Ballard short sale class 11.27.12
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Ballard short sale class 11.27.12 Ballard short sale class 11.27.12 Presentation Transcript

  • Distressed PropertiesPresented By: Tami RitochRedfin’s Ballard TeamNovember 27, 2012 Seattle, WASlide 1 of 37
  • Geographical Comparison – SeattleSlide 2 of 37
  • Types of Distressed Homes ● Short Sales ► AKA: Pre-foreclosure ► Potential vs. Approved Short Sale ● Foreclosures ► AKA: Bank-owned, REO, lender owned ► Fannie, Freddie, Ginnie & HUD ● Auctions ● Estate SalesSlide 3 of 37
  • Agenda ● How does a short or REO sale work? ● Parties involved (see chart) ● Qualifying the short sale or REO ● Short sale and REO approval process (see chart) ● Timelines (Contingencies and Closing) ● False contracts ● Approval noticeSlide 4 of 37
  • 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 titleSlide 5 of 37
  • How to Grow a Short Sale ● Supply vs. Demand ● 80/20 Loans ● HELOCS ► Recourse in a Non-recourse state ● Market crash ► 50% drop in home values ● Making the decision to short sale ► Loan modifications ► Bankruptcy ► Credit ImpactSlide 6 of 37
  • 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 dateSlide 7 of 37
  • Short Sale Tid Bits ● The rumor mill (old market) ● Types of loans and liens ► Get the Prelim! (and read the fine print) ● Refundable deposit ● 15% Redfin Rebate on Short Sales ● Questions to ask before writing an offerSlide 8 of 37
  • Picking Your Team ● Qualifying Your Realtor ► Experience, education, designations ► What does it mean to you? ● Qualifying Your Lender ► Rates are just the beginning ► Lenders pay compensation ● Redfin Partner Lenders ► A hidden value ► No financial referralSlide 9 of 37
  • Searching for Short Sales● Active, Backup, and Pending ► What do they really mean?● Accurate and reliable websites● Backup, Pending, and Sold stats● Pre-foreclosure lists ► What are they?Slide 10 of 37
  • Moving Forward…● Writing the Offer ► Tips, tricks, pointers● Youre 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?Slide 11 of 37
  • Sit and Wait, Finally Explained!● The short sale approval process (chart)● Parties involved (chart)● Types of liens● Getting updates ► Frequency and quality● Approval NoticeSlide 12 of 37
  • Short Sale Parties Short Sale Bank #1 Title Customer Short Sale Litigation Care Center Department Escrow Officer BPO Mortgage Appraiser Insurer Escrow Assistant Mortgage Negotiator Investor #1 Sellers Bank #2 Mortgage Investor #2 Customer Care Short Sale Litigation Center Department Closing Buyers Department BPO Mortgage Home Buyer’s Appraiser Insurer Appraiser Inspectors Lender Mortgage Negotiator Investor #1 Underwriter Mortgage Investor Investor #2 Guidelines Closing DepartmentSlide 13 of 37
  • Short Sale Approval ProcessSlide 14 of 37
  • Bank Owned HomesSlide 15 of 37
  • What is a Bank-Owned Property?● A foreclosed home owned by a bank or lender● Standard sale but: ► Verbal negotiations ► Long response times ► Repairs unlikely ► Legal addenda may require an attorney ► Limited or no disclosures ► Banks demand use of their own contracts ► Bank can back out any time until they’ve signed ► Contract often requires early release of earnest moneySlide 16 of 37
  • Foreclosure TimelineSlide 17 of 37
  • Why Buy a Bank Owned?● Best price● Not afraid of a remodel● Comfortable with contracts● Financially strong with liquid capitalSlide 18 of 37
  • Foreclosure Activity and 30-Year Interest Rate – Seattle Slide 19 of 37
  • Foreclosure Activity by Month – SeattleSlide 20 of 37
  • Buying at Auction● County Auctions (steps)● Organized Auctions● Who buys homes at auction?● What types of homes are at auction?● What are the prices like?● What is involved with buying at auction?● What is an absolute auction?● Due Diligence prior to auction● Tip - Write down your Max-bidSlide 21 of 37
  • Finding Distressed Homes● Redfin ► Shadow Inventory ► Foreclosures (bank owned) ► Short Sales● Government Sites ► Homepath.com and Homesteps.com ► Hudhomestore.com ► IRS● Look down the streetSlide 22 of 37
  • The Offer & The DealSlide 23 of 37
  • Negotiation Strategies - SS● Recognize pricing strategy● Ask lots of questions● New listing● Old listing● Pre-approved short sale● Team up with listing agent● Meet the sellers● Be realisticSlide 24 of 37
  • Negotiation Strategies - REO● Round 1 ► New listing ► 30 days old ► Price Reductions ► Keep it clean● Round 2 ► Repairs Health and safety Stolen goods Lender Required RepairsSlide 25 of 37
  • Title and Closing● Title Search ► Chain of title ► Last minute liens ► Title insurance Lender’s Policy Owner’s Policy● Closing Paperwork● Possession and keysSlide 26 of 37
  • FinancingSlide 27 of 37
  • Financing Options● Conventional loans ► 30 year, 15 year, 5/1 ARM, etc● FHA ► FHA health and safety requirements ► Flipping guidelines● Rehab loans (203k)● Homepath loansSlide 28 of 37
  • Financing Steps● Preapproval● Select property ► What is condition of property? ► Flipping guidelines● When to lock in the rate ► Short sale ► Bank owned● Mortgage processSlide 29 of 37
  • Current Average Rates Type of Loan November 21, 2012 November 15, 2012 30-Year Fixed 3.31% 3.34% 15-Year Fixed 2.63% 2.65% 5/1 ARM 2.74% 2.74% 1-Year ARM 2.56% 2.55%Slide 30 of 37
  • Where Are Rates Headed?Slide 31 of 37
  • Home InspectionsSlide 32 of 37
  • 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 defectsSlide 33 of 37
  • Home Inspections● Most common concerns ► Roof ► Structural ► Plumbing ► Electrical ► HVAC ► Deferred Maintenance ► Termites ► Mold ► CosmeticSlide 34 of 37
  • Home Warranties● What is a home warranty?● What is covered?● What is excluded from coverage?● Benefits of a home warranty● Managing the risk of unexpected repairs● As-is, what can be covered?● Pre-existing conditions ► Known ► Unknown● Home inspections and warranty coverageSlide 35 of 37
  • Title and Closing● Getting a clean title ► Last minute liens ► Title insurance● Mortgage Electronic Registration System● Recording Process● Keys!Slide 36 of 37
  • Thanks for Coming!Please fill out the survey that was handed out at the beginning ofclass. We appreciate the feedback!Check out our upcoming classes and events at http://www.redfin.com/buy-a-home/classes-and-eventsSlide 37 of 37
  • Our next class! Home Buying Class December 4, 2012 6:15pm – 9:00pm Redfin’s Seattle Office (Same Location) http://www.redfin.com/buy-a-home/classes-and-eventsSlide 38 of 37