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Phoenix - Short Sales - November 17, 2011

Phoenix - Short Sales - November 17, 2011






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    Phoenix - Short Sales - November 17, 2011 Phoenix - Short Sales - November 17, 2011 Presentation Transcript

    • Short Sales – Start to FinishPresented by:Marcus Fleming and Justin Toenjes
    • Introductions• Redfin • Website Search • Changing the game for the consumers • Transparency• Marcus Fleming• Justin Toenjes
    • Introductions• Your Turn • Name • How long have you been looking for a home? • Have you been under contract on a short sale? • What would you like to get from this class?
    • 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 title
    • How to Grow a Short Sale• Supply vs. Demand• 80/20 Loans• HELOCS (disappearing money) • Recourse in a Non-recourse state• Market crash • 50% drop in home values• Making the decision to short sale • Loan modifications • Bankruptcy • Credit Impact
    • - 10,000 20,000 30,000 40,000 50,000 70,000 60,000Jan-02Apr-02Jul-02Oct-02Jan-03Apr-03Jul-03Oct-03Jan-04Apr-04Jul-04Oct-04Jan-05Apr-05Jul-05Oct-05Jan-06Apr-06Jul-06Oct-06Jan-07Apr-07Jul-07Oct-07Jan-08 Number of Active ListingsApr-08Jul-08Oct-08Jan-09Apr-09Jul-09Oct-09Jan-10Apr-10Jul-10Oct-10Jan-11 # of Active Listings - Cromford ReportApr-11Jul-11
    • 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 date
    • Shifting GearsStarting your search for a short sale
    • Picking Your Team• Qualifying Your Realtor • Experience, education, designations • What does it mean to you?• Qualifying Your Lender • Rates are just the beginning • New lender pay compensation• Partner Lenders • A hidden value
    • Searching for Short Sales• Active, AWC and Pending • What do they really mean?• Accurate and reliable websites• AWC, Pending and Sold stats• Pre-foreclosure lists • What are they?
    • Market Statisticsunderstand today’s market not the media’s market
    • Number of Active Listings50,000 Cromford Report Active Listings45,00040,00035,00030,00025,00020,00015,00010,000 5,000 - Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11
    • Homes for Sale by Listing Type Short Sales 22%Lender Owned 14% Traditional 64%
    • Inventory Sold Pending Active Pending Solds Inventory Inventory REO 1,905 2,205 2,097 0.91 1.05Traditional 8,456 2,922 2,107 4.01 1.39Short Sales 2,897 11,066 2,196 1.32 5.04
    • 10% 20% 30% 40% 50% 60% 70% 90% 80% 0%Jan-08Feb-08Mar-08Apr-08May-08Jun-08 Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09 Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10 Entire Phoenix Valley Source: ARMLS Jul-10Aug-10Sep-10Oct-10 Single Family Home Sales % of Total by Type 2008-2011Nov-10Dec-10Jan-11Feb-11Mar-11Apr-11 Traditional Short SalesMay-11Jun-11 Lender Owned Jul-11Aug-11
    • Avg $/sqft for 3 Bedroom Homes$120 By Listing Type Traditional Lender Owned Short Sale$100 $80 $60 $40 $20 Source: ARMLS $- 41,533 Homes Sampled
    • What What if… if… What if… What if… What if… What if… What What if… if… What if… What if…
    • Possible Scenarios• Home is over priced • Risk over paying• Home is under priced • Risk rejection by bank• Bidding wars • Is the home over priced or under priced?• Tenants• Owner damages the home• Pre-approved with another buyer
    • Research…its time well spent
    • Negotiations and Research• Purpose: Looking for a reason…• The 40 questions to ask • Listing agent • Sellers • Banks • You’re agent• Contract need to know
    • More Research• What’s the true price? • Pull the comps • New listing • Old listing• What does it mean? • Pre-approved short sale • Approved once upon a time• Meet the sellers• Be realistic• % of Listings that don’t sell: 60%
    • % of Homes Sold, Expired, Cancelled100%90%80%70%60% Expired50% Cancelled Sold40%30%20%10% 0% Short Sales Traditional Lender Owned
    • 100% 105% 75% 80% 85% 90% 70% 95%Jan-09Feb-09Mar-09Apr-09May-09Jun-09 Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10 By Listing Type Jul-10 Final Sale to List %Aug-10Sep-10Oct-10Nov-10Dec-10Jan-11Feb-11Mar-11Apr-11May-11 Short Sale TraditionalJun-11 Lender Owned Jul-11Aug-11
    • Original Sales Price Compared to Sold Price By Listing Type110% Traditional Lender Owned Short Sale100%90%80%70%60%50%40%30% Source: ARMLS Single Family Homes20%
    • Time to Build the Offer…and wait for the approval
    • Moving Forward…• Writing the Offer • Tips, tricks, pointers • Low and low method• Youre Under Contract, Now What? • Sit and wait… and wait… and wait… • Do an Early Home Inspection • Revisit the home, occasionally
    • Sit and Wait, Finally Explained!• The short sale approval process (chart)• Parties involved (chart)• Types of liens• Getting updates • Frequency and quality• Approval Notice and Transferability
    • 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 #1Sellers Bank #2 Mortgage Investor #2 Customer Short Sale Attorney Litigation Care 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 Department
    • Short Sale Approval Process
    • Getting a Loan• #1 Question • Credit inquires and FICO scores• Pre-qualification vs pre-approval• Changing underwriting guidelines• When to lock your interest rate • Short sales• Loan Options • Conventional, FHA, Rehab, Homepath• Current Trends
    • Youre Under Contract, NowWhat? wait… and wait… and wait… • Sit and • Do an Early Home Inspection • Revisit the home, occasionally• Approval Process • What’s involved? • Approval Letters and Transferability
    • 10% 12% 14% 16% 18% 20% 0% 4% 6% 2% 8%Apr-71Mar-72Feb-73Jan-74Dec-74Nov-75Oct-76Sep-77Aug-78 Jul-79Jun-80May-81Apr-82Mar-83 18.45%Feb-84Jan-85Dec-85Nov-86Oct-87Sep-88Aug-89 Jul-90Jun-91May-92Apr-93Mar-94Feb-95Jan-96Dec-96Nov-97Oct-98Sep-99 Interest Rates 1971 - Today 30 Yr Fixed Source: Freddie MacAug-00 Jul-01Jun-02May-03Apr-04Mar-05Feb-06Jan-07Dec-07Nov-08Oct-09 Interest RateSep-10Aug-11
    • Interest Rates Past 18 months 30 Yr Fixed Source: Freddie Mac5.50% 30 YR Fixed Interest Rate5.00%4.50%4.00%3.50%3.00% Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11
    • 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 defects
    • Home Inspections• Most common concerns • Plumbing • AC • Maintenance • Termites • Fresh Paint
    • Home Warranties• What is a home warranty?• What is covered?• What is excluded from coverage?• Benefits of a home warranty
    • Home Warranties• Managing the risk of unexpected repairs• As-is, what can be covered?• Pre-existing conditions • Known • Unknown• Home inspections and warranty coverage
    • Title and Closing• Getting a clean title • Last minute liens • Title insurance• Mortgage Electronic Registration System• Recording Process• Keys!