Archive for the 'Short Sales' Category
Channel 5 News Report on Chase Bank
June 16th, 2010 categories: National News/Local News, Short Sales
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5 Personality Types People when Dealing with Stress
April 8th, 2010 categories: For Sellers, Short Sales
Family Therapist Virginia Satir identifies 5 personaliy types when people are in a stressful situation.
I would say working with homeowners in a Short Sale is definately a stressful situation so I suggest you become aware of these 5 personality types as you will most likely be confronted with them if you are a Short Sale Specialist.
- The Placater:
The Placater will do almost anything to avoid stress. Placaters tend to be a little narcissistic and are concerned about themselves and making a good impression. They feel uncomfortable in stressful situations and will ignore any situation that causes them discomfort. Direct confrontation is most likely not the approach you will want to do with a Placater.
- The Blamer:
The Blamer feels all alone in the world and tend to look to others as the reason for their misfortunes. When Blamers are confronted with stress they tend to feel more isolated, and will often take look to take charge of the situation and bluff their way out of a situation as a way to over compensate for their feelings of helplessness. It is important to make sure your client does not feel alone and to give and share some empathy with a blamer.
- The Computer:
The Computer does not like to show emotions and when confronted with stress will resort to logic and appear to be in control of their emotions when they are really churning mad on the inside. Beware of any explosions or melt downs when working with Computers.
- The Distractor:
The Distractor gets easily confused during stressful situations and will grasp for straws when looking for answers to their stress. You know you are working with a distractor when you scratch your head and ask yourself “Who is this Person”. They often will become someone your are not familiar with and so you must be aware that they too are not sure who they are.
- Leveller:
The Leveller is the ideal person to deal with stress. They like it when they are told things as they are without minimizing the situation. They are comfortable with who they are and can usually manage ambiquous situations. It would be nice if we all had clients who were Leveller’s during a Short Sale.
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5 Stages of Grief in a Short Sale
March 1st, 2010 categories: Ask the "Specialist", For Sellers, Short Sales
As a former Social Worker I am reminded of Elizabeth Kubler-Ross book “On Death and Dying’ and the five stages a terminally ill patient goes through when informed of their life threatening illness.
The five stages she identifies in her book are:
- Denial ( this isn’t happening to me!)
- Anger( why is this happening to me?)
- Bargaining ( I promise I’ll be better person if…)
- Depression ( I don’t care anymore)
- Acceptance ( I’m ready for whatever comes)
As I reviewed these five stages and relate them to Sellers I have worked with or am currently working with I am drawn to how these same stages are exactly what sellers go through when selling their home in a short sale.
Stage 1 Denial:
Many sellers who are falling behind in their mortgage payment often do not get help or seek help because they are in total denial. They often think nothing is going to happen to them even after the bank has sent them the Notice of Default letter.
Stage 2 Anger:
This is a very difficult stage. Many homeowners remain angry through the Short Sale/Foreclosure process. Reports of homes being trashed and appliances missing are usually the signs of people who have a lot of anger and direct this anger onto the property.
Stage 3 Bargaining:
This is the stage where sellers exhibit a lot of ambivalence. They do not want to loose their home and will do almost anything to keep it. Some sellers will contact their lenders and try to negotiate a loan modification while you are doing a short sale. You have to be aware of your seller in this stage because they are very vulnarble and will sabotage any efforts you have initiated because they have not truly accepted the need to sell their home.
Stage 4: Depression:
Sellers in this stage just stop caring about the house and will withdraw from you as their agent. It is important to maintain contact with your sellers during this stage and give them support and assure them that what they are doing is in their best interest.
Stage 5 Acceptance:
This is when you see your seller come out of their shell and begin to prepare for a life after the Short Sale.
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Is the Glass “HAFA” full or “HAFA” empty?
February 26th, 2010 categories: Just "My" Opinion, Short Sales
Will Hafa be a success or failure?
The National Association of Realtors has new numbers on existing home sales for the month of January and they are not good.
The First Time Home Buyer program is due to expire April 30, 2010. How many more months will it last. If home sales are down with the stimulus what will happen when the stimulus is no longer available to new home buyers.
FHA guidelines are changing and many people looking to buy are not going to qualify for FHA loans.
Unemployment continues to be the number 1 problem. If people do not find jobs more mortgage defaults are learching around the corner
Pre-foreclosure (Short Sales) and Bank owned (REO’s) represent 34-39% of all home sales. Yet buyers, agents that I talk to are all frustrated because pending sales are taking too long.
Short Sales can take anywhere from 6 months to a year to close.
On April 5, 2010 HAFA will go into effect. The question is “How many lenders will participate in the program?” Will it streamline the process of Short Sales and Deed in Lieu or just be another beurocracy created by government.
We will have to wait and see if the glass is “HAFA” full or “HAFA” empty.
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Home Affordable Foreclosure Alternative (HAFA) Explained
February 11th, 2010 categories: Ask the "Specialist", For Sellers, Short Sales
Home Affordable Foreclosure Alternatives (HAFA) will begin April 5th of 2009.
What is HAFA?
It is a new Foreclosure prevention program designed to streamline the Short Sale and Deed-in-lieu of foreclosure process.
- Those homeowners who are not eligble for the Home Affordable Modification Program (HAMP) can apply for the HAFA program. Those who do not qualify for HAMP and wish to avoid foreclosure can do so by applying for the HAFA program.
Who is Eligible for HAFA?
- Home owners who are delinquent or in default on their mortgage on their principal residence.
- Loan must have origination date January 1, 2009 or sooner.
- Amount of loan cannot exceed $730,000
- Current mortgage exceeds 31% of homeowners gross income.
What are the Steps?
Borrowers expresses interest in HAFA program.
Servicer has 14 days to determine Net Proceeds they will accept in Bank Directed Short Sale. This amount is expressed as a :
- % of current market value;
- % of list price;
- fixed dollar amount.
Step 2:
A Short Sale Agreement is put into action with a written agreement between lender/servicer and borrower. This agreement shall include:
- List Price/ Allowable Net proceeds to lender
- Guarantee 120 days or greater before lender can pursue foreclosure.
- Homeowner must agree to pay 31% of gross income while Short Sale is being considered
- Maximum Real Estate Commission of 6%. Realtor must also agree that out of the real estate commission a % or $ amount will be paid a third party vendor.
Step 3:
Borrower must provide evidence within 14 days of Short Sale Agreement (effective date)
- A signed copy of a Broker Listing Agreement at Approved List price.
- Information regarding any Subordinate Liens.
- Market the property 120 days or greater
- 3 business days to submit all offers
- Servicer has 10 days to approve all offers.
- Buyer has 45 days to get financing and close
- Borrower has 45 days to move out of the house from date contract has been acccepted.
HAFA Agrees to the following Payments :
- B orrower to receive $1,500.00 for moving expenses.
- Servicer to receive $1,000.00 for processing costs.
- Investor to receive a $1,000.00 back on maximum $3,000.00 paid to all subordinate liens.
Advantages to HAFA:
- No hidden administrative fees can be asked from borrower from servicer.
- The investor must waive all rights to seek a deficiency judgement.
Disadvantages of HAFA:
- Subordinate liens may not agree to $3,000.00 maximum payment.
- Investor owned property does not qualify.
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HAFA Program Explained …
January 19th, 2010 categories: Ask the "Specialist", Just "My" Opinion, Short Sales
The HAFA program is a logical addition to the HAMP program.
My friend Jafer Hasnain of Lifeline Assets has written an article on the HAFA program and I am glad to share his article here on my website.
Thank you Jafer…
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Life after a Short Sale…
November 16th, 2009 categories: Short Sales, Success Stories
As realtors we often talk to past clients to see how things are going and I wanted to do the same with some of my Short Sale Clients.
Following is an email I recently received from one such client..
Hi Jack,
Things are actually going pretty well for me. “The Short Sale was the best thing that happened ” 
.
I am living in my own apartment with my dog in the city. I had a hard time buying a new car because of my credit not my income but my family was able to give me a loan and I am paying them back.
I don’t have any major debts, outside of a student loan and Ihave a comfortable life within my means. Overall, things are as they should be.
I will definitely pass your name if given the opportunity.
Good luck with the blog and I hope you have an enjoyable Thanksgiving…
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Top 2 Reasons Why A Short Sale Never Closes… and How to Prevent it
October 16th, 2009 categories: Short Sales
Here are my top 2 Reasons Why a Short Sale Never Closes and how to prevent it.
Number 1 Reason: ” Seller Ambivalence”
Most people want to keep their homes. This is true of most sellers in a Short Sale.
During some stage in the selling process you will be confronted with what I call ” Seller Ambivalence” . ”
“Seller Ambivalence” is like “Buyer Remorse”. Seller Ambivalence and Buyer Remorse is when second thoughts appear after a commitment to buy or sell has been made.
Seller will do almost anything to sabotage the listing if they are ambivalent. If you find your seller avoiding your phone calls, making it difficult to show, or has called the lender to negotiate a Loan Modification while doing a Short Sale then you must have a talk with your Seller bccause these are signs of Seller Ambivalence.
This talk with your Seller can prevent Short Sales from not closing.
Number 2 Reason: “Wrong List Price“
Critical to any sale today is having the right price to motivate buyers. Short Sales are not immune to this and must be priced right to motivate buyers.
As an agent you must make sure you understand your market, what the BPO price will be for a Lender and understand a buyer is looking to buy a property at a price at or below market value.
The following is an example of a home I think was priced too high, did not sell, and was canceled as a Short Sale Listing.
Subject property:
This house is a 7 Room, 3 Bedroom, 2 Bath Brick Bi-Level home.
List Price: $349,900
DOM: 136 Days (Days on Market)
Cancelled Listing
Market Data:
The market data shows 6 homes sold in the area. 3 homes were Short Sales and 2 homes were Bank Foreclosures. The lowest price home sold was $195,000 and the highest price home sold was $272,500. It is my opinion that the List price for this property should have been somewhere in between the low and high price.
Having the correct list price will prevent Short Sales from never closing.
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Pending Home Sales are The Highest Level Since March 2007
October 1st, 2009 categories: Investing in Real Estate, Market Data, Short Sales
Pending Home Sales are at the Highest Level Since March 2007. Short Sales and Complex Appraisals are causing delays in home sales from closing.
| County | # of Pending Sales | # of Pending Short Sales | % of Total Pending Sales | # of Short Sales Pending 100 + Days | % of Short Sales Pending 100+ Days |
| Cook | 5689 | 1058 | 19% | 700 | 66% |
| Lake | 1039 | 221 | 21% | 169 | 76% |
| Dupage | 1169 | 205 | 18% | 169 | 82% |
| Mchenry | 578 | 156 | 27% | 116 | 74% |
| Will | 1116 | 156 | 14% | 136 | 87% |
| Kane | 820 | 169 | 21% | 135 | 80% |
Summary:
Short Sales represent 14%-27% of all Pending Sales in all five counties.
66%-87% of all Short Sales are taking 100+ days to close.
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Short Sales Could be the Solution to Housing Market Only if..
September 24th, 2009 categories: Short Sales
Campbell Communications surveyed 1,000 real estate agents and found 19 % of all home sales during January and February of 2009 were Short Sales. On average there is one Short Sale for every two foreclosed property sales.
Short Sales are more cost effective than a foreclosure because they avoid the legal expense of a foreclosure, maintenance expenses, and interest and real estate tax expenses. In addition, Short sales can be completed with less marketing time and exposure to price fluctuations in the market.
Short sales also are better for the seller. The seller will not have a foreclosure on their record and often are fore given of the debt after the sale.
If Short Sales are so good why are we not doing more of them.
According to Campbell Communications, for every completed short sale, three fail due to slow responses to the offers.
It is not uncommon for short sales to take a minimum of 5 months to get a response or acceptance from the bank.
Why does it take so long to get a response. For one thing, the Banks are usually not the decision makers in a Short Sale. Banks typically are only servicing the loan and need approval from the investor.
If Short Sales are better than a Foreclosure then here is my solution to the problem.
Take banks out of the equation and stop rewarding them with money incentives.
If banks are not the decision makers in Short Sales then why reward them with cash.
I suggest we set up another review process for Short Sales.
buyers, seller, lender, and investor, and the Fed need to be part of the process.
Why the Fed?
The number one problem with Short Sales is Investors do not want to take a loss on their investment.
(The loss is the difference between what is owed on the mortgage and the price being offered in a Short Sale.)
In order to get more Short Sale approvals the Fed could guarantee the loss to the investor.
When the Short Sale is finally approved by all parties then they must perform or be in default.
If buyers default then they could be loose their earnest money. If sellers or lenders default then buyers could sue for specific performance.
Finally, Short Sales could become the Solution to the Housing market only if we take necessary steps to change how it is currently operating and streamline the process.
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