Critical that homeowners considering listing their home as a Short Sale do it in 2012..and in time to CLOSE by 12/31/2012. Why??? The Debt Forgiveness Act expires then! In California, although you will receive a 1099 for the debt that was forgiven, the debt is wiped out on primary and secondary residences..both first and second PMl’s. This helps you so much if you are not insolvent. Consult your CPA, then get that property listed and CLOSED in 2012.
Will the law be extended? I sure hope so. If not, Palm Springs and the La Quinta area will see more Foreclosures. We are really stabilizing in La Quinta. Prices are actually going up! Investors are finding that First time Buyers are able to beat them out in their bids!
Debt Forgivenss Act explained
If you are underwater on your mortgage and considering a Short Sale, get it listed NOW! Your final closing HUD must be dated no later than 12/31/2012 to qualify for your debt forgiveness. Consult your CPA, then get your property listed and CLOSED in 2012! Don’t wait and take a chance!
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The Sun is rising on B of A Buyer substitutions
Bank of America has been saying for months now that “if your Buyer walks in your Short Sale Transaction..don’t worry! We’ll allow a new Buyer to substitute right on in within 48 hours!” That was a joke. Never happened. Now it appears, they have changed that idea and now it looks like this…
This came to me via e-mail from Bank of America Short Sale Agent Update which is the same format they sent the last info in. I LOVE the idea of substituting a Buyer right on in. Eight days appears more reasonable to me since it seems to take forever for B of A Short Sale department people to learn any new rules. I am hopeful!
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8-Day Window to Submit Backup Offer
Based on agent feedback and to reduce overall cycle times, we are making a change to the short sale process. If it becomes necessary to submit a backup offer during a short sale, you now have a reduced window for making the submission. Instead of 14 days, backup offers must now be submitted within eight calendar days after the initial offer becomes invalid.
When a backup offer becomes necessary:
Within eight calendar days, resubmit the listing data, submit the short sale offer, and upload the offer documents and supporting documents. Any backup offer will require analysis and investor approval, regardless how similar it may be to the previous offer.
If no backup offer is available:
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The short sale will be closed in Equator by your short sale specialist.
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You should return to marketing the property.
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You may initiate a new short sale in Equator when you receive a new offer on the property.
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short sales CAN be a beautiful thing..
I’ve been noticing more and more, how many real estate agents are now “Short Sale Specialists.” Hmmm…got me to thinking. What IS a specialist? For a person to specialize in anything, they must do that one thing over and over. This creates experience. Experience teaches us how to handle problems that may arise in our “specialty”. Not until a person has handled MANY transactions and the problems and issues associated with those transactions over a period of several years at minimum, may that person claim to be a “specialist.”
Here’s an example…two agents that work together. In 2011, they take some seminars that claim that “short sales will be the wave of the future in real estate.” Uh-huh. They get certified by a Short Sale Negotiation company, (about 3 hours of instruction about how to hand over your short sale listings to them and they’ll do ALL the work.) Now, they are ready! Two new Short Sale Specialists are born. No ads came out stating such..until they landed a Short Sale Listing and handed it to the Negotiation company, and it closed. Bam! Now, their print ads read, “Short Sale Specialists.” What????
To me this feels fraudulent. I believe we will be seeing law suits over these fraudulent claims in the future. Why not just start working Short Sales, gathering experience and being honest? If you as a Short Sale Seller, are considering listing your home as a Short Sale, I would suggest you find out how many Short Sales your Listing Agent has closed last year? How many years of working Short Sales do they have under their belt? What do they know about your particular Lender? Are they simply taking your listing, then handing it off to a Negotiation Company that the Buyer pays for, thereby reducing the net to your Lender? Do you want a 3rd party negotiation company in the mix, or would you rather have a List Agent that talks to you directly? Get some references from your List Agent. Find out how past clients feel about their experience.
I know that a Short Sale is personal to each person enduring it. I handle my files myself..personally. My Sellers are real human beings to me..not just a commission pay out. Short Sales are long, arduous and require constant nurturing. But..2012 will be my 5th year of Short Sale negotiating with many different Lenders, MI companies, IRS liens, personal lenders..it is a skill. Not one that can easily be labeled a “specialty” by just anyone that takes a couple classes.
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The Short Sale BPO is critical to the Short Sale process. Remember that your Lender and the Investors above your Lender do not know you or your property..it is simply a file # to them. When I submit a Short Sale offer for approval, they order a BPO (many order a full appraisal). A BPO is a Brokers Price Opinion. A BPO Agent is paid very minimally ($50 or so) to create one of these reports..needless to say, they may not spend a ton of time on each home!
There are several problems with BPO’s for Short Sales.
1. The Agent is not a local Realtor and doesn’t understand the area/development of your Short Sale. They may use comps that are NOT comparable and mess up the FMV (Fair Market Value) of your property.
2. The BPO Agent is also an REO Agent (Foreclosure) and may even work for the Same Lender in their Foreclosure division! Conflict of Interest? Yes. The Agent may want the home to go to Foreclosure so he/she can get the Listing!
3. As mentioned above, the BPO Agent doesn’t spend much time on the property..
What to do? Have an experienced List Agent is most important. The List Agent will try to re-submit supporting comps for the offer and other financial documentation to support the Investors accepting the offer. If no success..sometimes, it’s just best to close the file, allow 60 days to expire (BPO’s are good for 60 days), then re-submit a new offer. A different negotiator, a different BPO and you’re in!
Crazy..yes. But sometimes, you just have to go with the system until it is smoother. Every year, Short Sales become smoother-no matter your Lender. Hang in there and trust your List Agent!
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Buyer’s Agent; What does it mean? A buyer’s Agent represents the BUYER. There are Agents who ONLY represent Buyers, and there are Agents that represent both buyers and sellers. Not usually at the same time, although in California “dual Agency”, is legal and in certain circumstances is just fine.
When a Buyer is considering a Short Sale OR a standard, equity sale, they need an Agent looking out for their own interests. I don’t take my Buyer’s to just any property. It is a process to find a property that matches a buyer. It takes homework on the Buyer’s Agent side. We need to interview our Buyers to try to suss out exactly what their list of “I wants” is vs. their list of “I will not live withouts.” Very different.
If a Buyer is looking at a Short Sale or a Foreclosure, they are probably more interested in price/sf. This Buyer may very well give up many of their “wants” and certainly some of their “I will not live withouts”. In a Short Sale, the Buyer has to LOVE that home so much, they are willing to ride the short sale cycle all the way to the end. In a Foreclosure, the Buyer has to look past the condition to the potential..
The Buyer’s Agent has to LISTEN. Really hear what the Buyer is looking for. Really see how they respond to a property. Sometimes, the Buyers list of “I will not live without”, becomes very different as we go through the process of home searching. Look for a Buyer’s Agent that suits your personality, and listens to what you want…you’ll be working together for a long time!
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HAFA short sale CLOSED. North La Quinta, CA.
Just closed another Short Sale in North La Quinta yesterday. This one was approved for a HAFA Short Sale. HAFA short sales are not easy because they require such extreme documentation from the Sellers, but if the Seller has already tried to do a Loan Mod, then it’s relatively straight forward.
HAFA is the government backed Short Sale program. It is for Primary Residences only with Purchase Money Loans. One loan or two loans..both may qualify. The requirements for the Seller are stringent to be sure, but less so than they were before this year! The Sellers income to expense ratio is no longer calculated, against their % of Mortgage payment. It used to be that the Seller had to be spending 31% or more of their monthly income to their mortgage. No longer. There must be a true hardship to qualify, but it is a good program because there are time lines and the Seller receives a Relocation fee of $3,000 to help them move on with their lives.
This particular home in the Topaz development of North La Quinta is gorgeous! Built in 1994, it has 3 bds/2.5 baths, a large yard with pool/spa/BBQ and outdoor shower, and is located on a dul-de-sac in a great school district. North La Quinta is preferred by families because it has great Kindergarden, middle and high schools within walking and biking distance for the kids. North La Quinta is also about 5 minutes from Hwy 111 with it’s shops and public transportation. The parks and common green belts located throughout the North La Quinta developments encourage outdoor living for all family members. A friendly, neighborly community of home owners.
Wells Fargo held the note for this home. Value of $350,000. I listed and CLOSED this Short Sale in approximately 90 days for the price I listed it at..$228,000. Seller received $3,000 in relocation fees and the Buyers purchased a highly upgraded home for a very good price. HAFA short sales are tricky, but with an experienced Listing Agent, they DO close!
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What they say is true. Short sales are a long, arduous, and oftentimes frustrating process. Short sales for Palm Springs real estate are no different. To lessen the frustration, it is imperative to get the right players on your team from the beginning. Facing a financial crisis is hard enough, getting the right people on board can make your resolution a lot better.
Where to Begin
First, find an experienced short sale agent. No two short sales are exactly alike, but even so, novices need not apply. These deals can be extremely difficult, and you want a seasoned pro in your corner. Also, a more experienced short sale agent is going to have better contacts with the bank’s asset managers and loss mitigators, which will come in handy as the pressure starts to heat up.
Use the internet to search for short sales in your area. See if you can determine an agent or two who is or has done several of them and check for testimonials. I have over 5 years of experience with short sales and many testimonials of successful transactions. Another avenue to pursue in searching for the right agent is to ask friends and family if they know of anybody.
Also, you may want to contact a Palm Springs real estate attorney who has experience with the short sale process. Putting together a short sale transaction can be lengthy and confusing with potential legal ramifications. Having someone qualified to give you legal advice and protect your rights as a homeowner is a good idea, because a REALTOR® cannot. Typically, real estate agents and attorneys work together to ensure a good outcome.
If a short sale is not handled correctly, it will turn into a foreclosure. To avoid that as well as several headaches and hassles, get the best team possible working on your behalf right from the start.
Get Your Short Sale Documentation In Order
The next step, after finding quality representation, is assembling everything you will need to submit your short sale packet to your lender. Once you find your documents, your agent can help assemble everything.
- Hardship Letter (Some banks have forms to fill out, others require a personal handwritten letter. This is your explanation of why you are requesting a short sale.)
- Third Party Authorization Form (Required for a third party (agent) to negotiate on your behalf.)
- 2 Months of Bank Statements
- Last 2 Paystubs
- Last 2 W-2s
- Last 2 Income Tax Returns
- Signed Listing Agreement
- Income vs. Expenses Documentation (Depending on the lender.)
- Recent Mortgage Statements
- HUD-1 Closing Statement For New Offer
- Buyer’s Offer
- All Marketing Documentation
In the case that there is more than one lien against the property (home equity loan, second mortgage, etc.) your agent will need to repeat the packet assembly process for each lien holder. Once an offer is submitted on the property, your packet, as well as the qualified offer you have negotiated, will be submitted to each lien holder for their approval. As an aside, lenders are not typically willing to accept lowball offers, so keep that in mind as you negotiate any offers.
Be patient, the average time necessary to close a short sale is in the 3 to 6 month range, but some take even longer. If you are trying to short sale a home in Palm Springs, the process may be long and hard, but with competent parties on your side, things will run as smoothly as possible. Ultimately, a little extra preparation upfront, (get those docs to your List Agent!), can save lots of headaches later. Do your homework and get yourself the The Short Sale Queen of the Palm Springs Valley!
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