Former Model home; Whitehawk
Whitehawk in Palm Desert, California is a small, private, gated community in East Palm Desert. Located off of Country Club Dr., the 10 Fwy overpass is about 5 minutes away, shopping is across the street and also around the corner on Washington St. HOA’s are only $110/month.
This Short Sale, (Listing #21446840), is unbelievable..$100/sf for this former model home with all the upgrades, bells and whistles. Built in 1996, the home has 4bd/4ba with lovely outdoor porches and splash pool. Beautifully maintained, the Seller is current on HOA’s and keeps home in perfect condition.
Bank of America has the note on this one, and there is also a HELOC with them as the 2nd. The HELOC has already been approved..just need an offer to push back the Sale Date and get this Short Sale it’s final approval!
This home is approx. 2900 sf and priced at $289,900..just $100/sf. Seller’s loss is your gain. Great investment opportunity as would be a great year round lease.
The Neighborhood of Whitehawk..
Furnishings available outside of Escrow..hurry..bring offer!!!
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This is not news, but it IS critical for any Seller thinking about listing their home as a Short Sale in California in 2012. Remember the MOST critical thing..the Debt Forgiveness Act expires on 12/31/2012. Will it be extended? Most likely. However..do you want to take that chance? Read on for a recap of our anti-deficiency law, 580e. It’s a fantastic protection for Short Sale Sellers in California!
One of the first things my Short Sale Clients ask me is, “How does the Deficiency work?” What they mean as a Short Sale Seller is, “Am I going to be sued for the deficiency by my Lender?
In a word, “no!”
The year of 2011 saw a very spescific change to the anti-deficiency law for the state of California. Section 580e of the California Code of Civil Procedure came into effect on Jan. 1. This law generally prohibited a FIRST TRUST DEED LENDER from obtaining a deficiency judgment. This law applied to 1-4 residential units.
Then on July 15, 2011 a bill was introduced that greatly broadened the powers of section 580e.
Now section 580e covers many types of mortgage loans for 1-4 residential units, including..
•Purchase Money
•Rate and term refinance
•Cash-out refinance,
•owner occupied
•rental
•second home or vacation home
(This Law has it’s exceptions! Other types of liens such as judgment liens, tax liens, or HOA liens are NOT exempt from deficiency pursuit by the note holders!)
WOW! Lots of encouragement from the Government to do a Short Sale instead of a Foreclosure.
So..you are protected from the second lien holder pursuit as well now. Your Lender may NOT..
•collect a deficiency
•have a borrower owe a deficiency
•request a deficiency judgment
•require a borrower to pay to get a short sale approved
•require a borrower to waive their rights
Tips:
Sellers: Although a Short Sale Lender cannot demand you contribute to get your short sale done, you may offer to pay something to get a deal to work.
Buyers: Carefully consider before you write your offer, HOW MUCH money a Lender is being asked to write off. Sometimes, if a Lender has to write off a huge deficiency, they COULD choose to not do a Short Sale and pursue their other options. Not a huge likelihood in California..but think about it.
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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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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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Another Short Sale CLOSED; La Quinta, Calif.
Two more Short Sales CLOSED; one in La Quinta and the other in Indio. Short Sales DO close if you choose the right Listing Agent.
Short Sale CLOSED in La Quinta, Calif.: Listed in August..CLOSED in November.
Bank of America, primary home, one loan
Note Value: $252,000
Sold for $150,000..that’s about 60 cents on the original dollar! Conventional Loan with 20% down. Great family home with a lovely pool.
Short Sale CLOSED in Indio, Calif.: Listed in August, CLOSED in November
Estacio in Indio; Short Sale CLOSED!
Chase, primary home, one loan. The hitch was that the Sale Date was set for two weeks from the day I listed the property. Oh, and one more thing. Tenant in the home who was not happy, so the offer was written “contingent upon interior inspection”.
Note Value: $385,000
Sold for $234,000.. Buyers used a VA loan..unusual for a Short Sale! Another great home built in 2005, with a pool/spa in a gated community.
These were both relatively straight forward, because they were primary residences with only one loan involved and no Mortgage Insurance.
If you are nearing your Sale Date, or perhaps not, but want to learn about the possibility of doing a Short Sale, give me a call. Free, discreet property consultation and I don’t use a third party negotiation company! You WILL know where you stand with your Short Sale when you list with me!
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Submitting an offer on a short sale is the same as submitting an offer on any other property except a few minor details. Due to the nature of a short sales complexity, it’s best to choose an agent who has real experience on both sides of the transaction.
Even though you’re buying a home, a short sale listing agent that also helps buyer’s, will give you an advantage. This is why I pride myself in my ability to handle Palm Springs Valley short sale transactions.
First, have your agent find out how experienced the listing agent is with short sales. Though it may seem a little unusual to ask the other agent to provide their qualifications, it could potentially make a big difference. If the listing agent is experienced, they will likely have connections with asset managers at the bank, know what is expected by that particular Lender, and be able to communicate effectively about the progress of the transaction, timeline, etc. Talk this over with your agent and determine how you want to proceed.
Second, find out how many liens are currently held against the property. There is a direct multiplier between the number of liens and the level of difficulty of the transaction and time it takes to close. Your agent can get this information from a title company. To shed some light on this, just consider that for each lien holder, the short sale packet must be presented and negotiated, approved, and worked through.
You may or may not be able to find this out, but make sure and ask if there are any other offers. Most listing agents will not get into too many specifics about this, but at least if you know there are other interested parties, you can put your best foot forward. If the bank has already approved a previous buyer’s price, the listing agent may share that with you. This could potentially save the step of waiting for a price approval. This happens when the bank has approved a previous offer, but the buyer eventually backed out, though no guarantee. Lenders are known to change their prices too!
Once your deal is negotiated with the seller and presented to the bank, the waiting begins. Different banks have different timelines, but they are all ridiculously slow compared to a typical non-third party negotiation. Expect to wait at least a month for an approval, but be prepared to wait for several months.
Buyers often wonder why it takes so long. For the most part, the speed at which the file moves through the bank is a direct correlation to the amount of backlogged paperwork the bank is experiencing. There are literally thousands of these transactions happening across the country with the big banks. When you think about it, banks are losing money on short sales, so they probably do not want to spend money to hire tons of people to work on them. All in all, it will likely take 3-4 months to close your transaction on a short sale. For a cash transaction, the length of time could be shorter, but it’s not always the case.
After your offer is approved by the bank your contract’s inspection and financing contingencies will go into effect. You will have time, as stated in the contract, to seek financing. You will also have time to perform an inspection, and although most short sales are sold as-is, in rare cases, the bank may be willing to compensate for major problems, but that is not typical and should not be counted on. Should you choose to withdraw from the purchase, it is usually not a problem until after the due diligence and financing deadline. At that point, you will forfeit your earnest money should you choose to cancel the contract.
If you’re interested in buying a short sale in Palm Springs or surrounding areas, be sure to contact me to discuss what needs to be done to make your real estate transaction successful, and as stress free as is possible!
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