pleasanton short sale webinar 12 19 2012 v2
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TRANSCRIPT
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Short Sales – Start to Finish
Presented by Lynda Divito – Redfin’s Bay Area Listing Specialist
December 19, 2012
Follow: @RedfinbayareaLike: http://www.facebook.com/Redfinbayarea
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The Life of a Short Sale● How to grow a short sale● Getting a short sale listed● Picking your team● Searching for short sales● Market statistics● Negotiations and research● Sit and wait, finally explained● Getting a loan● Home inspections and warranties● Getting a clean title
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What is a short sale?● A short sale allows the homeowner to avoid foreclosure,
minimize financial damage and move on from a burdensome, unaffordable mortgage.
● In many cases, a short sale allows the borrower to qualify for a new mortgage in just 24 months, as opposed to five years or more after a foreclosure.
● A trained real estate agent can negotiate a short sale with your lender if you have three qualifications. ►First, you must show some type of financial hardship.►Second, you must have a monthly shortfall, meaning your
monthly expenses are greater than your monthly income.►Finally, you need to prove that your debts are greater than
the value of your assets (certain investments, property, etc.)
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How to Grow a Short Sale● Supply vs. Demand● 80/20 Loans● HELOCS (disappearing money)
►Recourse in a Non-recourse state● Market crash
►50% drop in home values● Making the decision to short sale
►Loan modifications►Bankruptcy►Credit Impact
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What Qualifies as a Distressed Property?● Property that is in poor physical condition● Property that is or will soon be in some stage of the
foreclosure process● Property that has an owner who is experiencing a period of
financial instability● Property on which the mortgage obligation exceeds its
current value, causing its owner to sell
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Market Trends● 2012
►34% sub prime in foreclosure or default►7% prime in foreclosure or default►15.77% FHA in foreclosure or default►8.72% VA in foreclosure or default
►5,881,000 mortgages are not being paid in 2012
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Foreclosure Activity and 30-Year Interest Rate – Pleasanton, CA
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Foreclosure Activity by Month – Pleasanton, CA
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Getting a Short Sale Listed● Seller’s mindset
►Home maintenance►HOA dues
● Bank’s attitude● Listing agent’s struggle● Pricing strategies
►Some things are too good to be true● Approval Notice complications● Trustee’s sale date
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Getting a Short Sale Listed● Verifiable financial hardship● Preparing of all financial paperwork for the ‘short sale
package’. Bank statements, w2’s, employment history, hardship letter, frank Dodd certification, 3rd party authorization, arms length agreement, ect
● Prep the listing and put on market● Negotiate short sale. If it’s a HAFA short sale, the bank gives
approval before the house is listed and the bank sets the listing price.
● The bank gives approval and a date to close by so the buyer/buyers agent has to be ready to close sometimes very quickly.
● The seller walks away with absolutely no proceeds from the sale of the home at all…HAFA offers a 3K incentive for moving out but the banks cover all closing costs, commissions and debt forgiveness.
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Understanding Cause of Distress● Verifiable financial hardship
► Loss of employment►Reduced income►Business failure►Damage to property►Death of a family member► Illness►Many others…
► It is estimated that most American families can only maintain their current living expenses for 30 days or less when income is interrupted for any reason
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Picking Your Team● Qualifying Your Realtor
►Experience, education, designations►What does it mean to you?
● Qualifying Your Lender►Rates are just the beginning►New lender pay compensation
● Partner Lenders►A hidden value
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From the buyers perspective
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Searching for Short Sales● Active, AWC and Pending
►What do they really mean?● Accurate and reliable websites● AWC, Pending and Sold stats● Pre-foreclosure lists
►What are they?
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Moving Forward…● Writing the Offer
► Tips, tricks, pointers► Low and Low Method
● You're Under Contract, Now What?►Sit and wait… and wait… and wait…►Do an Early Home Inspection►Revisit the home, occasionally
● Approval Process►What’s involved?►Approval Letters and Transferability
● What If…►House gets trashed►Critical items are missing to qualify for the loan►What leverage do you have?
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Sit and Wait, Finally Explained!● The short sale approval process (chart)● Parties involved (chart)● Types of liens● Getting updates
►Frequency and quality● Approval Notice
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Short Sale PartiesShort Sale
Title
Escrow Officer
Escrow Assistant
Sellers
AttorneyBuyers
Home Inspectors Appraiser Buyer’s
Lender
Underwriter
Investor Guidelines
Bank #1
Customer Care Center
Short Sale Department
BPO
Appraiser
Negotiator
Litigation
Mortgage Insurer
Mortgage Investor #1
Mortgage Investor #2
Closing Department
Bank #2
Customer Care Center
Short Sale Department
BPO
Appraiser
Negotiator
Litigation
Mortgage Insurer
Mortgage Investor #1
Mortgage Investor #2
Closing Department
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Short Sale Approval Process
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Getting a Loan● #1 Question
►Credit inquires and FICO scores● Pre-qualification vs pre-approval● Changing underwriting guidelines● When to lock your interest rate
►Short sales● Loan Options
►Conventional, FHA, Rehab, Homepath
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Home Inspections● What to look for yourself● Missing components
►Big ticket items (AC, cabinets, appliances)►Deliberate damage & safety (electrical)
● Severe neglect● What an inspector won’t find and won’t test
►Hidden defects►Untested system defects
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Home Inspections● Most common concerns
►Plumbing►AC►Maintenance►Termites►Fresh Paint
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Home Warranties● What is a home warranty?● What is covered?● What is excluded from coverage?● Benefits of a home warranty
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Home Warranties ● Managing the risk of unexpected repairs● As-is, what can be covered?● Pre-existing conditions
►Known►Unknown
● Home inspections and warranty coverage
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Title and Closing● Getting a clean title
►Last minute liens►Title insurance
● Mortgage Electronic Registration System● Recording Process● Keys!