Thursday, June 11, 2009

Thinking of Selling Your House as a Short Sale? How do you find the right agent

Anyone thinking of selling their home as a Short Sale is already facing a stressful time, adding the normal emotions of escrow and these sellers need special care. What we usually find, however, is the opposite. Often these sellers spend months without knowing what's going on and dreading the threatening notices in the mailbox. These fragile home owners are listed and then get on the short sale roller coaster.

Finding the right listing agent for a Short Sale is critical to avoid the emotional and financial hazards of a Short Sale. Unfortunately there are no specific rules yet on how to list and handle the Short Sale. So you must ask questions of the agent and find one who is going to handle this for you in a manner which fits with your lifestyle.

Short Sales can take a very long time. Understanding that process is the first step. When you first meet with your agent, make sure they have experience in closing Short Sales and understand the process. You should not be the training ground. Many agents hire a Short Sale Negotiator to work with the lenders and negotiate the sale. This can be very helpful, but make sure that the not pay anything out-of-pocket for this service. The agent is making this decision and this fee comes out of the commission. If you are considering a Short Sale and anyone asks you for money, time to keep looking.

Some listing agents don't understand the unique needs of a Short Sale.....and let's face it...we often make significantly less commission on these deals because all fees are determined by the bank. Add to this the fact that close of escrow can be months away, it's human nature to put these sales on the back burner.

So does this mean that you must find a very hungry who has nothing better to do...and then hope for the best? No! It means that you need an agent who will run the entire process correctly.

The first step is listing your home. This is going to consist of a listing agreement and a Short Sale Addendum. In the Short Sale Addendum, the local Association of Realtors is going to outline the terms of the sale for you. It will tell you that this is not a guarantee and that we are going to pursue this sale and negotiation for you. That you are not obligated to accept any settlement. It is also going to outline that you, as the seller, will have no out-of-pocket fees.

Does this mean that the bank isn't going to ask you for money? fact often your lender is going to ask you for money. We simply say "NO."

Every state is different, but in California we are a non-recourse state. What this means is that if your home eventually is sold in a Trustee's Sale, the proceeds from that sale is all the lenders can use to satisfy the liens on the home. This is our bargaining power in the Short Sale....if they don't accept our offer, we will simply let them foreclose and they will get less.

Once you have listed your home, we treat this as a "normal" sale. Present your home as you like to live....neat, clean and pleasant. We put a sign in your yard and give you a lockbox for the keys. The MLS listings will specify the details and show pictures of your home. If a listing has no pictures....does this mean the listing agent doesn't care enough to take them? Your agent needs to treat this listing with respect.

Respect is also shown in the way we handle the offers. The pricing is going to be aggressive.....the sellers will get no proceeds, so the only goal in pricing is to get solid buyer offers. This is where there is the greatest difference in approaches. Some agents will send all offers to the bank, as if they already own the home. In reality....the seller owns the home. We need to look at the offers, counter for the best price and terms, and then send one accepted offer to the bank for APPROVAL.

The right buyer for a short sale is similar to one we would want for a non-Short Sale. We check on their credit, we verify funds and counter for the best price and terms. Then we make sure they are going to be there through the Short Sale process. This involves opening escrow and getting a deposit. I ask for $5000 for financed offers and $10,000 for cash offers.

Does this seem unreasonable? Why? Is the buyer serious about buying this home?

Then we put the home in Back-up and discourage showings so the seller can go back to their lives. What we present to the bank is a solid buyer, solid offer and the Short Sale Package. We ask that they review and approve the offer as given. And we all wait. For the sellers....having the home in back-up will allow them to go back to more normal lives.

Are all Short Sales approved as presented? then what?

Once the bank has the package they will approve it or not based on their internal appraisal and loss mitigation policies. This can take months, but many banks are moving quicker now. The response might include a financial contribution from the seller. NO!!!

Since California is a non-recourse state....we never agree to a seller contribution. I often find that other agents advise their sellers to pay this, or accept a note for the requested money. As a buyer's agent....I'm not going to complain. But as a seller's agent, we refuse!

The right agent will work with you and the bank to the conclusion. That might be a Loan Modification or a Short Sale or a Foreclosure. It's a financial, business decision. But sellers need caring for....they need an agent who is there every step of the way and will handle what comes up. This is not a "numbers game"'s one of the most important decisions a family will make, and needs special expertise and care.

Saturday, May 23, 2009

California Down Payment Assistance Is Back.....Because We Have So Much Money :)

From the title of my post....I sound ungrateful, but I'm not. I'm thrilled!!! CALHFA is a program which helps first time home buyers of California with a 3% deferred loan to be used for the down payment. When used in combination with the FHA loans.....a first time buyer can now qualify to buy a home with only 1/2 % of the purchase price.

(FHA requires a 3.5% down payment......3% of that can be from the CALHFA program)

The mortgage industry calls this a silent second. This is a lien on the property, but the borrower makes no payments on this loan until they refinance or sell the property. So it just sits "silently." Because the FHA allows closing costs to be paid by the seller....this gives an opportunity to many more first time home buyers.

This is a bond-funded program....and there are several others too. Take a look at the link above for more information.

Thursday, May 21, 2009

And The Bank Held Out For Less Money.....Short Sale Idiocy

Last August....yes, August....I took a listing for a short sale. I had my appraiser give the property the "once over" and priced it competitively at $149,900. I had numerous buyers the first week. One was for $165,000 and all cash. Yippee!!! This was ready to go in November. The bank should be thrilled!

They weren't!

The bank did it's own appraisal and it came in at the $149,000 that we had listed....we had a cash buyer ready to go at $165,000....they should be thrilled!

They weren't!

The bank wanted the seller to "take some responsibility" and take a note for $20,000. The seller said "no." We went back and forth with the bank and eventually got them down to $5000 note. By this time the buyer was gone, and prices had dropped.

I put it back on the market in December and it sat and sat, comps went down and down. We finally found a new buyer in March. For $125,000. By this time the seller had received his notice of default and sale date. He saw no reason to sign a note. He was tired and annoyed. I agreed with him. The buyer did want the home and offered an additional $2000 to the bank in lieu of the seller's note.

They agreed!

The bank "stuck to it's guns" and held out for less!!!!

I hope they are thrilled!

Friday, May 1, 2009

Hello Buyer!!! Why It's OK to "Window Shop"

I call it "window shopping"! In the truest sense of the term, you are in fact shopping for windows...and doors...and floors...and kitchens...Ok, you get the point! In my business plan, I include time to take clients who are not ready/prepared to buy out to see homes and neighborhoods. This is not only first-time buyers....this market can be scary!

I think the industry as a whole now understands that buyers are more educated than ever. They use the Internet to do much of the research. Sure they can get a list of available homes and recent sales....but without the context of seeing these homes, this information is numbers. Drive-bys are helpful as well....but an afternoon spent with a Realtor looking at homes with the background information and comps is an education that can't be gained on the Internet.

I have a database full of these future buyers. I don't use the normal "drip" email system of sending 1 or 2 lisitings as they pop-up. I use a gateway is a sample site:

This site allows the future buyer to capture, sort, save and make notes on listings all in one place. These listings come directly from the MLS so nothing is missed. When you are "window shopping" this is a great way to start watching the market. You will be able to watch prices...are they going down? up? are there more listings that fit your criteria? less? This is great information!!! All in one place!

The Real Estate Market is changing every day...if you aren't ready to jump right now....find a Realtor to help you prepare! Go see a few homes, check out the neighborhoods and do some "window shopping."

Saturday, April 4, 2009

California Association of Realtors Mortgage Protection Program: CAR Will Pay the Mortgage

Just announced this week by the California Association of REALTORSis a new Mortgage Protection Program. This program will be administered by the California Association of REALTORS Housing Affordability Fund (CARHAF) and will pay the mortgage payment up to $1500/month if a home buyer loses their job or accidental disability or death. There is also a one-time accidental death benefit of $10,000.

This is offered at no cost to the home buyer and the application is handled by the REALTOR as part of the transaction. To be eligible you must:

1) Be a first-time home buyer who hasn't owned a home in the last three years

2) Open escrow after 4/2/09 and close before 12/31/09

3) Property must be a primary residence in California

4) Be represented by a California REALTOR

5) Be a W-2 employee (Self-employed, sole proprietor, partner, etc will not qualify)
There are no income requirements or limits. Coverage takes effect 6 months after the close of escrow and is subject to a one month wait period after unemployment.

To get full information on this program...please contact me at

Saturday, March 21, 2009

Start Watching the Real Estate Market: A Free Listing Website Set up Just for YOU!

Buyer's and Sellers!

If you're in Southern California...this post is for you!

Regardless of which category you fall into.....I have a system which will help you educate yourself on the real estate market you are actually IN! Unlike the major online search websites....this site will be geared to your specifications and give you real-time notifications of new listings, solds and pending sales. You no longer have to guess if a home price you see online is real! This comes directly from the MLS.

On this site...I will imput your search criteria. If you are a home seller...we will enter the comparable homes to the search. You can begin to watch home values....see all the homes that are currently listed and what the price is. You can see pictures and other important information as well. You can also go in and sort these listings, make comments, and even send them directly to me for more information.

This information comes directly from the Multiple Listing Service...the same system the realtors use...and so you will have the most current information available.

This is a link to a sample site...loaded with a Mission Viejo search. If you would like one for your specific needs....please email/call me and I'll set one up for you too!


Friday, March 20, 2009

Open Letter to Home Buyers

Dear Future Home Buyer,Wow...interesting times out there! Short sales, foreclosures, changing loan's so hard to know what to do. Is this the right time to buy? Or should you wait? Where should you go to find answers.

If you are reading this, you already know there are many websites which are available to give you some insight. You can now find home listings, mortgage rates and even your credit report online. But what you still need to know is how to put all this information together to build a coherent plan of attack. A good buyer's agent can help you do this. And a buyer's agent represents you free of charge. Their commissions are paid by the seller.

A buyer's agent is not someone who necessarily rejects real estate listings, but in your case will be someone who is representing YOU and only YOU. This is not someone who is representing both buyer and seller in the same deal. That, in my opinion, is a recipe for trouble...and something I never do.

A buyer's agent will help bring a team of experts together to work with you depending on your needs. This might include a tax consultant, a mortgage broker, and/or a credit counselor. It will certainly involve a comprehensive discussion of your home needs. You will explore cities, size of home, community amenities, school districts, resale values...all the things that should go into an educated home purchase.

This can be done in various ways. I like to set up a custom website for each buyer and load it with a personal search. Using this site, you will receive all the listings directly from the MLS which suit your criteria. On this site, you can save, sort and make comments on the listings...and send them directly to me by email if you have specific questions....or see something you'd like to view. Once we develop a working list...we can go see them.

This is all the things you would expect a real estate agent to do for you....but do you know what happens after you find the perfect home?

During escrow...your buyer's agent is there for you too! We not only negotiate the price in the offer, but represent you during the escrow period too. You will have a home inspection. There might be repairs needed. Although most listings now say "as-is" even banks recognize that sometimes making repairs for a buyer ready to close is better than holding firm and risk starting from scratch with a new buyer. Especially if the problem is severe.

A good example is mold. Most banks, regardless of whether it's a short sale or foreclosure, will address a mold problem. Once they have been made aware of the existence of mold, they must disclose it to every new buyer...they might as well handle it with us. There are other major problems that can be addressed in a bank approval situation too. If we are working with a seller with equity...there is even more room to negotiate repairs, or credits, to handle problems with the home condition.

Other issues which might occur during escrow include insurance quotes, appraisal problems, title discrepancies. All situations your buyer's agent is prepared for, and experienced in solving. Can all problems be solved? of course not...but your agent will have the experience and resources to guide you during the entire process.

In short....if you are ready to buy a new home, or if you are ready to THINK about buying a new home. Start talking to a buyer's agent.

Good luck with your new home purchase and we are here to help when you are ready.