Archive for the 'Buyers' category

“This House Has Not Been Stigmatized As a Foreclosure” (Yet):

Tuesday, June 15th, 2010

In the past 6 months, I have found more and more cases where the BPOs and Appraisals that Loss Mitigation Departments are receiving are higher than foreclosures in the same area – and even in the same subdivision.

I have a client who is working on a Short Sale with one of the Big Banks.  The bank sent me an appraisal on the property, after I submitted the one and only offer I have received for this property in six months.  The negotiator came back and countered the offer asking for $35,000 more than the buyer was willing to pay.  Not surprisingly, the buyer dropped his offer and I was at square one again.

I contacted the negotiator and asked her how it was possible to have an appraisal $35,000 higher when her own company has a foreclosure property under contract in the same subdivision for $35,000 less than the appraisal claims this house is worth.  She stated that the Appraisal showed a higher value because the house had not been “stigmatized” as a foreclosure yet, and the tax records show that the foreclosure is a few square feet larger than the Short Sale.  The loss mitigator stated that they would not review any offer below the appraisal’s number, and I needed to increase the listing price to match it.

Two months passed, and a new negotiator has been assigned to the file.  I shared the same information adding that yet another house foreclosed by the same bank has already closed, and both the foreclosures are less than the $35,000 additional that the bank is asking any buyer I receive to offer for a short sale on my client’s house.

In the Real Estate market we are enduring in Georgia, it is like pulling teeth trying to keep a buyer happy during a transaction that involves a short sale.  It is even more frustrating when you are competing with foreclosures and a 6 month long process to close.  I cannot count the number of times I get a call from a buyer’s agent asking to see one of my properties now, and when they find out it is a Short Sale, they do not bring their buyers.  They just skip those houses.

So where is the real stigma?

What are you looking for? An Agent or an Advocate?

Monday, May 11th, 2009

Last week I closed on a property located in Loganville, GA, representing the buyer.  The property was brand new construction; the bank had foreclosed on over one-third of the subdivision.

 

Even though it was a foreclosure, the bank agreed to pay for:

$5,000 in closing costs

$   480 for a home warranty

$   330 for HOA transfer and assessment fees

$   300 to install two new windows that had been broken

$   400 for a termite bond

 

As we were closing, the attorney saw those numbers on the HUD and told my client that he might have had a good advocate in the process, and my client agreed with him.  When the closing had ended, the attorney turned to my client and told him that he had closed that morning on a house in the same subdivision, with the same floorplan, for a price $35,000 higher than we were paying.

 

In these times where everyone is counting the pennies, you need to look not just for an agent who will represent you, but for an advisor who will advocate in your favor during the whole process.  One who will help you to purchase your dream home while looking out for your best interests.

 

I would like to earn your business by providing you with that same level of service, and have a client for life.  What do you buyers think of this kind of service?  Leave us a comment here and tell us what kind of service you are looking for.

President Obama’s Housing Plan

Wednesday, March 11th, 2009

On March 4th, President Obama laid out some of the details of his Homeowner Affordability and Stability Plan.  It is mostly aimed at people who already bought their homes.  It has two large components: one to help those who cannot pay their mortgages and are already behind, the other to help those “under water” who have a home worth less than their mortgage.  A smaller part of the plan is to extend and change the first-time home buyer credit.  As with most bailout policies of the last year, this one has its share of proponents and antagonists.  Without discussing the appropriateness of the approach, I would like to take a moment to point out the benefits for you, depending on what group you belong to.

For those behind on their mortgages and unable to get current, the idea is that you talk with your lender to see if you can qualify for the government plan.  The lender gets some money from the government as an incentive to help you modify your terms.  You would negotiate a payment you can afford, and the lender gets money from the goverment corresponding to how faithfully you pay the new mortgage – how much is unclear.  Obviously, if your new negotiated payment plus the government subsidy add up pretty close to your current payment, the lender is more likely to accept as it prevents a default.  But if the two do not add up to a reasonable portion of your mortgage, the lender has no reason to want to accept it. 

For those current but underwater, the idea is to refinance the loan under Fannie Mae or Freddie Mac (only if they already hold your mortgage) into a 15 or 30 year fixed rate loan.  To qualify, you must have a home worth less than the mortgage, but not by more than 5%.  If you have a $200,000 mortgage, for example, the house must appraise for between 200,000 and 210,000.  Anything more or less does not qualify. It is aimed at those in that underwater position who have a current interest rate significantly higher than the market rate.  If you are not in that position, the plan is not likely to help you even if you qualify.

If you have never owned a home before, the government has changed the first-time home buyer tax credit.  The one passed last year was for up to $7500, but it was treated as a loan that had to be paid back over 15 years through your taxes (500 per year).  This one has no repayment clause, and was increased to $8,000.  So, in essence, the government is giving you $8000 to add to your downpayment.  It is a fantastic deal, open only to first time home buyers.

For more information on the Plan, go to http://www.whitehouse.gov/blog/09/02/18/help-for-homeowners/.

Let me know if you think this plan will help you, and what you think about the whole idea, by leaving a comment here.

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 #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.

Downpayment Assistance Ends in 54 days!

Thursday, August 14th, 2008

There are a bunch of new incentives for buyers in the new law just signed to help out in the housing crisis.  This is good news for those trying to sell their houses through a short sale process, as it helps buyers afford better houses and gives them a little push to get moving.  But there’s an even stronger reason for them to move now – the loss of the Downpayment Assistance program.

The Downpayment Assistance programs are designed to help first-time homebuyers get into homes they can afford.  But they’re going to end in 54 days. 

The combination of the Downpayment Asstance program and the new tax credits, along with the below market prices of short sales, make it very attractive for a buyer to buy NOW.  This can be good news for you.

What can you do to help out?  If you know anyone even thinking about buying their first house, tell them about this and about the new tax credit.  Have them call me.  Even if they’re not right for your house, maybe they are for another client, and maybe that client knows someone who might like your house.  So help me help you.

Here are some of the specifics of the new law, for you to share with your friends:

Current FHA Changes
1.  All government-sponsored zero down payment assistance programs would be eliminated as of October 1, 2008.  To be eligible for these programs, all home loans would need to be approved by September 30, 2008.
2.  The minimum down payment for Federal Housing Administration (FHA) loans, the largest purchaser of mortgages in the United States, would increase from 3 percent to 3.5 percent.
3. The risk based tiers that were just implemented for FHA will be under a 1 year moratorium
 
Tax Incentives for First Time Homebuyers
Anyone buying a first home between April 9, 2008, and July 1, 2009, will receive 10% of the purchase price of a new home and up to $7,500 in federal income tax credits.  This will essentially be a tax free loan that will be paid back over 15 years. 

So have your friends give me a call.  And share with us all, here on the blog, any ideas you have for getting buyers to stop waiting in the wings, by posting a comment here.

Big Myths About Short Sales – Part II

Thursday, July 17th, 2008

During the last 2 months, when the market is turning even tougher, I have been spending more time dealing with Agents and Buyers that have big myths about Short Sales.

Here are a couple of the big myths I would like to share with you.  A couple more can be found in my last post.

3.  I don’t want to deal with Short Sales, I would need to deal with an eviction process.  FALSE.

All sellers that understand the Short Sale process KNOW that it is a WIN-WIN for everybody.  They do not want to cause any kind of problem in leaving the house, as they are also benefiting from the transaction by not having their credit damaged.  The seller, as in any transaction, will be leaving the house on their own as of the closing date.

4. I don’t want to work with Short Sales.  It is a long process and at the end, the lender is not going to accept it.  FALSE.

Short Sales are going through a BOOM right now.  Many Real Estate Agents, in this current slow-moving market, want to work with short sales.  Please, when you are considering making an offer, ask the Listing Agent some questions about the Short Sale Process.  For example: what experience the agent has with short sales, how many have they closed in the last three months, and if they have an established relationship with the specific lender for that property, etc.

The KEY in short sales is to work with an experienced Listing Agent.  If you have found an inexperienced one, the short sale could be a nightmare.  Unfortunately, due to the inexperience of many agents, millions of sellers are living the affects – not just because they lost their houses, but also because the buyers and their agents think the process is endless and they decide to buy a different house with less hassle.

Also, remember that the economy as a whole gets a little shot in the arm as it avoids yet another foreclosure.

Let me know what you think about these myths, as well as those in the previous article, by posting a comment.  And if you are in trouble, struggling hopelessly to make your mortgage payments, please give me a call and let me tell you how I can help.

Big Myths About Short Sales – Part I

Sunday, July 13th, 2008

During the last 2 months, when the market is turning even tougher, I have been spending more time dealing with Agents and Buyers that have big myths about Short Sales.

Here are a couple of the big myths I would like to share with you.  I will discuss a couple more in the next article.

1. The house is in the market for full price – I want to wait until all the price reductions take place.  FALSE.

Many agents and buyers believe that waiting is the way to have a good price on a short sale.  The reality is that as soon as you encounter a short sale that interests you, you should make the offer you think is best for you, and not wait for the reductions.  Believe me, the seller will not be offended; and the price reductions may never happen – and you have lost a good opportunity.  A house with no offers may get foreclosed while you are waiting, and your offer can hold that process back.  Keep in mind that you are really negotiating the price with the bank, and they have no emotions involved in the property – it is all about the numbers.  The lender has a number they will accept, and as long as your offer meets that number or better, and no one has submitted a better one, it will get fair consideration.

2. I want to wait until the house has been foreclosed – so I can buy it cheaper.  FALSE.

In the current market, every lender prefers to negotiate a short sale and save the costs that a foreclosure process brings – which in the best of cases will not be less than $15,000.  After a foreclosure, these costs become part of their cost basis for the house, making the same offer appear even more of a loss for them.

In addition, you will be getting a house in better condition that has not been abandoned throughout the foreclosure process.  Some foreclosure cases also result in additional damage to the house as angry owners depart.  All my short sales have been occupied, and the owners continue to care for the house until closing.  My clients understand the process of a short sale, and they know the value of maintaining it in the best condition, clean and without that damage.

In my next article, I will discuss another couple of major myths about short sales.  In the mean time, let me know what you think about these.  And if you are in trouble, struggling hopelessly to make your mortgage payments, please give me a call and let me tell you how I can help.

Don’t Give Up on Your New Home!

Saturday, June 28th, 2008

Agents around the country are speculating that Lenders are making the housing downturn worse by taking months to make decisions on short sales and sticking to high internal target numbers.  As a result, buyers are abandoning short sale properties, which worsens the problem because it forces them to be sold in foreclosure sales that usually mean the lender receives less thany they would have gotten through a short sale.

This is why having an agent to manage the process is so important.  An experienced agent can:

  1. Keep the process moving with the lender so the file does not get lost or put on the back burner
  2. Keep in communication with the buyer and the buyer’s agent so they do not become impatient and walk away.
  3. Help the seller navigate the process without needing to deal directly with intimidating collection deparment tactics

These are just some of the reasons to work with me as your Agent, either as the buyer or the seller, makes sense and benefits you throughout the process.