North end short sale class 8.23.12

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North end short sale class 8.23.12

  1. 1. Distressed PropertiesPresented By: Tammi EscalleAugust 23, 2012 Bothell, WASlide 1 of 37
  2. 2. Geographical Comparison – BothellSlide 2 of 37
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. Short Sale Approval ProcessSlide 14 of 37
  15. 15. Bank Owned HomesSlide 15 of 37
  16. 16. 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
  17. 17. Foreclosure TimelineSlide 17 of 37
  18. 18. Why Buy a Bank Owned?● Best price● Not afraid of a remodel● Comfortable with contracts● Financially strong with liquid capitalSlide 18 of 37
  19. 19. Foreclosure Activity and 30-Year Interest Rate – Bothell Slide 19 of 37
  20. 20. Foreclosure Activity by Month – BothellSlide 20 of 37
  21. 21. 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
  22. 22. 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
  23. 23. The Offer & The DealSlide 23 of 37
  24. 24. 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
  25. 25. 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
  26. 26. 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
  27. 27. FinancingSlide 27 of 37
  28. 28. 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
  29. 29. 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
  30. 30. Current Average Rates Type of Loan August 9, 2012 August 16, 2012 30-Year Fixed 3.59% 3.62% 15-Year Fixed 2.84% 2.88% 5/1 ARM 2.77% 2.76% 1-Year ARM 2.65% 2.69%Slide 30 of 37
  31. 31. Where Are Rates Headed?Slide 31 of 37
  32. 32. Home InspectionsSlide 32 of 37
  33. 33. 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
  34. 34. Home Inspections● Most common concerns ► Roof ► Structural ► Plumbing ► Electrical ► HVAC ► Deferred Maintenance ► Termites ► Mold ► CosmeticSlide 34 of 37
  35. 35. 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
  36. 36. Title and Closing● Getting a clean title ► Last minute liens ► Title insurance● Mortgage Electronic Registration System● Recording Process● Keys!Slide 36 of 37
  37. 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

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