don’t expect them to be willling to pay more for them.

2. Sellers Learn to Manufacture Urgency

Anyone with an eye on the housing market’s ups and downs should feel drunkenly dizzy by now. But the most real hangover in the market this year was the drop-off in buyer urgency and home sales activity that happened after the tax credit expired (for real, this time) on April 30. Every month since then, sellers have escalated their list price cuts, slashing prices like a big box store on Black Friday.

In 2011, only sellers who need to sell will sell, in all but the few stabilizing and rising markets. The trend of sellers getting aggressive about cutting their list prices will continue, and truly serious sellers will begin to simply set prices aggressively low in the first place.

Sellers will continue to ditch the cutesy, kitschy “selling strategies,” like burying religious figurines in the front yard, and will get more extreme about differentiating their homes from the competition. Increasing numbers of home sellers will aggressively prepare, repair and stage their homes for sale, to set their homes apart from the bargain-priced short sales and foreclosures. And more sellers than ever will undertake creative transactional strategies to get their homes sold, from extreme incentives (like the couple who will throw in their Florida vacation condo if you buy their main Connecticut home!) to reverse offers.

3. Condos Become Even More Difficult to Sell

Homeowners’ associations have taken a hit in this recession–big time. When condo owners get strapped for cash, their HOA dues are one of the first bills they put off. And when units are foreclosed, the banks sometimes don’t pay the dues until they resell the place.

The problem: When more than 15% of an HOA’s members are behind on their dues, its unlikely that a lender will extend financing to a new buyer. From there, it snowballs: Units can’t sell (except to cash buyers and investors), the buyer pool shrinks, the values go down, and homeowners feel trapped or, even worse, more inclined to walk away.

Then, as more investors buy units, the harder it gets to sell others to anyone but investors. Why? Because many banks refuse to finance mortgages in a complex that has more renters than homeowners living on-site.

Complicating matters for HOAs are the challenges that buyers have in obtaining FHA approval on condo complexes.

Condo-buyers have relatively lower incomes and down payment reserves than single-family home-buyers, so FHA loans are the mortgage of choice. But the kibosh has been put on many a condo sale by the inability of the complex to obtain FHA approval. And approval guidelines are set to get even tougher in 2011.

The FHA is drawing a line, only backing loans on up to 30% of the units in a complex. If your complex is already at or beyond the 30% “saturation” rate, your pool of prospective buyers will be pretty slim–limited only those who can qualify for a conventional loan, and have 5% to 20% down (not FHA’s 3.5%). Accordingly, already tough-to-sell condos will get even tougher to sell in 2011.

4. Prices Bounce Along the Bottom, With Notable Exceptions

Remember those commercials from the ’70s and ’80s, where the little ball would bounce along the bottom of the screen, atop subtitled lyrics? That bouncing ball presages what housing prices will look like next year; they might be up a tad one month, but they’ll be back down the next. Many insiders are predicting as much as a 5% to 10% decline in housing values nationwide, but it’s tough to be that specific (and be right).

A caution here too: The real estate market is, now more than ever, highly localized. Nationwide data is interesting, but it’s just numbers. What counts is what’s going on in your specific neighborhood.

Some caveats: If the job market takes off and many more jobs are created, wary wanna-be buyers might hop off the fence, and home prices could begin to really recover, for good.

Also, in some of the markets that have had and will continue to have positive job growth and population growth–mostly Southern and Midwestern metros like San Antonio, Salt Lake City, Oklahoma City and Raleigh-Durham, N.C.–home prices will be stable or even on the upswing in 2011.

(Re-blogged from Hot Pocket..and worth it!)

Buyers are looking past Short Sales for 2011..

Short Sale competition 2011 gifts to Sellers.. 

Buyers are looking past Short Sales for 2011..

An interesting thing has been happening to me and my fellow Realtors.  Buyers have become more educated about Short Sales and the process and are looking beyond those properties for their property purchases.  Short Sales still make up approximately 60% of the market, but because of the time involved with the Lenders, Buyers are beginning to include higher price/sf properties in their hunts.  I believe the “deals” are broadening into the Standard Sale markets.

If a Seller purchased their property during the heighth or before, have equity in their homes, and are willing to price aggressively, they CAN compete with Short Sales.  Short Sales are normally priced approx. 10-15% below current market values.  BUYERS, however, are understanding that buying below market in a Short Sale can entail a painful transaction time and a roller coaster ride of emotions.  Many Buyers are now willing to pay the difference (still FAR below peak prices), get a deal, and actually be able to CLOSE on their property!  A novel idea, and one that Lenders will need to look at in the coming year. 

I suspect that 2011 will see a continuation of Sellers reducing their asking prices so that they truly can compete with the Short Sales and Buyers more willing to pay the higher price for a fantastic property.  This bodes well for 2011 in the real estate world…let’s see how the Lenders respond to this new trend.

Short Sale Pricing VS Fair Market Value

Lenders forcing Short Sales to Foreclosure Short Sale Counters; Pushing more Foreclosures? 

Short Sale Pricing VS Fair Market Value? 

This is a real issue for Realtors that handle many Short Sales in today’s market.  B of A, the holder of MORE distressed mortgages than any other Lender, is countering Short Sale offers with “This is below our Fair Market Price Valuation”.  Duh..Short Sales are NOT regular Sales and should NOT be treated as such. 

Realtors should not put prices on their Short Sale properties that are undervalued by more than 10% of the OTHER Short Sales selling.   Even REO’s (Foreclosed) properties are different than Short Sales because the Buyer KNOWS when they can close and what the terms will be with the Lender..big questions for Short Sales.  However, to insist on Fair Market Value (which is NOT distressed property) is insane and will push even more properties to Foreclosure.  Perhaps that is the intent????  Please see below for definitions that will help clarify this..

Short sales are NOT FMV.  Short sales are distressed and liquidated assets with a slashed marketing time.  They are not FMV properties.  FMV properties are properties where the seller can wait all the time in the world to take an offer, have no compulsion to sell, can offer warranties/etc., as the previous poster said.

Short sales are based on liquidated value.  They are not the same thing.  Short sales have less marketing time, distressed, and the homeowner has a distinct compulsion to sell. 

Unfortunately, lenders are asking agents for FMV assessments on short sales and it’s impossible.  They are two different things. 

FAIR MARKET VALUE
“Fair market value is defined as the amount in cash or terms reasonably equivilent to cash, for which in all probability the property would be sold by a knowledgeable owner willing but not obligated to sell to a knowledgeable purchaser who desired but is not obligated to buy.

LIQUIDATION VALUE: from The Dictionary of Real Estate Appraisal, Appraisal Institute, Fourth Edition: The most probable price that a specified interest in real property is likely to bring under all of the following conditions: 1. Consummation of a sale will occur within a severely limited future marketing period specified by the client. 2. The actual market conditions currently prevailing are those to which the appraised property interest is subject 4. The seller is under an extreme compulsion to sell. 5. The buyer is typically motivated. 6. The buyer is acting in what he or she considers his or her best interest 7. A limited marketing effort and time will be allowed for the completion of a sale. 8. Payment will be made in cash in U.S. dollars or in terms of financial arrangements comparable thereto.
“DISTRESSED PROPERTY” is defined as “real property that suffers a reduction in its market price because of pressures operating on the owner, such as threatened foreclosure, divorce, settlement of an estate, or fear of economic changes that might decrease the value.” (The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD, 2007.) 

It’s impossible to call a short sale a FMV sale because there is a hardship present.  If the homeowner had no hardship and no need to sell THEN you could value it as a FMV property, but short sales aren’t full market value.  They are distressed properties. Most appraisers know the difference between FMV and Liquidated value.  This is why BPO’s are critical…

Bad Credit? No problem…

short sales, strategic defaults..no problem Lenders gifts to you..more credit! 

Bad Credit? No Problem  (Courtesy of the New York Times)

Homeowners who are hopelessly underwater on their mortgages are often warned of the perils of walking away. Their credit will be destroyed. They will never be able to borrow money again.

That is what the banks say.

But they do something else.

In his front-page article on the extension of credit cards to people with blemished credit records, Eric Dash writes:

Industry consultants, in their attempt to feed the demand for finer classifications of borrowers, have coined new labels to describe different borrowers with similar credit scores.

One is “strategic defaulters,” whose credit scores were damaged because they walked away from a home when its value dropped below what was owed on the mortgage. These borrowers made a bad bet on real estate but may otherwise be prudent risks because they make a good living.

And so the banks will give credit cards to those people. They can often get higher fees and interest rates from such people, and therefore higher profits.

In other words, let bygones be bygones.

Well, not completely.  Eric tells me that most banks won’t give credit cards to people who defaulted on mortgages issued by that bank.  But if the loser was some other bank, why hold a grudge?  This you have gotta love!

I have been saying for the past 3 years at least, that the credit rating system is going to have to change..who’s going to buy homes if it doesn’t???  All my clients with Short Sales, Loan Mods, Defaults..as long as they keep up their other credit payments..Voila!  Watch their scores go back up within a year..bet they can buy again in a much shorter period than the threatened 3-7 years..

Real Estate Reality; Nobody wants to take Responsibility.

short sales are a real estate reality real estate reality 

Real Estate Responsibility; Nobody wants to take it! 

It is a hard time for property owners right now.  What to do?  Who to ask?  Who to Listen to?  It seems that taking responsibility for our past decisions, their consequences, our current choices and their consequences is something all of us could become better at.  It’s REALLY hard to admit you’re wrong..or were wrong about a past decision.  “Wrong” is a difficult word to say along with “I was”..almost painful for so many of us.  I wonder why?

Admitting we’re wrong means we have to look at ourselves.  Yikes..there’s a problem.  It’s so much easier to go along each day NOT focusing on ourselves.  But is easier the better way?  I don’t believe so.  Confrontation is painful when you’re doing it, but what a relief when it’s done!  That’s it!  Take the longer, more global view by accepting responsibility for your actions, remembering their consequences, learning from them and then trying to react differently the next time a similar situation comes up. 

Real Estate is just one small area where we can ALL accept responsibility for our own decisions.  I had to look at the home I’d purchased in 2004, then refinanced in 2006.  My experienced Lender and friend, couseled me, I took his advice, BUT..ultimately, it was my own fault for accepting his recommendations and going forward with the paperwork.  So..the house depreciates more than 50%, I’m underwater, I panic, stress out and don’t sleep for approximately 1 year and then what???  Ah-ha!  Stop crying! Look at the REALITY of the current market (for me, this was 2008), do some extensive research and then make a decision and live with the results.  I did, and immediately felt the relief of a plan take shape.  There is NOTHING more stressful than living in the ether world of grayness and indecision.  As Cher said in the movie ‘Moonstruck’, “Snap out of it!!” Continue reading

Short Sale Hardships..who cares????

Lenders need to accept the Short Sale gifts..Short Sales are gifts to Lenders

Short Sale Hardship..who cares??? 

It would seem sensible that in this current housing mess, the Lenders would be..well, sensible.  Not so.  Understood by all of us that there were people that scammed the system by using straw buyers, taking out loans that they could not understand or ill afford..blah, blah.  BUT..the fact remains, that every single vacant home drives the values of neighborhoods even further into decline.  SMARTEN UP LENDERS! 

The Lenders will eventually loosen their “hardship requirements” for Short Sale approval.  Any dummy can see that..there is no other way to keep occupants in their homes, utilities paid, pools maintained, landscape up, and vacant home numbers down.  Are they there yet?  No.  I actually had a CHASE short sale declined last week because the “Seller obviously wasn’t in hardship because I can see right here that she used her charge card to buy something at Victoria’s Secret.”  Excuse me????  And you care because????  Oh, that’s right..it’s a moral thing.  Get off your high horse and use your brains.  When a Seller is not in huge financial distress, but their property has dropped 50-75%, it is now a non-performing asset.  What smart investor/owner/human alive would continue to throw money at it in this economic world?  I asked the negotiator that and he was silent…

Why not ask these Sellers to throw in cash to get the Short Sale approved?  My particular Seller was very willing to do just that..still, they chose to send this home to Foreclosure.  That’s smart.  The sale is approximately 6 months away, the Seller has now turned off all utilities, cut off the landscaper and pool maintenance, and let the property manager go..yep, that’s going to really help the value of the residence.  And did I mention that my offer was ABOVE THEIR BPO?  I’d guess the Brains at Chase just left approximately $30,000 to $40,000 on the table..that costs each of us taxpayers money, AND drives down the neighborhood prices AND increases the odds of Vandalism, which further decreases the value.  Good move Mr. Lender. 

Common Sense and Banks NEVER should be put into the same sentences….