Distressed Properties &
Short Sales
Tami Ritoch
Redfin North Seattle Team
October 24, 2013 Seattle, WA

@Redfin
Facebook.c...
Working with Redfin

Slide 2 of 34
A Little Bit About Who We Are
Redfin has refunded more than $100 Million to customers and
reaches $8 Billion in home sales...
Distressed Properties &
Short Sales

Slide 4 of 34
Geographical Comparison – King County

Slide 5 of 34
Types of Distressed Homes
● Short Sales
► AKA: Pre-foreclosure
► Potential vs. Approved Short Sale
● Foreclosures (Post-Co...
Short Sales
●
●
●
●
●
●
●

How does a short sale work?
Parties involved (see chart)
Qualifying the short sale
Short sale a...
The Life of a Short Sale
●
●
●
●
●
●
●

Searching for short sales
Market statistics
Negotiations and research
Sit and wait...
Foreclosure Activity and 30-Year Interest Rate – King County

Slide 9 of 34
Foreclosure Activity by Month – King County

Slide 10 of 34
Short Sale Tid Bits
● The rumor mill (old market)
● Types of loans and liens
► Get the Prelim! (and read the fine print)
●...
Picking Your Team
● Qualifying Your Realtor
► Experience, education, designations
► What does it mean to you?
● Qualifying...
Moving Forward…
● Writing the Offer
► Tips, tricks, pointers
► Low and Low Method

● You're Under Contract, Now What?
► Si...
Sit and Wait, Finally Explained!
●
●
●
●

The short sale approval process (chart)
Parties involved (chart)
Types of liens
...
Short Sale Parties
Short Sale

Bank #1
Title
Customer
Care Center
Escrow
Officer

Short Sale
Department

Litigation

BPO
A...
Short Sale Approval Process

Slide 16 of 34
Bank-Owned Homes
●
●
●
●
●
●

Contracts
Addendums
Timelines
Home condition
Listing agents
Tenants

Slide 17 of 34
Why Buy a Bank-Owned?
●
●
●
●

Best price
Not afraid of a remodel
Comfortable with contracts
Financially strong with liqui...
Buying at Auction
●
●
●
●
●
●
●
●
●

County Auctions (steps)
Organized Auctions
Who buys homes at auction?
What types of h...
Searching for
Distressed Homes

Slide 20 of 34
Finding Distressed Homes
● Redfin
► Shadow Inventory
► Foreclosures (bank owned)
► Short Sales
● Government Sites
► Homepa...
The Offer & The Deal

Slide 22 of 34
Negotiation Strategies - SS
●
●
●
●
●
●
●
●

Recognize pricing strategy
Ask lots of questions
New listing
Old listing
Pre-...
Negotiation Strategies - REO
● Round 1
► New listing
► 30 days old
► Price Reductions
► Keep it clean
● Round 2
► Repairs
...
Title and Closing
● Title Search
► Chain of title
► Last minute liens
► Title insurance



Lender’s Policy
Owner’s Polic...
Financing

Slide 26 of 34
Financing Options
● Conventional loans
► 30 year, 15 year, 5/1 ARM, etc.
● FHA
► FHA health and safety requirements
► Flip...
Financing Steps
● Preapproval
● Select property
► What is condition of property?
► Flipping guidelines
● When to lock in t...
Where Are Rates Headed?
Type of Loan

October 10, 2013

October 3, 2013

30-Year Fixed

4.23%

4.22%

15-Year Fixed

3.31%...
Home Inspections

Slide 30 of 34
Home Inspections
● What to look for yourself
● Missing components
► Big ticket items (AC, cabinets, appliances)
► Delibera...
Home Inspections
● Most common concerns
► Roof
► Structural
► Plumbing
► Electrical
► HVAC
► Deferred Maintenance
► Termit...
Home Warranties
●
●
●
●
●
●
●

What is a home warranty?
What is covered?
What is excluded from coverage?
Benefits of a hom...
Thanks for Coming!
Questions? Get in touch:
Tami Ritoch
tami.ritoch@redfin.com
Check out our upcoming classes:
http://www....
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Redfin's Free Short Sale Class - Seattle, WA

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  • Realtytrac.comIs your area’s foreclosure rate as high as state and national averages?
  • Realtytrac.comWhat impact do interest rates have on foreclosure activity?
  • Realtytrac.comForeclosure Activity by MonthHow is each foreclosure stage trending?More info6 Month TrendFalling
  • BATNA – back up plan, have one to avoid feeling like you have no option except to take the offer
  • Research needed to understand the Auction process better
  • Chart:http://www.mortgagenewsdaily.com/mortgage_rates/charts.aspPrediction:http://www.bankrate.com/finance/mortgages/mortgage-rate-trend-index.aspx
  • We’ll stick around…
  • Redfin's Free Short Sale Class - Seattle, WA

    1. 1. Distressed Properties & Short Sales Tami Ritoch Redfin North Seattle Team October 24, 2013 Seattle, WA @Redfin Facebook.com/Redfin Slide 1 of 34
    2. 2. Working with Redfin Slide 2 of 34
    3. 3. A Little Bit About Who We Are Redfin has refunded more than $100 Million to customers and reaches $8 Billion in home sales; 97% would refer us to a friend. ● Customers, not commissions ● Informed decisions ● Right home for the right price  No obligation  Commission credit Slide 3 of 34
    4. 4. Distressed Properties & Short Sales Slide 4 of 34
    5. 5. Geographical Comparison – King County Slide 5 of 34
    6. 6. Types of Distressed Homes ● Short Sales ► AKA: Pre-foreclosure ► Potential vs. Approved Short Sale ● Foreclosures (Post-County Foreclosure) ► AKA: Bank-owned, REO, lender owned ► Fannie, Freddie, Ginnie & HUD ● Auctions ● Estate Sales Slide 6 of 34
    7. 7. Short Sales ● ● ● ● ● ● ● How does a short sale work? Parties involved (see chart) Qualifying the short sale Short sale approval process (see chart) Timelines (Contingencies and Closing) False contracts Approval notice Slide 7 of 34
    8. 8. The Life of a Short Sale ● ● ● ● ● ● ● 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 Slide 8 of 34
    9. 9. Foreclosure Activity and 30-Year Interest Rate – King County Slide 9 of 34
    10. 10. Foreclosure Activity by Month – King County Slide 10 of 34
    11. 11. Short Sale Tid Bits ● The rumor mill (old market) ● Types of loans and liens ► Get the Prelim! (and read the fine print) ● 15% Redfin Rebate on Short Sales ● Questions to ask before writing an offer Slide 11 of 34
    12. 12. 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 Slide 12 of 34
    13. 13. Moving Forward… ● Writing the Offer ► Tips, tricks, pointers ► Low and Low Method ● You're 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 13 of 34
    14. 14. Sit and Wait, Finally Explained! ● ● ● ● The short sale approval process (chart) Parties involved (chart) Types of liens Getting updates ► Frequency and quality ● Approval Notice Slide 14 of 34
    15. 15. Short Sale Parties Short Sale Bank #1 Title Customer Care Center Escrow Officer Short Sale Department Litigation BPO Appraiser Mortgage Insurer Negotiator Mortgage Investor #1 Escrow Assistant Sellers Bank #2 Customer Care Center Attorney Buyers Short Sale Department Mortgage Investor #2 Litigation Appraiser Buyer’s Lender Underwriter Investor Guidelines BPO Appraiser Mortgage Insurer Negotiator Home Inspectors Mortgage Investor #1 Mortgage Investor #2 Closing Department Slide 15 of 34 Closing Department
    16. 16. Short Sale Approval Process Slide 16 of 34
    17. 17. Bank-Owned Homes ● ● ● ● ● ● Contracts Addendums Timelines Home condition Listing agents Tenants Slide 17 of 34
    18. 18. Why Buy a Bank-Owned? ● ● ● ● Best price Not afraid of a remodel Comfortable with contracts Financially strong with liquid capital Slide 18 of 34
    19. 19. 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-bid Slide 19 of 34
    20. 20. Searching for Distressed Homes Slide 20 of 34
    21. 21. Finding Distressed Homes ● Redfin ► Shadow Inventory ► Foreclosures (bank owned) ► Short Sales ● Government Sites ► Homepath.com and Homesteps.com ► Hudhomestore.com ► IRS ● Look down the street Slide 21 of 34
    22. 22. The Offer & The Deal Slide 22 of 34
    23. 23. 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 realistic Slide 23 of 34
    24. 24. Negotiation Strategies - REO ● Round 1 ► New listing ► 30 days old ► Price Reductions ► Keep it clean ● Round 2 ► Repairs  Health and safety  Lender Required Repairs Slide 24 of 34
    25. 25. Title and Closing ● Title Search ► Chain of title ► Last minute liens ► Title insurance   Lender’s Policy Owner’s Policy ● Closing Paperwork ● Possession and keys Slide 25 of 34
    26. 26. Financing Slide 26 of 34
    27. 27. Financing Options ● Conventional loans ► 30 year, 15 year, 5/1 ARM, etc. ● FHA ► FHA health and safety requirements ► Flipping guidelines ● Rehab loans (203k) ● Homepath loans Slide 27 of 34
    28. 28. Financing Steps ● Preapproval ● Select property ► What is condition of property? ► Flipping guidelines ● When to lock in the rate ► Short sale ► Bank owned ● Mortgage process Slide 28 of 34
    29. 29. Where Are Rates Headed? Type of Loan October 10, 2013 October 3, 2013 30-Year Fixed 4.23% 4.22% 15-Year Fixed 3.31% 3.29% 5/1 ARM 3.05% 3.03% 1-Year ARM 2.64% 2.63% Slide 29 of 34
    30. 30. Home Inspections Slide 30 of 34
    31. 31. 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 Slide 31 of 34
    32. 32. Home Inspections ● Most common concerns ► Roof ► Structural ► Plumbing ► Electrical ► HVAC ► Deferred Maintenance ► Termites ► Mold ► Cosmetic Slide 32 of 34
    33. 33. 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 coverage Slide 33 of 34
    34. 34. Thanks for Coming! Questions? Get in touch: Tami Ritoch tami.ritoch@redfin.com Check out our upcoming classes: http://www.redfin.com/events Slide 34 of 34

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