As an active short sale broker, assisting both buyers and sellers of short sale properties, I consider it a critical party of my job to help keep all parties involved and informed.

A recent statistical article by RealtyTrac, one source for Foreclosure Activity across the US, posted its recent statistical summary releasing statistics for the number of foreclosure properties nationwide, along with comparing the value of non-foreclosure properties to those properties that have been through the foreclosure process and are then sold by the Bank or lienholder.

It’s a statement of our current market to see that even nationwide, foreclosure sales made up almost a third of all properties that actually sold during the first quarter of 2010. Locally, in Auburn WA, the combination of short sale and bank-owned properties comprises a much higher percentage of residential sales.

Even more importantly to all homeowners, whether selling or not, however, is the statistic that properties that have completed the foreclosure process and are now owned by banks (“Real Estate Owned” (REO) properties), have a discounted price 34% lower than comparable properties that are NOT REO properties!

Short sale properties, conversely, look to be discounted about 15% nationwide from their counterparts that are not short sale or bank owned.

So … Mr. Bank … Please cooperate with us to get this short sale property off market. It’ll save you 19% NINETEEN PERCENT and keep prices higher!

(off my soap box now ….)

Perhaps as expected, when comparing homes currently for sale (Active) to those under contract (Pending) to those where the sale actually closed (Sold), those homes pending or sold were considerably lower in price and were on the market for fewer days than those currently Active.

Market Update 7/19/10

As expected, short sales and bank-owned houses continue to play a dramatic part of house sales in the areas. Year to date, of the 275 sold houses, 45 were short sale transactions. Year to date, approximately 16% of all homes sold in Auburn were short sale properties. …. But WOW, notice that almost 29% of the current Active home listings in Auburn are short sales!

… while 89 additional houses were bank-owned.

So … short sale properties and bank-owned properties make up 38% of the current Auburn market, while almost 49% of all closed sales so far this year were short sale or bank owned!

Every transaction, every house sale is different. Is it a good time to sell your house? Looking at information like this that’s customized specifically for you is one place to start. If you have questions about selling your home, no matter what your motivation, please give me a call or send along an e-mail message. I’m always delighted to be of service to you, your family, friends, and co-workers!

I have to say that this Listing is one that took exceptional effort, but after visiting the home to drop off keys to the new buyers, their palpable excitement and relief about being in their new home just left me with such a sense of fulfillment.

Now this was a transaction just overflowing with issues … big issues! Shortly after listing, there were difficulties with the weather, with leaks in the kitchen, with the estate auction (hmmmmmm, I’ll think twice, 3 times, about recommending that guy again), then with fielding call after call after call of low offers from agents informing me that the price was too high and that the place just wasn’t worth anything more than the land. And yet there were offers — eight of them. Most were close to the asking price. Others not so much. One was dreadfully low.

And then there were endless visits to the County and the City of Auburn trying to find appropriate records for permits, as-builts, well certifications, foundation requirements, and on and on. Meeting with contractors for bids and work to be done.

However, floating through all of this were these Buyers. They made three offers before the Seller felt secure that the offer was strong and solid enough to survive the remaining challenges of missing permits, foundation certification, title elimination, etc.

Finally, FINALLY, six weeks to the day after the contract scheduled closing date, it did. What a cause for celebration!

I remain grateful for my client, the Seller, who repeatedly listened to my advice and then took it. As with every client, we talked often. About how things were going, or not going, or just the general frustration of trying to get things done. At the end, about the frustration of the current lending climate where a Buyer’s approval could get challenged over the most mundane and ridiculous items. About the Department of Licensing who decided that they didn’t like the “appearance” of a notary’s stamp, and on and on.

The house sale closed! (whew)

Short sales can be lengthy and difficult, but if you know what you're doing, you can end up with a great deal. Image: fotog/Getty Images

By preparing for a real estate short sale, you can emerge with a great home at a favorable price.
 
When sellers need to sell their home for less than they owe on their mortgage, they’re shooting for a short sale. Short sale homes can sometimes be bargains, but only if you do your homework, stay patient, and remain unemotional during the sometimes lengthy and difficult short sale process.

Here are six tips for protecting yourself emotionally and financially when bidding on a short sale.

1.    Get help from a short sale expert

A real estate agent experienced in short sales can identify which homes are being offered as short sales, help you determine a purchase price, and advise you on what to include in your offer to make the lender view it favorably. Ask agents how many buyers they’ve represented in short sales and, of those, how many successfully closed the transaction.

2.     Build a team

Ask agents to recommend real estate attorneys knowledgeable in short sales and title experts. A title officer can do a title search to identify all the liens attached to a property you’re interested in. Because each lienholder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic’s and condominium liens, or homeowners association liens, will be harder to purchase.

A title search may cost $250 to $300 up front, but it can help weed out less desirable properties requiring multiple approvals.

3.    Know the home’s fair market value

By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses as low as possible. If your offer is dramatically less than the home’s fair market value, it may be rejected. Your agent can help you identify the price that’s good for you. The lender will determine whether approval is in its best interest.

4.    Expect delays

There are two stages to a short sale. First, the sellers must consent to your purchase offer. Then they must submit it to their lender, along with documentation to convince the lender to agree to the sale.

The lender approval process can take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.

5.     Firm up your financing

Lenders will weigh your ability to close the transaction. If you’re preapproved for a mortgage, have a large downpayment, and can close at any time, they’ll consider your offer stronger than that of a buyer whose financing is less secure.

6.     Avoid contingencies

If you must sell your current home before you can close on the short-sale property, or you need to close by a firm deadline, your offer may present too many moving parts for a lender to approve it.

Also, consider ordering an inspection so you’re fully informed about the home. Keep in mind that lenders are unlikely to approve an offer seeking repairs or credits for such work. You’ll probably have to purchase the home “as is,” which means in its present condition.

This article includes general information about tax laws and consequences, but isn’t intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

Other web resources:

• More on short sales
• Real-life discussions of short sales

G.M. Filisko is an attorney and award-winning writer who luckily has avoided the need for a short sale on her properties. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

GSE loans were excluded from the Treasury’s Home Affordable Foreclosure Alternatives (HAFA) program’s guidelines, which went into effect in April. HAFA, which streamlines the Short Sale process, was created to help both homeowners and banks avoid foreclosure.

To be eligible for HAFA, Fannie and Freddie loans must first qualify for and enroll in the Home Affordable Modification Program (HAMP). GSE loans are eligible for HAFA only after HAMP and other home-retention options have failed.

Freddie Mac and Fannie Mae servicers must comply with the new HAFA procedures by Aug. 1; the program expires Dec. 31, 2012.

Here’s an excerpt from a DSNews article detailing the new GSE procedures:

Fannie Mae’s HAFA servicing guide stipulates that, “All servicers must implement Fannie Mae’s HAFA for all conventional mortgage loans that are held in Fannie Mae’s portfolio, that are part of an MBS [mortgage-backed securities] pool that has the special servicing option, or that are part of a shared-risk MBS pool for which Fannie Mae markets the acquired property.”

Freddie Mac’s HAFA servicing bulletin specifies, “First-lien mortgages owned, guaranteed, or securitized by Freddie Mac that were originated on or before January 1, 2009.”

The GSEs will pay financial incentives to both servicers and borrowers who make use of a short sale or a deed-in-lieu to avoid a foreclosure on a HAMP-eligible loan. Servicers will receive $2,200 for every HAFA short sale and $1,500 for every HAFA deed-in-lieu completed. Borrowers are entitled to an incentive payment of $3,000 to assist with relocation expenses.

© 2010 RE/MAX, LLC. RE/MAX Affiliates may share this article, provided they do not charge for it and this notice is included. All other rights reserved.

Although I run statistics frequently, I hadn’t actually compared different parts of the region as far as distressed property sales. Curious, I went to our Northwest Multiple Listing Service to run some quick stats. No, it’s definitely not just my imagination: short sales and bank-owned properties are far more prevalent in my business areas of the south King County and Pierce County areas. 

So here are the facts as of this morning, May 18, 2010 of the residential properties that I work most frequently (single family, condominiums, and manufactured homes): 

In King County, there are currently 15349 unsold properties. (Some of these do have offers of one sort or another.) Of those unsold properties, 971 are noted as being Bank-Owned, while another 4207 are noted as requiring Short Sale or some other third-party approval before the sale can close. Okay, that computes to about 33.7% of unsold properties being either bank-owned or short sale nature. 

In Pierce County, there are currently 6755 unsold properties. Of those, 741 are bank owned and 2178 are short sales. That’s approximately 43.2%. 

Now, to get even more specific, I live and focus my business (although not exclusively) in Auburn, a smaller community that spans the King and Pierce County lines. In the Auburn area, there are 463 unsold listings, 68 bank-owned and 228 short sale properties. YIKES! That’s 63.9% of all listings in my area!

So here’s the point: If you plan to buy or sell a property in the south King County or Pierce County areas where properties are so affordable, be sure that you’re working with an experience Short Sale or Foreclosure Agent. 

Taking the certification class was a fascinating experience – of the group of approximately 50 agents present, fewer than 30% of the agents had ever handled either the buyer or seller side of a short sale property! Wow, where have they been and how on earth are they still in business?

When questioned about where they work, well over half of the agents at the class focused on the east and northeast sides of King County – i.e., Bellevue, Redmond, Issaquah, Sammamish, etc., where short sale and bank owned properties aren’t as prevalent as they are in my practice areas. (Briefly, a short sale property is identified in our MLS as one where a property’s sale price is less than its outstanding indebtedness and some sort of negotiation, concession and/or approval is needed by the lien holder(s) before a sale can be completed.)

These types of transactions – for BOTH Sellers and Buyers – require considerably more experience and expert handling than do “regular” purchases and sales (whatever those are – I’ve almost forgotten!). From our informal classroom survey, it’s possible than over 70% of agents in our area have never handled a short sale or bank-owned property!!

Therefore, when you find yourself in need of help – or know someone who does – buying or selling short sale or foreclosure properties, call an experienced agent! I can be reached by phone at 206.300.8421 or by e-mail at gabrielle@gabriellenemes.com.

This unique Northwest home has so many things to offer!

The main living area with kitchen, dining room (centrally located by the kitchen and living room), and living room is open and spacious — perfect for family & friend gatherings. There are two bedrooms on the main level and one full bath. Upstairs is a fabulous master suite, while the lower level offers a large family room, 1/2 bath and huge bonus room. There is a two-car garage plus two-car carport, wonderful yard, and view like no other.

Call to see this home today!

Listing courtesy Geri Wehry of RE/MAX Select R.E.

I count myself spectacularly blessed to have a healthy happy family. Yes, we’ve experienced our share of anxieties … each time Children’s Hospital in Seattle was there for us. The doctors and nurses at Children’s are possibly the most dedicated medical staff to be found anywhere. Our needs were small compared to those of thousands of other families and their children. Yet we have always been treated with compassion, respect, and professionalism. The care of children just doesn’t get any better than at Children’s!

It is a great honor, therefore, to be affiliated with RE/MAX and its continuing support and contributions to the Children’s Miracle Network. A portion of the proceeds of every single transaction in my office goes directly to Children’s Miracle Network. That means every single home that we list for our Seller clients … and every single home purchase in which we assist our Buyer clients … contributes to this deserving cause.

Four years ago, the agents in my office determined that we could and should make a personal difference in the lives of the families of our extended community. With that goal in mind, the idea of an annual Little Miracles Auction arose. With the expert knowledge and guidance of our Broker and hours, days, and weeks of work by our Auction Committee, the Auction became a reality and has been a resounding success, directly benefiting the Pediatric Cancer Research Center at Children’s Hospital!

This year marks the Fourth Annual Little Miracles Auction, which will be held on April 30th at the Spirit of Washington Event Center in Renton. John Curley will return as auctioneer … and entertainment!

Now that the fourth auction is just around the corner, I want to personally issue an invitation to each of you to join us for this wonderful event! Click here to open an invitation. It really IS a lot of fun and benefits such a great cause — our children! You’ll have fun! I promise! Come’on join in!!

And, of course, at the heart of every auction are donations from friends, both personal and businesses. Your contribution will be greatly appreciated! Click here before April 7th to open a donation form.

Matt Person of The Legacy Group in Puyallup stepped up this morning with a compelling reason for Buyers to get off the fence and submit any FHA applications before the end of March. Since the business of selling houses is dependent on the ability of our clients to obtain financing — whether a Buyer or a Seller — Matt’s information is helpful.

Thanks, Matt! This is useful and I can understand this one!

4 Reasons Why Those Who Wait to Buy a Home Will Pay Thousands More This Spring!

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

These FHA changes make it even more important to act now to save big.

Here are a four reasons why:

1.    Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board’s mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year)

2.    On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%.

3.    For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

4.    Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these “seller concessions” can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March.

I know Matt would be delighted to be of assistance to you in your home financing needs. And, it goes almost without saying (gotta say it though) … I’d also be delighted to be your advocate in your home purchase and/or sale. Or … if you just have a question, well, give me a call and we’ll figure it out!