Monday, March 31, 2008

Short Sales: Time Frame and Approval Process

I get phone calls almost daily from agents in my market asking how long the short sale lender will take to respond, if they have approved the price, and how "far along" in the process the short sale is. Here are the answers:

1. How long will the lender take? Use a 90 day closing in your contract- for starters. Depending on the lender backlog, your closing may take as long as four months, if approved. The last closing I had with ASC, for example, was submitted as a complete package on December 7, 2007. It closed on March 27, 2008. That is almost four months. Currently, most lenders are taking 30 (if you are lucky) to 75 days to order an appraisal on the property.

2. Has the lender approved the price? It depends on the lender. Many of the bigger lenders do not pre-approve a price, for example-- Countrywide, Wells Fargo, Chase, Aurora, etc. However, a few do-- Citi Residential, Fremont. So, most of the time, the answer is "no", the list price is not "pre-approved". Most lenders will look at the price at the time an offer is submitted, and order an appraisal or BPO (Broker Price Opinion) at that time.

3. How far along is property in the short sale process? See number 2, above. Most lenders take no action on the file until a complete short sale package, with offer, is submitted. Yes, Citi Residential and Fremont are ahead of the game, but if there is a second mortgage involved, add that to your scenario.

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or 850-650-7883 ext 204

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Tuesday, March 18, 2008

And Then I Became That Buyer's Agent

I recently wrote about Short Sales: For Buyer's Agents. Well, I just became that agent! Having practiced real estate for almost nineteen years, I have spent the last many specializing in listings. I work with buyers infrequently, and almost always on a referral basis. That is because I enjoy the listing aspect more. Yes, after I end up working with a buyer, I usually find it rewarding. But it is not my normal modus operandi. Today I had an interesting scenario arise where I became the Short Sale Buyer Agent. A little background....

About three weeks ago I received a phone call from a gentleman who had three properties he needed to sell short. He was a retiree who had made some investments in condos in Destin about three years ago. He thought he could flip them for a profit, but was never able to. Meanwhile, his rent revenue had diminished and he was several months behind in his mortgage payments. I told him I could help him, and referred him to my website After a day of discussions, he said he felt guilty he was not working with an agent who tried to help him previously. I understood perfectly well, and let it go at that. Today, I noticed his three listings came on the market with that particular agent. One was substantially underpriced. I received a phone call from one of my out-of-state sellers who was shocked at the price, as I have one of his units for sale in the building, at a much higher price. He referred a friend of his to me to write an offer on the new listing.

I called the listing agent to inform her I was writing an offer. I gently (I thought) asked if I could be of any assistance regarding the Short Sale aspect. (Short Sales are 90% of my business, and I often have local agents refer their Short Sale listings to me). She said, "No, I do these ALL the time." Of course, I had seen in my MLS statistics that she had only sold five houses in the last 18 months, none of them being Short Sales. I asked, "Who is the lender?" She said, "I don't disclose that." I asked why, and she said "I am protecting my client, and that's how things are done." I automatically told her it was public record. She then told me she had had enough of the "Drama" and "didn't have time for this". Etc., etc. I, stunned, asked if I had missed something? She again repeated she did not have time for the "Drama". I did find the previous lender authorization her seller had sent me a few weeks prior indicating the bank was Countrywide.
Hmmm. Having to be diplomatic to protect my buyer's interest is going to take some restraint on this one.

UPDATE- DAY 2: The offer I submitted yesterday had a response deadline of 6:00 p.m. today. I just called the listing agent at 5:45 p.m. I asked if her client was going to make the response time. She said "No, we have multiple offers, and I am going to present them all at once." She had not intended on notifying me that the response time would not be met. I then called and told my seller that we may be in an "auction" situation since the listing was underpriced, it probably generated offers above asking. He said he was not going to participate in the game.

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Fort Walton Beach, Niceville, Navarre, Crestview, Grayton Beach, Sandestin, Seaside, Rosemary Beach, Dune Allen, Blue Mountain Beach, Bluewater Bay, Mary Esther, Shalimar, Freeport and vicinity. 1-877-487-9639

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Wednesday, March 12, 2008

Short Sales: For Buyer's Agents

Are you the selling agent in a Short Sale market? Arm yourself with information for a successful transaction:

1. Prepare your buyer by going over steps in Buying Short Sales.
2. Ask the listing agent if he has gathered the information necessary to submit the Short Sale package, including: letter of authorization, financial statement, recent pay stub or last quarter profit and loss, recent bank statement, last year's tax returns, hardship letter, and payoff if more than one lender. If the listing agent has not already done so, prepare the buyer for a longer wait. I would also ask what the hardship is. If the listing agent will divulge that information, it may assist you in determining whether it would be a viable short sale situation. The hardship should be loss of income, medical, divorce, etc. where they might be a reasonable expectation for approval by the lender.
3. Decide with the buyer whether to make the contract effective date, depending on your board of Realtors, the date the seller signs the contract, or the date the offer is finally approved by the seller's lender. The contract effective date is normally the trigger from which other actions are based. For example, if it is customary in your market to conduct inspections within two weeks, your buyer may wish to wait for bank approval before proceeding. Conversely, if the buyer conducts inspections early, that shows strong intent to complete the transaction.
4. Advise the buyer regarding potential valuations of the Short Sale property by the lender. If the buyer is going to make an unreasonable offer that you know may not be approved after several months of waiting, it is better to inform him at the beginning. Look at the property in the eyes of an appraiser. If recent comparable sales don't come close to justifying the buyer's offer, this may not be a transaction worth pursuing, for you, the buyer or the seller.
5. Once the contract is signed by the seller, follow up gently with the listing agent. A call every two weeks to check on the status of the offer with the lender should be enough of a reminder, and should satisfy your buyer's anxiety during the long wait toward approval.

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Sandestin, Santa Rosa Beach, Blue Mountain Beach, Dune Allen, Watercolor, Rosemary Beach, Seaside, Niceville, Bluewater Bay, Freeport, Crestview, Navarre, Fort Walton Beach, Mary Esther, Shalimar and vicinity. Call 1-877-487-9639.

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Tuesday, March 4, 2008

Countrywide Short Sale: Case Study

Following is a case study of a Countrywide short sale negotiating process.

Property: Single family home in Navarre, Florida- an investment property with tenants

Seller Hardship: Rent does not cover mortgage payment, medical, job loss

List Price: $142,000

Seller Mortgage: $188,000

Offer: $135,000

Countrywide Appraisal: $152,000 (higher than list price)

Buyer Counter: $137,000

Countrywide Response 2 days before Foreclosure Sale: "Offer will be denied. It is too low. Will only extend foreclosure sale if seller pays mortgage payment plus penalty."

Wendy Rulnick: "Seller cannot comply. I challenge your appraisal. Countrywide just approved a different sale for a better house for $139,000. I will send you comps and proof."

"Quick Facts" Document sent to Countrywide: Comps, market statistics showing months inventory, Countrywide's demand letter approving a recent sale for similar price, and history of the property's price reductions proving it could NOT sell for $152,000.

One Day Before Foreclosure Sale: Approved.

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Fort Walton Beach, Niceville, Navarre, Crestview, Freeport, Santa Rosa Beach, Blue Mountain Beach, Sandestin, Watercolor, Seaside, Rosemary Beach, Inlet Beach, Mary Esther, Shalimar. Call 1-877-487-9639 email [email protected]

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