San jose selling short sales class 3.18.13
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  • 1. Understanding Short Sales and Your Selling Options March 18, 2013 San Jose, CA Presented By: Ashley Rabello Redfin’s San Jose TeamSlide 1 of 32
  • 2. Agenda ● Market update ● Modifications ● Short Sales ● Foreclosures ● Debt Relief Act ● Bankruptcy ● Listing with RedfinSlide 2 of 32
  • 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 32
  • 4. Understanding the MarketSlide 4 of 32
  • 5. Geographical Comparison – San JoseSlide 5 of 32
  • 6. Foreclosure Activity by Month – San JoseSlide 6 of 32
  • 7. Case-Shiller: San Francisco Area v. 20-City 250.00 20 City Composite San Francisco 200.00 150.00 100.00 50.00 0.00Slide 7 of 55
  • 8. Case-Shiller – By the Numbers Case-Shiller: San Francisco Area Up 12.7% year-over-year Peak was May 2006 Down 33% from peak Currently at June 2003 prices Case-Shiller: 20-City Composite Up 5.5% year-over-year Peak was July 2006 Down 29.4% from peak Currently at September 2003 pricesSlide 8 of 32
  • 9. Loan ModificationsSlide 9 of 32
  • 10. Forms of Loan Modifications ● Temporary Mods ► Forbearance ► Reinstatement ● Mortgage Modification ► HAMP – Making Home Affordable ► HAFA – Part of HAMP ● Special Programs – SRCA & HAPSlide 10 of 32
  • 11. 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 11 of 32
  • 12. 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 12 of 32
  • 13. Where Are Rates Headed? Type of Loan March 14, 2013 March 7, 2013 30-Year Fixed 3.63% 3.52% 15-Year Fixed 2.79% 2.76% 5/1 ARM 2.61% 2.63% 1-Year ARM 2.64% 2.63%Slide 13 of 32
  • 14. Where Are Rates Headed?Slide 14 of 32
  • 15. What is a Short Sale?Slide 15 of 32
  • 16. 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 16 of 32
  • 17. 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 17 of 32
  • 18. 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 ● Property Repair & Damage Form ● Estimated Carrying Costs ● Current Market Stats and ComparablesSlide 18 of 32
  • 19. 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 19 of 32
  • 20. 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 20 of 32
  • 21. Short Sale Approval ProcessSlide 21 of 32
  • 22. 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 22 of 32
  • 23. Foreclosures 1. Deed in Lieu (Cash for Keys) 2. Foreclosure Notices 3. Non-Judicial Foreclosures 4. Post-Foreclosure 1. Redemption Periods 2. Deficiency Judgments 3. Tax ConsequencesSlide 23 of 32
  • 24. 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 24 of 55
  • 25. BankruptcySlide 25 of 32
  • 26. 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 26 of 32
  • 27. Marketing Your HomeSlide 27 of 32
  • 28. Listing with Redfin ● More People See your Home ► Premium placement on Redfin.com ► Mobile apps target on-the-go buyers ► Promote home in targeted emails ► Professional Flyers ● You’ll Know It All at Every Step ► Email all buyers who see your home ► See how many people have viewed your home ► Advise you at every step in the processSlide 28 of 32
  • 29. Benefits of a MLS Powered Site ● Recent Windermere/Redfin study across 11 major U.S. cities ● Redfin.com has 20+% more agent-listed properties than two national portals, Zillow and Trulia ● We display new listings 7 to 9 days faster, and record sales faster tooSlide 29 of 32
  • 30. Marketing Blitz Twice as many people see your home on Redfin.com #1 Brokerage Website 100-250 extra clicks per daySlide 30 of 32
  • 31. Marketing Blitz Twice as many people see your home in emailSlide 31 of 32
  • 32. Thanks for Coming! Please fill out the survey that was handed out at the beginning of class. We appreciate the feedback! Check out our upcoming classes and events at http://www.redfin.com/buy-a-home/classes-and-events Ashley Rabello | Listing Team | Redfin ashley.rabello@redfin.com | T: 408.510.8548Slide 32 of 32
  • 33. HUD Settlement StatementSlide 33 of 32
  • 34. 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 34 of 32
  • 35. Favorite Real Estate Links: Listings ► Redfin: MLS + FSBO + REO, updated every 15 minutes, 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 35 of 32
  • 36. 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 36 of 32
  • 37. 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 37 of 32
  • 38. 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 38 of 32
  • 39. 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 39 of 32