On Top of the Aloha Beat BLOG

If you are looking to buy or sell a home you may want to ask a question of you real estate agent before making a decision on whether to work with them.

• Do you do this full time?  In other words is this their primary source of income?

In my county and I am sure the numbers may be similar across the country.  About 2/3 of the members of our Board had one transaction or less last year. I know you are stunned, but this is the number.  That does not include all the people who have active real estate licenses who are not member of the Board of REALTORS®.

I am in a class of some kind monthly and sometimes even more often.  As a full time licensed broker/ agent I write and review contracts continuously.  I allocate a large budget every month for marketing both y client's properties and myself.  I attend briefings and meetings constantly.  This is a complicated business and it requires that we stay on the top of our game.

• Someone who had zero or one transaction in a year cannot possibly be up on the contract and law changes. 
• There is no way that they will be able to market your home properly when they are not successful marketing themselves. 
• Will they even have the resources to pay for the marketing?
• Are they tight for money and will they be pressured to close this sale at all costs?  Will they be willing to protect your interests even if that puts the sale at risk?

Of the other 1/3 of the agents who had 2 sales or more, how many of them are actually in the business of real estate?  How many have a full time job and do this weekends and evenings while balancing their family time?

In this changing market the need to find a professional real estate agent is stronger than ever.  To have success in this market look for an agent who is having success.  They are out there.  They are however in the minority.  Like the old saying if you want to get something done find the busiest person to do it.

Real estate is my full time occupation.  In 2008 when many agents left our industry, I increased my marketing budget and increased my sales.  If you are looking to buy or sell a home in Honolulu County (Oahu),  I would be honored to assist you.  My services are normally free to buyers and I have aggressive marketing programs for sellers.

After participating with Broker Bryant in Jennifer Allan's webinar on Short Sales for beginners, I realized there is just wayyyy to much info, even at the most rudimentary level, to go over in a 2 hour class, so here is blog 2 of the promised follow up.

Since working on the buyer side as your first time short sale has seem to create the most frustration, below is a short primer on buyer side dealings...

As short sales spread from the hot spots of Las Vegas, Florida and AZ into the rest of the country, it seems that it is becoming unavoidable for an agent to run into one on the buyer side. If you are not familiar with them, frustration can soon ensue, both you with the process and your buyer with you. If short sales are newer to your market, you have the added risk that the listing agent is not too familiar with them either, exponentially heightening the frustration factor. With education and a few tools, you'll be able to enter those murky waters with at least a snorkel and a mask (for both you and your buyer).

DISCLAIMER: This is how we do them in our market (Miami, FL), check with your state, board and broker for your area - these are just suggestions! (also, as with everything in real estate, everything is a negotiation, these may not ALL be possible, but at least get them on the table so everyone is aware of how things stand on all sides).

DISCLAIMER: I am not a guru or trying to sell anything, I am just explaining our OWN experiences to help other agents. If things are done differently in your market, I understand, this is just a general overview that might help people realize what to think about in order to make a smoother process for everyone in their transaction.

 

Here is that Short Sale Webinar recording

Here is the Q&A that came from that webinar

 

I have marked the issues that seem to spark the largest frustration with a flame for easy identifcation!

 

A few tips to protect your buyer:

1. Make sure there is a short sale addendum (your board may have) or create one that states how time frames will be counted. We have inspections and loan commitment dates starting from the date of the lender acceptance.

2. State in that addendum how long your buyer will wait for the lender approval during which time they are contractually bound. Ie - "seller and buyer understand that third party approval is needed. This contract will allow x days (60?) for such approval, after that time, in the absence of an approval, either party may elect to no longer go forward with the contract upon written notice" or something to that effect.

3. Take pictures and include descriptions of everything in the home you expect to stay. Appliances, fixtures, etc. Homeowners are notorious for taking their upgraded appliances and swapping them out for standard ones.

4. I would definitely do my own research if publicly available to make sure there aren't any ongoing code or permit issues. The listing agent may not know and something could blow up at the end of the process. It may just be a simple on-line check. If so, I'd do it.

5. We put that escrow will be submitted with acceptance of the lender. This is normally accepted it may not be in your area.

 

Things to ask the listing agent:

1. Will they continue to market the property and accept backups and submit them to the lender? (market area specific, find this out!)

 

2. Have they spoken to the lender about commission? If there is a chance it will be lowered, do they intend to honor what they advertised to you or split it 50/50? (another major area of anger and frustration - find out in the front end what the deal is and you won't end up angry. If not clearly indicated on the MLS I'd do this BEFORE I showed the house just so I knew)

3. Have they already gotten the package from the seller and started the process with the lender?

4. How did they come up with the list price? (If it SEEMS to good to be true, it probably is, a lender isn't going to just give the place away!)

5. If the owner plans to continue to live in the property. If not, are they going to keep the utilities on and the pool, lawn maintained? In a "regular sale" this is a no-brainer (I would hope!) but in a short sale, it may not be as they might not have the finances to do so. Again, if you flush this out in the beginning, you have far less chance of a buyer being upset at the end.

6. If the owner is not going to be living there, are they going to be willing to turn on the utilities for inspections. This becomes a problem as they often have seriously defaulted utility bills and to have them turned back on might require the bills being brought current.

7. How many loans are on the property and are there other issues? This might just help you understand how long the process may take.

8. Who is going to negotiate and deal with the lender(s)? The listing agent? A third party? Find out and get the phone and email of that person.

 

Things to advise your buyer of before you ever look at a short sale listing:

1. This is a long long process. They can't become too emotionally attached to it as they may with a regular offer, there is just too much that has to occur between offer and closing.

2. Due to the length of time they are waiting for an answer, they are going to possibly see values continuing to drop, media, friends talking in their ear and they may begin to have buyer's remorse. Talk this through before making the offer so they don't suddenly want "out" or to lower their offer out of fear. The best offers are the ones made anticipating all of these things. The buyers will remain patient and keep a level head during the process.

3. Explain to them even a full list price offer is not guaranteed to be accepted. It is normally just the listing agent's best guess as to what might be acceptable to the lender, buyers need to understand this before looking at short sales. This is very very important.

4. That depending on how things are done in your market and by that listing agent, the home may continue to be shown and that better offers may be submitted to the lender for review. This is again lender/market specific, but if you find out from the listing agent before hand, everyone is playing fairly and knows the deal. If you and the buyer know how it will be done, there is a lot less misunderstanding and anger.

5. That the seller likely has no money for anything that comes up at inspections, so make your best offer keeping that in mind. Seller won't be able and lender likely not willing to make those repairs that would normally not be a big deal.

6. Lenders want to recoup as much of their loss as possible, therefore are normally not willing to go more than 10-20% below current market value. You have to assist your buyer determining what current market value is and make the offer accordingly. If they are looking for deep discounts (ie 40+% off current market value) foreclosures may be the better answer for them. With a short sale, a buyer is normally going to get a little deal, and normally a maintained and habitable (and financeable) home.

 

Once the offer is submitted:

1. A Pre-HUD will need to be submitted with the package. Find out if who provides that and ask to review it (if buyer's side does title that means you may have to get this from the title company). This is very very crucial to be correct and have numbers for prorations accurately projected out to when closing might occur at it's latest. - the HUD actually might be an entire blog post in itself!

2. Follow up with the listing agent at least once a week. Then call your buyer immediately, even if you have no news. They want to be kept in the loop and if you call them before they call you they will feel much calmer about the process.

 

With some education and understanding by the buyer and buyer's agent about short sales in general and how the listing agent in your particular deal plans to handle things, the process will be easier and less painful for all involved. In many of the deals I hear about that went sour, most anger and frustration could have been eliminated if everyone just knew what the "deal" was in the front end. We just all need to work together, inform ourselves and our clients and do the best we can in less than ideal situations.

 

Want to read more about Short Sales?  Visit my other posts!

If you need assistance with a possible short sale in the South Florida Area, we are here to help! 786-252-4970 or janie@janiecoffey.com

If you liked what you read here, make sure to subscribe to my blog

 

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The Federal Housing Administration has insured over 35 million home mortgages and 47,205 multifamily project mortgages since 1934. Currently, FHA has 4.8 million insured single-family mortgages and 13,000 insured multifamily projects in its portfolio.

American Recovery and Reinvestment Act of 2009 ("Recovery Act")

The American Recovery and Reinvestment Act of 2009 ("Recovery Act") was signed into law by President Obama on February 17, 2009. It is an unprecedented effort to jumpstart our economy, create or save three to four million jobs, and lay the foundation for a robust and sustainable 21st century economy. Find out about HUD's Recovery Act programs...    

NOTE: The Homeowner Affordability and Stability Plan is part of the President's broad, comprehensive strategy to get the economy back on track. The plan will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. In doing so, the plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs.

• Executive Summary
• Fact Sheet
• Housing Example Sheet
• Consumer Q&A
• White House

Preguntas y Respuestas para los Prestatarios sobre el Plan de Estabilidad y Facilidad

According to the Mortgage Bankers Association and an article put out by Reuters, a record 11.18% of one to four unit residences were at least 30 days late on their mortgage payment.

And while some people, and I'm not one of them, may find some solace with Obama's $275 billion sweeping housing and mortgage plan, it is worth noting that despite previous loan modification efforts, nearly 60% of loans have re-defaulted within 8 months after having been modified, and that was before unemployment hit critical mass.  Why would this plan be any more successful?

What we are going to see is that foreclosures, regardless of loan modifications, will be coming to the market at an alarming rate over the next couple of years.  Credit Suisse is predicting over 8 million additional foreclosures over the next four years. 

In the absence of new investment demand for real estate, these foreclosures will continue to sit on the market and drive down home values which in return will punish the banking system and ultimately the broader economy.

Despite the housing market being already flooded with foreclosures, the Obama administration has taken the stance that they are going to attempt to patch the failed levee system with loan modifications despite the city being underwater.

What they have failed to recognize is that they can't fix the levee system while the city is still flooded, they need to pump the water out first and stabilize home values.  And in order to do this, you need to stimulate demand for real estate.

Unfortunately, their efforts to plunge mortgage rates and offer a $8,000 first time home buyer tax credit have been woefully ineffective, not surprisingly. 

The solution is to provide Americans with an incentive to invest in real estate.  However, everything that Obama is proposing has been anti-investment.

 

 

 

 

 

 

                            

Last week I attended the CRS Sell-a-bration in San Francisco.  The Sell-a-bration is a gathering of some of the top agents in the country.  We spent 3 days of classes, conference session with top speakers and some fun social mixers.  During the conference I picked up several pearls.  One that I truly liked was the phrase: "A Pricing War and a Beauty Contest."

When describing the sale process to a potential home seller, this phrase sums it up in the best direct way I can think of.

In most parts of the country we are in a buyer's market.  There is a good selection of inventory and prices are either flat or slipping depending on the area and type of property.  With that said, what will make you home sell before the others in your neighborhood?

You have to win the beauty contest plain and simple.  When the buyers walk in did you grab them?  If they liked what they saw did the price scare them off and send them down the street?  This is one of the hardest concepts for many sellers.  They have lived in this home.  Raised their family and have had so many great memories here.  Their friends and neighbors have all told them their home is worth so much more than all the others in the neighborhood.  Let me clear things up for you.  It is not!  Friends and family will tell you that to be supportive.  Neighbors have a conflict of interest.  They are hoping you will raise their property value by selling at a higher price.

To keep it simple, when you are getting your home ready for sale remember you are entering a Pricing War and  Beauty Contest.

I just finished closing a short sale and was pleasantly surprised to see how smooth a transaction it was! We even closed 5 days ahead of our 30 day escrow. After analyzing the entire transaction I realized that this was the result of a combination of a few good steps taken by all of us before the listing and while meeting the bank's requirements. From now on, I will always do the following:

•1.       List the property at or slightly below market value. We received 4 offers within one week of putting the house on the market. The highest offer was about 5% above asking price. This strategy works well if the seller cooperates by understanding that a major condition from the lender to approve the short sale is that the sellers cannot walk away with any money from the seller's proceeds. 

•2.       Have Home and Pest Control inspection reports available before the house goes on the market.  Most short sales are on an "as-is" condition. Potential buyers will have fewer or not contingencies if they are provided with recent house reports prior to making the offer. Most of the times we even pay in advance for those reports and then include a reimbursement back to us in the escrow instructions. 

•3.       Turn your CMA into a BPO. Banks ask for a list of documents to see for their approval of the short sale. The listing agent is asked to provide a CMA (Comparative Market Analysis,) then they call for an Appraisal and also another Realtor who typically does a  BPO (Broker's Price Opinion) while preparing my CMA, I simply changed the forms and send it as a BPO. It is the same information anyway. When the bank saw that, it bypassed the BPO. This simple step saved us a few days at closing and eliminated  another step in the long process. 

•4.       Type the "Seller's Hardship Letter" verbatim for clarification purposes. (and mark it as such)The sellers are asked to write in their own words a letter giving an explanation as to why payments cannot be made anymore. My clients provided me with a 3 page handwritten document, granted I could read it, I knew that the faxed copy will be difficult to read, the typed copy was necessary.

•5.       Put the loan number on EVERY SINGLE DOCUMENT that you send to the bank. We actually had to fax a package of over 35 documents, and even then they asked for some of them to be faxed again.  I also recommend faxing late at night... Why? Because nobody else is faxing at that time and your package has a better chance to get there in one piece and not mixed with another fax from somebody else. Clear, small labels with the loan number keeps it all together.

Short sales are still NOT my favorite transactions, but after this closing I am now looking forward to my next dealing with the banks. I realize that the people I deal with in these types of transactions are employees who simply have to follow a set of rules from their employers, they are not Realtors; I must make it easy for them to find, read and understand the mountain of documents we send them. The easier we make their job, the faster we can close. 

Antonio & Alexia Cardenas, GRI, CRS, E-Pro.

Selling Real Estate since 1985

The Realtors In Motion. www.ListedByAntonio.com

Open 25/7 to receive your referrals anywhere in the San Francisco's bay area communities of Alameda and Contra Costa Counties.  Call us! We'll come and TANGO WITH YOU!

(The extra hour is for faxing)