Archive for month December, 2008

Reality Check #6: For Agents who list Short Sales

Tuesday, December 30th, 2008

Before the end of the year, I wanted to finish my Reality Check series.  I think I have VERY GOOD NEWS for the new year!.


But I think it important to make a remark about the responses I’ve received from this series – like Gene Allen: “Seems like everyone will be  a short sale expert by the time all this is said and done.”


Ladies and Gentlemen, I have to say that there are very FEW experts in short sales in this market.  Recently I have come across several agents who think they know short sales, such as the case of one of my Alpharetta Short Sales.  The client was referred to me by an agent in Illinois.  Her ‘strategy’ was to list the property for 10% below the cheapest in the subdivision, and lower it 5-10,000 every week.


Another case is one I ran across yesterday.  I was looking for a condominium for my buyer in Atlanta.  I found a Short Sale for $20,000 below the foreclosures that sold in the same building, and that agent proudly commented that she had multiple offers on the property.


OK, so you are all going to ask me: And what does it matter?  For me, a lot.  The mentality of many agents that start working in Short Sales is to reduce the price of the property, without studying the area and the subdivision to have a clear idea of how much the lender will be likely to accept in an offer.  Since they do not do this homework, their idea is to get the most offers under that percentage, send them to the lender, and the buyer waits for a month or two without a response thinking that the lender is going to accept it.  When the lender comes back with a counter for more than the listing price of the property, the buyer is so involved in the transaction that he’ll accept the increased price.


If I were the buyer, making an offer for the listing price, and after two months I am told to accept a price higher than the listing price, I would not buy that property.  Why?  Because I would feel like I was being scammed.  Nor would I ever work again with the Agent “representing” me, the one who involved me in this transaction.


If I as the buyer have the option to choose between several equal properties (such as a cluster home, townhouse, or condo) on the market, and I have to wait for months only to have the price increased on me, I would rather buy one of the foreclosures where I don’t have to wait for months for a transaction that is never going to happen.


Now: do you think the agent that listed the Short Sale was really helping their client?  Acting in their best interest?  How many of these offers have a realistic chance to work?  Lenders pay for appraisals and BPOS, and if the numbers do not make sense, they foreclose anyway.


Negotiators have way too much work to review all the offers submitted by agents who follow this shotgun strategy – especially when those offers do not make sense.  It is difficult to sell Short Sales, and these kind of agents are not helping the market at all. 


Let me know your opinions, now that we know we are going to all be experts…  Or maybe just a little more realistic about the market, lenders, and short sales.



Opportunity to Refinance

Tuesday, December 23rd, 2008

While I am a Short Sale Specialist, I am the first one to tell you that a Short Sale may not be the right answer for you.  As a matter of fact, one of my posts a while back talks about 6 alternatives to Short Sales.  On the top of the list of alternatives to a Short Sale is to refinance your home.  If you have any chance of being able to do so, right now is probably the best possible time.  Some rates are as low as 4.5%.

On the other hand, those incredibly low rates require pretty good credit.  If you are considering a short sale, those rates may be out of your reach due to your credit score.  Talk with your lender and see what they can do for you.  If you don’t have one, give me a call and I will put you in touch with one or two that will try to help. 

If that does not work, these new rates may give you a little more leverage in attempting to renegotiate the terms of your existing mortgage.  Again, if there are any options that can keep you in your house and prevent you losing it or further damaging your financial future, that is the option you want to pursue. 

Let me know if none of these options work for you, and I will help you consider a Short Sale.  If you do manage to use this time to solve your financial dilemma, leave us a comment here and leave some hope behind for others in this holiday season.

Good Luck

Reality Check #5: Are they giving houses away?

Monday, December 15th, 2008

A week ago, I was working on a Short Sale in Sugar Hill, GA in which the Seller did not have any equity and the fair market value of the house is $140,000. This house had not did not need significant repairs and was in good condition.

I received an offer, which requested a reply.  The offer was for $40,000.  By law, I have to present this to my client.  But isn’t it incredible that Buyers think that banks are giving away houses?  I had already begun the short sale process on this property with another, higher offer, and I’ll tell you how the story ends in January, when we close.

When working with buyers who want a ‘deal’, I ask them first what for them means a ‘great deal’ because if for them it means that the bank is giving away houses, my idea of a great deal is completely different.

For me, a great deal – especially when I am representing a Buyer – is giving them the opportunity as a Short Sale Specialist giving them my expertise and knowledge to find a property which is below market value, which will appreciate in two years or less, and in which my client can have a good equity in that same period.

But I still haven’t found the waiting line where the bank, just because I’m so nice, will decide to give me a house.  If any one of you out there know where that line is, please let me know.  I have several clients in distress that would love a house for the next few months.

I realize that 2008 and 2009 are the years of opportunity, but these opportunities are made by people who want to work hard and make a difference.  Not for those who want to make themselves rich in a day.  Or maybe I’m the one mistaken, or in the wrong line. 

Share your experiences with me and let me know how mistaken I may be.

Reality Check #4: Real Estate Agents and Short Sales

Thursday, December 11th, 2008

It is incredible how many times I get a call from an agent in Metro Altanta, and when they hear that the property is a Short Sale, they decide not to show it.

Ladies and Gentlemen, I would like to share with you that Short Sales are a great way to continue in this market as a Real Estate Agent, either helping a seller in financial distress or motivated buyers with their next dream home.

Sellers will become clients for life, when you are there at their side helping them through their toughest time ever.  Buyers are also going to be very impressed with your ability to help them walk in with equity in their dream home from day one.  And most important, you will be able to continue your business as an agent – which is my passion and way of life.  The market is showing us that there is a time for competition, and there is a time for us agents to get together and cooperate. 

By the way, statistics show that after this Foreclosure madness, Lenders are getting ready to shift all their energies to the Loss Mitigation Departments due to the fact that Foreclosures are not working – too much money has been lost already.  2009 is going to be the Short Sale year, whether or not you make the shift with the market and are ready to represent your buyers in the best ever market to buy houses.  I will be working with each of you as a professional on the listing side, and it will be my pleasure.

Reality Check #3: Great Offers, Stubborn Lenders:

Sunday, December 7th, 2008

The reality is that lenders lose millions daily with foreclosures, but not that much with a Short Sale process.  We, agents that work with Short Sales, are adding a small drop of help to all this financial mess in which we are living now.

In the month of November, I received an offer on one of my Short Sales in Cumming, GA (Forsyth County) which had great numbers for the lender.  After sending my Short Sale packet, and going through the BPO process, etc., the Negotiator for the lender called me and told me the number for their ‘final counter offer’: Full Payoff.

The builder had not finished the subdivision.  They are selling NEW construction for far less than the negotiator was asking, less than the buyer had offered.

At the end of the day, the buyer decided to withdraw the offer.  When the lender understood his mistake, he offered to accept the original amount from the buyer’s offer. 

Too Late…  When I tried to call buyer’s agent again to revive the transaction, he was very frustrated and not very cooperative.

Agents and Buyers, I share your frustration.  My advice is that even though the lender is aiming that high, please understand that most of the time the people who have been assigned to a particular file have not been in that position for very long.  Usually it is 6 months or less.  If you are patient and are sure you have made a fair offer, stick with it for a bit longer.  The lender will understand that they need a reality check.

At the end of the day, if we AGENTS work on our client’s best interests, we close more transactions, and I said to this particular Agent: Christmas would be a better holiday for everybody.

Reality Check #2: Stubborn Lender Aims for Full Price

Wednesday, December 3rd, 2008

During the first week of November, I received a call from a lender with whom I had been trying to do a short sale on a property in Gwinnett County, GA.  I shared certain interesting facts with the lender about the subdivision.

1. The subdivision, as originally planned, would have 45 houses.  Only 24 had been completed.
2. The last 3 builders in that subdivision filed for bankruptcy.
3. Three brand new houses were for sale as foreclosures between 50,000 and 70,000 lower than their original price because the builder gave up and they still have not sold.

I had given them an offer from a buyer who was willing and able to purchase the property.  But this lender called me and told me that he wanted to counter the buyer’s offer with a full price counter – much higher than any of the foreclosures already available in that same neighborhood.  I reminded them that I had already sent the information I shared with you above, and told them that the counter would not be accepted – the deal was not going to happen.

The person from the bank told me that they were doing this counter in order to raise the offer to the highest possible.  I reminded them that I am a Short Sale Specialist with almost three years of short sales under my belt, and this was the best and highest offer they would ever possibly get in this current market.

In the end, the person told me that was their strategy, and to just tell him what the buyer decided.  Just as I predicted to the lender, the buyer terminated the contract and went and bought one of the foreclosed new construction properties in the same subdivision for $100,000 less than the lender had countered.

Lenders: Just how much more do you need to lose in order to recognize a good offer when you get one?  Take it, and don’t let that motivated, willing, and able buyer walk away.

This house is still on the market, and I hope that if I get another offer, the lender will have more sense, be more realistic, and stop throwing away money.

Do you have other horror stories of lenders, buyers, or sellers that needed a reality check?  Leave a comment here and tell us the story.