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Foreclosure Alternatives – Selling a Short Sale  Presented by Will Fassinger  September 19, 2012 Atlanta, GA  Follow: @Red...
Agenda     ●   Market update     ●   Modifications     ●   Short Sales     ●   Foreclosures     ●   Debt Relief Act     ● ...
Advisors  Real Estate Broker – Marketing your house  Bankruptcy Attorney – Bankruptcy and credit impacts  Short Sale Speci...
Market ConditionsSlide 4 of 34
Geographical Comparison - AtlantaSlide 5 of 34
Foreclosure Activity by Month – AtlantaSlide 6 of 34
Case-Shiller: Atlanta Area v. 20-City   250.00                20 City Composite                Atlanta   200.00   150.00  ...
Case-Shiller – By the Numbers  Case-Shiller: Atlanta Area    Down 12.1% year-over-year    Peak was July 2007    Down 33% f...
Atlanta Unemployment RateSlide 9 of 34
55% of Atlanta Homes Under WaterSlide 10 of 34
Loan ModificationsSlide 11 of 34
Forms of Loan Modifications      ● Temporary Mods         ► Forbearance         ► Reinstatement      ● Mortgage Modificati...
Home Affordable Modification Program                  ● HAMP Criteria:                  ● 1- Borrower is delinquent or fac...
Ways Modifications can help                 1. Reduce Interest Rate as low as 2%                 2. If necessary, extend l...
0%                                             2%                                                  4%                     ...
What is a Short           Sale?Slide 16 of 34
Short Sale Process      1.    Create Package      2.    Market Property      3.    Receive Offer & Evaluate      4.    Sub...
Hardships Examples        ► Loss of Job        ► Loss of Income        ► Reduced Income        ► Business Failure        ►...
Short Sale Package Contains         ●   Cover Letter         ●   Hardship Letter         ●   Preliminary HUD         ●   P...
Arms-Length TransactionSlide 20 of 34
How We Sell Your House      ● Perfect debut         ► Professional photos & video tour: optimized for online         ► Pri...
Pro Photos Make A Big Difference                             After price, the                             #1 factor for   ...
90% of Buyers Search Online                 140,000 visits in Atlanta for October 2010                 (Source: Internal r...
Evaluating the Offer  ● Keys to getting the lender to accept the short sale contract     ► Contract Price     ► Contract t...
Short Sale Parties                                                                Short Sale                              ...
Short Sale Approval ProcessSlide 26 of 34
Closing      ● Buyer needs to close within 30 days        of lender approval                 Cash to Close                ...
Slide 28 of 34
Foreclosures         1.      Deed in Lieu (Cash for Keys)         2.      Foreclosure Notices         3.      Non-Judicial...
Phantom Tax                       Mortgage Debt Relief Act of 2007             1. Debt must be incurred on                ...
BankruptcySlide 31 of 34
Bankruptcy Tid-bits      ● Temporary Stop for Short Sales and Foreclosures      ● Chapter 7            ► “Straight Bankrup...
Thanks For Coming!        Please fill out the survey we’ll send tomorrow          along with the slide deck. We’d love to ...
Our next class!                        New Construction Class                            October 9, 2012                  ...
HUD Settlement StatementSlide 35 of 34
Favorite Real Estate Links  ● Property Information     ► PropertyShark: Zoning data, title history, permits,       neighbo...
Favorite Real Estate Links: Listings + FSBO + REO, updated every 15 minutes,   ► Redfin: MLS          with DOM, price hist...
Favorite Real Estate Links: Pricing Data          ► Case-Schiller Indices: Pricing trends by metropolitan            area ...
Favorite Real Estate Links: Mortgage            ► Bankrate: Many ads, but is great for comparing local              lender...
Favorite Links      ● Loans for First-Time Home-Buyers         ► Federal Housing Administration (FHA)         ► Fannie Mae...
Favorite Links Cont.  ● Remodeling & Renovations    ► DoItYourself.com: A few ads, but a useful clearinghouse of      info...
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Atlanta foreclosure alternatives class 9 19 12

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  1. 1. Foreclosure Alternatives – Selling a Short Sale Presented by Will Fassinger September 19, 2012 Atlanta, GA Follow: @RedfinAtlanta Like: http://www.facebook.com/RedfinAtlantaSlide 1 of 34
  2. 2. Agenda ● Market update ● Modifications ● Short Sales ● Foreclosures ● Debt Relief Act ● Bankruptcy *For informational purposes onlySlide 2 of 34
  3. 3. Advisors Real Estate Broker – Marketing your house Bankruptcy Attorney – Bankruptcy and credit impacts Short Sale Specialist – Attorney Intermediary Mortgage Lender – Future Purchase Options CPA – Tax ImplicationsSlide 3 of 34
  4. 4. Market ConditionsSlide 4 of 34
  5. 5. Geographical Comparison - AtlantaSlide 5 of 34
  6. 6. Foreclosure Activity by Month – AtlantaSlide 6 of 34
  7. 7. Case-Shiller: Atlanta Area v. 20-City 250.00 20 City Composite Atlanta 200.00 150.00 100.00 50.00 0.00Slide 7 of 34
  8. 8. Case-Shiller – By the Numbers Case-Shiller: Atlanta Area Down 12.1% year-over-year Peak was July 2007 Down 33% from peak Currently at October 1998 prices Case-Shiller: 20-City Composite Up 0.5% year-over-year Peak was July 2006 Down 31.1% from peak Currently at July 2003 pricesSlide 8 of 34
  9. 9. Atlanta Unemployment RateSlide 9 of 34
  10. 10. 55% of Atlanta Homes Under WaterSlide 10 of 34
  11. 11. Loan ModificationsSlide 11 of 34
  12. 12. Forms of Loan Modifications ● Temporary Mods ► Forbearance ► Reinstatement ● Mortgage Modification ► HAMP – Making Home Affordable ► HAFA – Part of HAMP ● Special Programs – SRCA & HAPSlide 12 of 34
  13. 13. Home Affordable Modification Program ● HAMP Criteria: ● 1- Borrower is delinquent or faces imminent risk of default ● 2. Primary Residence ● 3. Mortgage originated before January 2009 ● 4. 2nd Lien Modification Program (2MP) Beware of Predatory Modification CompaniesSlide 13 of 34
  14. 14. Ways Modifications can help 1. Reduce Interest Rate as low as 2% 2. If necessary, extend loan to 40 or 50 years 3. Forbear portion of principal 4. Balloon Payment*Slide 14 of 34
  15. 15. 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Apr-71 Apr-72 Apr-73 Apr-74Slide 15 of 34 Apr-75 Apr-76 Apr-77 Apr-78 Apr-79 Apr-80 Apr-81 Apr-82 Apr-83 18.45% Apr-84 Apr-85 Apr-86 Apr-87 Apr-88 Apr-89 Apr-90 Apr-91 Apr-92 Apr-93 Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 30 Yr Fixed Source: Freddie Mac Interest Rates 1971 - Today Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 30 Yr Fixed Apr-07 Apr-08 Source: Freddie Mac Apr-09 Interest Rate Apr-10
  16. 16. What is a Short Sale?Slide 16 of 34
  17. 17. Short Sale Process 1. Create Package 2. Market Property 3. Receive Offer & Evaluate 4. Submit Contract to Lender 5. Receive Lender Approval 6. Close Sale 7. MoveSlide 17 of 34
  18. 18. Hardships Examples ► Loss of Job ► Loss of Income ► Reduced Income ► Business Failure ► Severe illness ► Relocation ► Mortgage Adjustment ► Too Much Debt ► Divorce ► Death of Spouse ► Incarceration ► Damage to PropertySlide 18 of 34
  19. 19. Short Sale Package Contains ● Cover Letter ● Hardship Letter ● Preliminary HUD ● Purchase Contract ● Loan pre-approval ● Authorization to Release Info ● Seller Financial Worksheet ● Bank statements & bills ● Income Tax returns ● Listing Agreement & MLS Printout ● Listing History ● Property Repair & Damage Form ● Estimated Carrying Costs ● Current Market Stats and ComparablesSlide 19 of 34
  20. 20. Arms-Length TransactionSlide 20 of 34
  21. 21. How We Sell Your House ● Perfect debut ► Professional photos & video tour: optimized for online ► Pricing: a science, not an art ● Marketing blitz ► Website syndication: 30+ sites ► Private placement ► Service: open house, private tours, sign, flyers ● Sustained effort ► Showing feedback, bi-weekly updates ► Real-time traffic dashboardSlide 21 of 34
  22. 22. Pro Photos Make A Big Difference After price, the #1 factor for driving tours: photosSlide 22 of 34
  23. 23. 90% of Buyers Search Online 140,000 visits in Atlanta for October 2010 (Source: Internal records) #1 real estate search site in the US (Source: Hitwise)Slide 23 of 34
  24. 24. Evaluating the Offer ● Keys to getting the lender to accept the short sale contract ► Contract Price ► Contract terms ► Closing cost contributions ► 2nd pre-approval letter ► Inspections done right away ► Earnest Money up-front (90 days) ► Start Title Work Right AwaySlide 24 of 34
  25. 25. Short Sale Parties Short Sale Bank #1 Attorney Customer Short Sale Care Departme Litigation Center nt Closer Intermediary BPO Mortgage Appraiser Insurer Escrow Assistant Mortgage Negotiator Investor #1 Sellers Bank #2 Mortgage Investor Customer Short Sale #2 Listing Care Departme Litigation Closing Agent Buyers Center nt Departme BPO nt Mortgage Redfin Home Buyer’s Insurer Appraiser Appraiser Agent Inspectors Lender Mortgage Underwrit Negotiator Investor er #1 Mortgage Investor Investor Guidelines #2 Closing Departme ntSlide 25 of 34
  26. 26. Short Sale Approval ProcessSlide 26 of 34
  27. 27. Closing ● Buyer needs to close within 30 days of lender approval Cash to Close Seller Note ● Attorney represents buyer’s lender* ● Title Search ► Title insurance ● Closing Paperwork ● Final HUD ApprovalSlide 27 of 34
  28. 28. Slide 28 of 34
  29. 29. Foreclosures 1. Deed in Lieu (Cash for Keys) 2. Foreclosure Notices 3. Non-Judicial Foreclosures 4. Post-Foreclosure 1. Redemption Periods 2. Deficiency Judgements 3. Tax ConsequencesSlide 29 of 34
  30. 30. Phantom Tax Mortgage Debt Relief Act of 2007 1. Debt must be incurred on Principal Residence 2. Cancelled debt up to $2mil 3. Debt from 2nd Mortgages and HELOC’s not eligible 4. Debt from Investment properties and second homes not eligible 5. Further criteria existsSlide 30 of 34
  31. 31. BankruptcySlide 31 of 34
  32. 32. Bankruptcy Tid-bits ● Temporary Stop for Short Sales and Foreclosures ● Chapter 7 ► “Straight Bankruptcy” or liquidation ► May be allowed to keep certain exempt property ► Stays on credit for 10 years ● Chapter 11 ► Businesses and corporations ► Re-organization of debts ► Most expensive Bankruptcy ● Chapter 13 ► Payment plan – keep all property ► Re-organization of debts and 3-5 year payment plan ► Stays on credit for 7 years ● Consult with a reputable Bankruptcy AttorneySlide 32 of 34
  33. 33. Thanks For Coming! Please fill out the survey we’ll send tomorrow along with the slide deck. We’d love to get your feedback on how the class could improve. To get even more info on the home buying process, check out our home buying guide: http://redfin.com/home-buying-guideSlide 33 of 34
  34. 34. Our next class! New Construction Class October 9, 2012 6:30pm – 8:00pm Glenridge Heights – Pulte Model Home http://www.redfin.com/buy-a-home/classes-and-eventsSlide 34 of 34
  35. 35. HUD Settlement StatementSlide 35 of 34
  36. 36. Favorite Real Estate Links ● Property Information ► PropertyShark: Zoning data, title history, permits, neighborhood data; navigation is clunky ● Neighborhood Information ► WalkScore: Proximity to points of interest ► Trulia Heat Maps: Median prices across a countySlide 36 of 34
  37. 37. Favorite Real Estate Links: Listings + FSBO + REO, updated every 15 minutes, ► Redfin: MLS with DOM, price history, Zestimate ► craigslist: Major FSBO source that Redfin cant crawl ► HotPads: Foreclosure heat maps ► Brokerage site of listing agents: more photos of the listing ► RealtyTrac: Foreclosure market detail, subscription required for full reportsSlide 37 of 34
  38. 38. Favorite Real Estate Links: Pricing Data ► Case-Schiller Indices: Pricing trends by metropolitan area ► HouseMath: Compares a housing investment to a stock market investment ► Altos Research: Median price trends and days on market by city, but some complain data is unreliable ► MSN Home Affordability Calculator: Based on your income & credit score ► SmartMoneys Home Buying Worksheet: Similar to the MSN calculator, but requires more infoSlide 38 of 34
  39. 39. Favorite Real Estate Links: Mortgage ► Bankrate: Many ads, but is great for comparing local lenders ► Zillows Mortgage Marketplace Help Center: Articles mortgage rates, types of mortgages, credit reports, and a series of mortgage calculators ► The Mortgage Professor: Bare bones information on mortgages, definitions of common terms, myriad of mortgage calculators ► HUD FHA page: Most reliable explanation of FHA loans, good site for first-time buyersSlide 39 of 34
  40. 40. Favorite Links ● Loans for First-Time Home-Buyers ► Federal Housing Administration (FHA) ► Fannie Mae and Freddy Mac ► CalHFA: California State agency that helps certain buyers ● Government Sites ► Federal Trade Commission: Articles & alerts for home- buyers. ► Dept. of Justice: Role of competition in real estateSlide 40 of 34
  41. 41. Favorite Links Cont. ● Remodeling & Renovations ► DoItYourself.com: A few ads, but a useful clearinghouse of information on remodeling ► National Association of Home Builders (NAHB): Articles on remodeling your home, most are good ● What to Look for in an Inspection ► American Society of Home Inspectors (ASHI): Good consumer FAQ & virtual home inspectionSlide 41 of 34
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