Archive for the 'FAQ' category

Do They Really Know What They Are Doing?

Thursday, October 1st, 2009

A couple of weeks ago, I contacted Bank of America to try to stop 3 foreclosures on different properties where I had submitted offers about 4 months ago – and all this time they had not “had time” to assign a negotiator.  Usually, I need to call three or more times before I am lucky enough to find a person who really wants to help me and make the best of his/her time for the company they work for.

The first person who answered the phone told me that there was no way to stop the foreclosure unless the negotiator said so.  By the way, remember I still don’t have a negotiator?  Between calls, a negotiator had been assigned – who decided to close the short sale without telling anybody.

I hung up in frustration, and called back again.  The person who answered the phone this time told me that she cannot do anything.  I asked her to transfer my phone call to her supervisor, and she asked me to hold.  10 minutes later, she returned saying her manager was too busy, and after looking at the file her manager stated that the offer was too low and they needed one more than 30K higher in order to stop the foreclosure.  It was now clear that the only goal she had in mind was to get rid of my phone call and move on – the numbers did not make sense at all and were considerably higher than the outstanding principal.  I hung up again.

Calling for the third time, I reached someone who really wanted to work and do what she was being paid for.  After sharing my frustrations with her, she explained to me that her company received 400,000 short sale packages every week!

The numbers do not fit in my mind, but let’s assume it is accurate.  I said – with these kinds of numbers, the company must be hiring like crazy.  She said “Yes, indeed, they are hiring.”  But who are the people who are in charge of these files?  I realized that every time I make a call, I need to talk to at least three or four people before I find someone who really wants to work and deserve their monthly paycheck.  So how much are the banks losing for their lack of interest or ability to hire people who really care about doing their jobs right?  Employees who really care about the bank and have the knowledge to do the job.  Do they really know what they’re doing?

Tell me: are you hearing the same volume from your lenders?  How often are you speaking to the same person you spoke to in the past?  Do the people you talk to have the knowledge to be able to do their jobs, or are you training them – saving Bank of America the training expense?

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 #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.

Is a Short Sale the Right (or only) Option For You?

Sunday, November 9th, 2008

As a Short Sale Specialist in the Atlanta area, I run across all kinds of people in a variety of hardship circumstances.  The first thing I need to do is figure out if a Short Sale is right for them.  It is not for everyone, and I only take on the Short Sale if it is right for the client.

After hearing what has caused the current hardship, I try to help the client understand their options.  Each situation is different, and there are no clear lines to which option is best.  Generally, though, there are seven different options.

  1. Refinancing.  Can you qualify for another mortgage, one that you can afford?  That’s always the best option.
  2. Selling the house as a normal transaction, even if it means bringing cash to the table – if you can.
  3. Working out a plan with the Lender.  Amicable settlement is better for everyone.
  4. A Short Sale.  The lender must agree to accept less than the principle and not hold the seller responsible for the difference.
  5. A deed in lieu of Foreclosure.  Give the house to the lender to terminate the mortgage.  The homeowner might be responsible for the difference between what the lender sells the house for and the principle.
  6. A Foreclosure.  The homeowner loses the house and their credit rating is damaged.
  7. Walking away.  This is the absolute last resort.  The homeowner’s credit rating is heavily damaged.

Let me help you figure out what option is best for you.  Give me a call, or leave a question or comment here.  I’d love to hear from you.

Short Sales Work – If You Have the Time

Saturday, October 4th, 2008

Even though the percentage of short sales I’ve closed has been very high (85% of them were successful), the remaining 15% leaves a bitter taste in my soul.  And I always come to the same conclusion: If I had a little more time…. It would have been another successful transaction.

Short Sale transactions are full of emotions.  None of us would like to be in this position and lose that for which we have worked for many years, a home for our children and our family.  When those emotions pull at our hearts and hinder our reasoning, we are not only playing with our house, but also with a person’s complete financial future.

Studying the cases of properties that go to foreclosure, we have seen the same path:  the person had high hopes when they asked for help.  The large part of the houses that I have had in Short Sales which have gone to foreclosure have done so because the sellers called me when they were already 3 months behind in their payments.  What that ends up meaning is that we’ve lost at least 2 months in marketing the house, receiving an offer, and starting the Short Sale process.  A small percentage was because the Banks were being completely unreasonable, with things like giving me a counteroffer that was completely impossible to achieve, and the buyer decides to move on to another property.  By the way, the big majority of those unreasonable banks are now bankrupt themselves.  I wonder why…

People have been asking me: and now what?  My response is very conservative: I don’t know, but I believe that the mortgage companies are going to be more open to accepting short sales, and are not going to continue choking the market with more and more foreclosures.  I think that after a year and a half of FORECLOSURE MADNESS, finally the lenders are beginning to be realistic: this path isn’t working.

So let me help you be in my 85% success rate, or even improve it.  Give me a call before the clock starts ticking down.  Give me the time to help get you out of trouble and save your financial future.  As a Short Sale Specialist, let my experience work for you and help you through the process with more confidence and less worry.

Why Do Short Sales Fall Through? Part 1

Friday, August 22nd, 2008

In this market, many agents have started doing short sales as they watch their “normal” transactions decline.  But they have entered this very complicated market late, and have not gathered the experience to make the transactions work.  I wanted to take a moment and share with you some reasons why this occurs.  Each of the next few articles will cover a different reason why Short Sales can fall apart.

The first reason?  The BPO.  A BPO is a Brokers Price Opinion, it is the bank asking for an “independent opinion” of the market value of the property.

Who does a BPO?  A Real Estate Agent.  One who is not involved in the transaction.  And if it comes in too high, the lender may terminate the transaction because they feel they are not getting enough or money is being left on the table.  So what’s the problem?  The agent may not know anything about the area or the type of property involved, and turn in a bad BPO – a price not supported by the market.

There have been cases where the BPO came in 30,000 to 40,000 over the reasonable value of the property – over the last two recent sales in the same complex, for example.  The lender stopped the transaction unless the buyer could come up with an additional 25,000 in their all-cash deal – when the buyer had offered more than the last comparative sale.  This is not the lender’s fault, they just asked for a second opinion, and relied on someone they thought would do a competent job.  The seller’s agent could not affect the outcome because they are not involved in the process.

But there is something the seller’s agent could have done to keep this from happening.  Something I do on every transaction, when submitting the Short Sale packet.  I prepare and submit a detailed market value analysis with the package that can easily refute an overvalued BPO, showing that the offer is valid and the best the lender is likely to get.  While I can’t put that information here, where other agents can learn in hours what it has taken me years to develop, I will gladly show it to you at my listing appointment if you like.  This has saved many transactions from falling through this trap.

In a few days, I will post another article about another reason why Short Sales fall through.  Please let me know your thoughts by posting a reply to this message.  And take a look at my Short Sale FAQ (Frequently Asked Questions) to learn more about what it takes to put through a short sale packet.

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.

What are the seller’s options if a short sale is rejected by the lender?

Friday, June 20th, 2008

There are a variety of reasons a bank will reject a short sale – from too low a price to too many files on the loss mitigator’s desk. You can look for another buyer or even try resubmitting the same contract. “Banks don’t want to take properties back in foreclosure, so they are going to do everything they can to make it work,” says one lender. You also need to prepare your seller in advance for the possibility of foreclosure if a short sale fails.

It all depends on the quality of the Short Sale packet that is sent.  If the Agent does not do a complete Short Sale Packet, the Loss Mitigation department is going to look at it and immediately set it aside.  He does not have time to educate Agents.  He will move on to another file, and your house may end up going to foreclosure.

Tip: A short sale might be rejected if the loan is less than a year old. In such cases, the servicer that’s bought the loan can often require the original lender to buy it back.

This is why it is critical that you find an agent who specializes in Short Sales, there is just too much at stake to learn on the job.  Please give me a call and give me the chance to help you out.

How Long Does a Short Sale Take?

Thursday, June 12th, 2008

Although Lender response times vary, it can take at least two weeks or as long as 60 days to receive an approval of a short sale from a lender. That is why it is so important that all sides, the buyer, the seller, and the other agent, all understand and accept that time frame from the beginning.  Patience is the password. 

And things are worse right now.  Many lender’s Loss Mitigation departments and Workout departments are inundated with work.  Some have as much as a two-month backlog.  While buyers need to be prepared for longer turnaround times, however, they must also keep in mind that they will be walking in with equity.

 

Tip: Keep in mind that the purchase contract on a short-sale property is a legally binding agreement once the earnest money has been deposited. Without language in the contract stating that the lenders must approve the offer and release all liens on the property, the seller may face a legal problem for failing to execute the contract if the short sale is not approved.  This is a standard clause of our Short Sale addendum to protect the seller.  If you are talking to anyone else about short sales, ask them about this clause – it is one of the sure signs whether the agent really knows short sales or not.

What is a Short Sale?

Wednesday, May 21st, 2008

A Short Sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs (such as property taxes, transfer taxes, and commissions), and the seller is either unable or unwilling to cover the difference.

Some short sales may also be in default on their mortgage loans, and be headed for foreclosure.  Others may not.  However, homeowners who bought at the top of the market, or who took out large amounts of equity with a recent refinance, and who now need to sell because of a divorce, loss of a job, or transfer, may find themselves “upside down” – owing more than the home is currently worth (especially once you add the closing costs).

Other types of sellers, those who may have assets such as stocks or high salaried jobs, may not understand that the lender is unlikely to let them just walk away without signing a note to repay what they owe.

If you are in any of these situations, please call me.  I specialize in Short Sale transactions, and can tell you quickly if this is right for you (it is not right for everyone).  Let me explain the process to you.  All your information will be kept in confidence.