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 ….)

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.

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.

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!

I’ve been privileged to work with Doug Thomas of WIN Home Inspections for the last five or six years, I’d say. He’s truly a professional in his job. Doug knows what he’s doing, does it well, and establishes a trusted relationship with every one of the clients with whom he is working. I like to think we’ve also become friends.

I’ll miss Doug’s enthusiasm and willingness to ‘work me into his schedule” at a moment’s notice. I wish all the best to Doug and his family in their new neighborhood. … Think you’ll be willing to fly back at a moment’s notice when we need you here????

So … here’s a heads-up to all you Chandler, AZ agents: Call Doug Thomas and his son Tyler of when you need a professional to trust with your client inspections.

….

Now to find a replacement that’s as dedicated. Who’s your favorite inspector in the southeast King County area?

(and, of course, his picture’s already gone from the WINI.com site. Rats! I wanted to include it here.

I was struck by her comment “Mom, you’re always out there taking care of other people’s houses. I can’t believe you do that. It seems like they should be doing this stuff themselves.” My response was “Welcome to Real Estate!”

Thinking back, my open-ended job description has changed significantly over the last two-three years. Is this a result of the “economy?” A result of my own changing standards and desire to be of help to folks? Or just laziness by allowing myself to get sucked-into agree to tasks that maybe could be delegated. Hmmmmmmm

Certainly my business profile has changed:

• Most of the homes I list and market are vacant. Used to be they were almost never empty!
• The majority of my listings are the result of financial distress on the part of their owners.
• The majority of the Buyers I assist have never owned a home before.
• Most of the Buyers are young, just starting out in their real estate ownership lives.
• A significant chunk of my business (almost 40%) comes from internet exposure.
• Nothing is fast — not the marketing time of a listing, nor the “finding a house and closing the sale” time with a Buyer.

So what does that mean to the actual “practice” of real estate?

Well, it means that my job description continues to evolve. Buyers don’t jump as fast at a great house — we have to see lots of houses. And then once a house is identified, an offer is accepted, inspections are negotiated and completed, the whole nightmare of completing all of the financing tasks comes into play. Let’s see, over the last half-dozen Buyer clients I’ve had to:

• Run to a Buyer relative’s home to pick up copies of bank statements and send them to the loan officer. Why me? Well, the Buyers got called away on a family emergency and somebody had to do this now!
• Go to the local IRS office to try to get copies of tax returns when an underwriter demanded real copies at the last minute.
• Attended a oh dear! super fun septic inspection in the pouring rain only to find out that the pump didn’t work.
• Negotiated payment for the septic repair over a period of a week and ran it around to all of the various parties because, gee, we were already a week past closing and the bank was threatening to pull our short sale approval.
• And on and on ……….

Sellers generally need help. They need hand-holding. Some of them are desperate. Most are anxious:

• I spent the better part of a day mucking out a garage and yard. Why? Well, it needed to be done and the Seller was totally unable.
• Met repair people at vacant listings!
• Helped move extra furniture out of the house and into storage because … well, I have a truck available and these two single gals had no idea what I meant when I said “pack!”
• Supervised the cleaning of gutters
• Picked up replacement locks and had them changed out.
• Bought food for an abandoned fish pond and cleaned it out.
• Above all, I’ve listened and listened and listened to their anxieties.

Now WHY should an agent bother with this? My response is always … because it has to be done. Somebody has to do this. To serve my clients well, the house needs to be sold/bought, they need help to be on their way to their next step in life, to be their ear, sometimes to encourage, sometimes to nag. To serve my clients, I am their trusted advisor, their “do-er,” the one to whom they look when there are snags along the way … and sometimes even after the transaction closes.

It all comes down to service. Real Estate is a service business.

Welcome to Real Estate!

Just so you know … Days on Market is the number of days the property was Active; i.e., available for sale and not under any sort of a purchase contract. Sometimes, especially where short sales are involved, a property may go in and out of Active status, however once a contract is fully signed by both the Buyer and the Seller, the property is “Pending” and the time during which the bank considers the sale does not affect the Days on Market.

Obviously the bulk of closed sales was for single family homes. So who sold these houses and why?

41% of the closed sales were from Short Sales and Bank-Owned homes. The good news: Almost 60% of closed residential sales were from private sellers!! YES, you CAN sell your house!

Information for these charts and graphs was manually compiled (by me) from the Northwest Multiple Listing Service and is for properties with Auburn addresses. Data for your individual neighborhood will be different and you’ll want to know exactly what’s going on around your own home when you consider selling.

Please remember that I specialize in Houses & Condos, buyers and sellers, and especially short sales! Interviewing for a progressive, knowledgeable, tenacious agent to buy or sell? Don’t hesitate to give me a call.

Repeat or Move-Up Home Buyer — Get Paid $6,500 to Buy a Home!!

• Buyers must have owned and lived in their previous home for five consecutive years out of the last eight years and purchase a replacement primary home.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.  Applies to homes priced at $800,000 or less.
• The tax credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010.  In cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies for the tax credit provided the sale is completed (closed) by June 30, 2010.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

1. You are buying a home today that doesn’t have inflated equity
2. You don’t have to sell your current home to qualify for the Tax Credit (although you would need to qualify for both house payments, if applicable)
3. You have sellers willing to pay your closing costs and possibly buy-down already great interest rates
4. You are in the first true “Buyers” Market in nearly 8 years and have the largest selection of homes in 15 years
5. The current downturn in house pricing as well as low interest rates could allow you to buy homes in neighborhoods that were out of reach two years ago

Thanks to Michelle Coolidge of Cobalt Mortgage for this information!