Archive for the 'Short Sales' Category
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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Is Your Local MLS behind the 8 Ball When Dealing with Short Sales?
July 16th, 2009 categories: For Buyers, Short Sales
Is your local MLS behind the eight(8) ball when it comes to Short Sales?
Mine is and here is why!!
According to my local MLS, all signed contract between buyer and seller must be shown as “Under Contract”.
Here is the problem. Short Sales are not your typical sales between buyer and seller.
Short Sales are contingent upon the “Approval” from a third party “The Bank”. This “Approval” can often take between 3 -4 months.
So what does this mean for the Seller. It means taking the property off the market for 3-4 months, getting fewer showings and this can affect the outcome of a Short Sale.
In my opinion I think my MLS board is behind the 8 ball when it comes to understanding how Short Sales work. In Short Sales your orginal buyer often is not your final buyer but if you take it off the market in order to comply with the board rules you are missing crucial marketing time for the property.
I wish the MLS would change the rules or modify the rules when dealing with Short Sales because as a Listing broker my fudiciary relationhip is with the Seller, not the bank. And as a Listing Broker I want the bank to approve a short sale for my seller.
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Putting the Pieces of A Puzzle together..
July 15th, 2009 categories: Loan Modification, Short Sales
Deciding what to do next about your home is like putting the pieces to a puzzle together.
Sometimes you don’t know where to start. When doing a puzzle, I always start to look for end pieces and work my into the middle.
Sometimes I get stuck and start all over. Sometimes I try to make two piece try to fit when they don’t.
Recently I heard of two separate families trying to solve the puzzle to their home problems by doing a loan modification on one corner of the puzzle and trying to fit a Short sale piece right next to it in the same puzzle.
Doing Loan Modifications and Short Sales together is like forcing two pieces in a puzzle that just won’t fit.
In the end up with an incomplete puzzle.
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Who’s on First?
July 10th, 2009 categories: Short Sales
I am reminded of the comedy routine “Who’s on First” by Abbot and Costello when dealing with the banks on Short Sales.
Today is the second time I have heard from people who say they have submitted a Short Sale package to the bank and they bank has denied ever receiving the package.
When you call the bank make sure they know “Who You Are” and “What the Purpose of the Call is about”
and “Why You are following Up with Them”.
Finally Make sure the bank is not confused as like our friends
Abbott and Costello.
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Unable To Afford an Affordable Home?
June 9th, 2009 categories: Short Sales
Unable to Afford an Affordable Home what next? The Obama Administration and The National Association of Realtors are soon to announce new procedures and uniform process for Short Sales under its new Foreclosure Alternatives Program.
This program will work with borrowers (Homeowners) who do not qualify or meet the minimum eligibility requirements fro the Home Affordable Modification Program.
Before proceeding with Foreclosure, servicers must determine if a Short Sale is appropriate.
Incentives include a $1,000 for servicers who are successful in completing a Short Sale or Deed-in-lieu of Foreclosure. The Homeowner will also receive a $1,500.00 check as relocation expense and another $1,000 to payoff any junior liens on the property.
There will also be Standardized Documents, including Short Sale Agreement and Offer Acceptance Letters. The goal is to make things simple and help speed the Short Sale Process.
Servicers will independently order Broker Price Opinions (BPO) to determine the market value and minimum Net return to the investor.
The Short Sale Agreement will give a minimum 90 days to market and sell the home and up to 1 year in more difficult markets. If the property does not sell within this time frame then the servicer would agree to a Deed-in-Lieu of foreclosure.
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What Goes into a Broker Price Opinion (BPO)
April 22nd, 2009 categories: Bank Owned, Short Sales
The Short Sale review process begins with ordering the Broker Price Opinion (BPO).
A BPO is nothing more than comparing “Apples to Apples” (Single Family to Single Family, Condo’s to Condo’s and Multi-family to Multi-family) and coming up with a “Current Market Value” for the Subject Property.
Three (3) Sales Comp’s are required in each BPO. The bank wants these sales to be within the past 6-months to 12-months. The Sales must be within a mile radius of the subject property and if there are any sales that are sold in “As-IS” condition like other Short Sales or Foreclosures then these should be used first as a Sales Comp. The Bank wants to also know the Last List Price , the Final Sales Price, the Number of Days on the Market, and Financing such as FHA, Conventional for the buyer.
Three (3) Active Listings are required in each BPO. The bank wants Active Listings of other Short Sales and Foreclosures being sold in “As-Is” Condition. These listing should be within a 1 mile radius of the subject property. The Original List Price, Current List Price, and number of days on the market is also included.
Market Conditions are included in a BPO. The average Days on Market (DOM.), description of area as rural, suburban, or urban. Is the market declining, stable, or increasing.
Subject Marketability is describing the negative and positive features of the subject property in relation to the current market conditions.
Estimated Value is based on “As-Is” Conditions and “Repaired Conditions. Market Values will include List price and estimated Sale prices for 60-90 days and another value for 90-120 days.
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Submitting a Short Sale Package
April 22nd, 2009 categories: Short Sales
You have a complete Short Sale Package and now your ready to submit it to the Loss Mitigation Department of the Bank. While you may be happy to get this to the bank…
The Loss Mitigation Department may not be as happy as you.
Each file handler in a loss mitigation department handles about 300-500 Short Sale Files and may look like this..
Because of the number of files they receive they will do anything they can to reject a Short Sale file.
Be prepared it takes a long time to get your file reviewed.
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What is a Complete Short Sale Package?
April 15th, 2009 categories: Short Sales
A complete Short Sale Package will help you get the attention from the Loss Mitigation Department.
Often People do not understand what is to be included in a Short Sale Package. An incomplete file often gets put at the bottom of the pile.
To make sure this does not happen to you, I am putting together information on what is needed to negotiate a Short Sale with your lender.
All Short Sale Packages will only be assigned a Loss Mitigator with a complete package.
| Items | Seller | Buyer |
| Executed Sales Contract | X | X |
| Executed Short Sale Rider | X | X |
| Mortgage Commitment Letter | X | |
| Listing Agreement with Realtor | X | |
| W-2 (Two Years) | X | |
| Pay Stubs (Two Months) | X | |
| Tax Returns (Two Years) | X | |
| Financial Statement | X | |
| Hardship Letter | X | |
| Signed Authorization to Release | X |
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