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Short Sales – Start to FinishPresented by:Vince Scarano and Justin Toenjes
Introductions• Redfin • Website Search • Changing the game for the home buyers • Transparency• Vince Scarano• Justin Toenjes
Introductions• Your Turn •   Name •   How long have you been looking for a home? •   Have you been under contract on a sho...
Short Sales Start to Finish•   How to grow a short sale•   Getting a short sale listed•   Picking your team•   Searching f...
How to Grow a Short Sale• Supply vs. Demand• 80/20 Loans• HELOCS (disappearing money)  • Recourse in a Non-recourse state•...
-             10,000                      20,000                               30,000                                     ...
Getting a Short Sale Listed• Seller’s mindset  • Home maintenance  • HOA dues• Foreclosure Process  • 90 days  • Trustee’s...
Shifting GearsStarting your search for a short sale
Picking Your Team• Trust• Qualifying Your Realtor • Experience, education, designations • What does it mean to you? • Full...
Picking Your Team• Qualifying Your Lender • When to pick your lender • Rates are just the beginning   • And not the end al...
Searching for Short Sales• Active, AWC and Pending  • What do they really mean?• Home Searching Websites  •   Accurate  • ...
Market Statisticsunderstand today’s market not the media’s market
Number of Active Listings                                    Single Family Dwellings50,000           Homes for Sale45,000 ...
Homes for Sale by Listing Type                    Traditional     Short Sales       14%        21% Sales         Short    ...
Inventory – Single Family Homes                                         Sold    Pending              Active Pending Solds ...
10%                                    20%                                          30%                                   ...
Home Sale in Queen Creek                          % of Total Sales by Listing Type120%                                    ...
Avg $/sqft for 3 Bedroom Homes                By Listing Type$120                                             Traditional ...
Research…its time well spent
Negotiations and Research• Purpose: Looking for a reason…• The 40 questions to ask •   Listing agent •   Sellers •   Banks...
More Research• What’s the true price?  • Pull the comps  • New listing  • Old listing• What does it mean?  • Pre-approved ...
Setting the Pricing  Expectations…    Correctly
Setting the Expectations• Be realistic  • Pricing  • Owner’s situation  • Countless “What if’s”• % of short sales that don...
% of Homes Sold, Expired, Cancelled100%90%80%70%60%                                                     Expired50%        ...
Final Sale to List %          By Listing Type104%                  Homes are selling                     for above102%    ...
What                     What if…                      if…              What                                            if...
Possible Scenarios• Home is over priced • Risk over paying• Home is under priced • Risk rejection by bank• Bidding wars • ...
Tenants• AZ Law protects tenants• Investors don’t want to lose their tenant• Owner might create fictitious lease• How to p...
Time to Build the Offer…and wait for the approval
Moving Forward…• Writing the Offer  • Tips, tricks, pointers      • Keep it clean      • Low and lower method• Youre Under...
Sit and Wait, Finally Explained!• The short sale approval process (chart)• Parties involved (chart)• Getting updates  • Fr...
Short Sale Parties                                                      Short Sale                                        ...
Short Sale Approval Process
Getting a Loan• #1 Question  • Credit inquires and FICO scores• Pre-qualification vs pre-approval• Changing underwriting g...
10%                                                12%                                                      14%           ...
Interest Rates Past 18 months                                   30 Yr Fixed Source: Freddie Mac5.50%                      ...
Home Inspections• What to look for• Big ticket items • AC, roof, appliances • Deliberate damage• Severe neglect• What an i...
Home Inspections• Most common concerns •   Deferred Maintenance •   AC •   Roof •   Termites •   Scorpions •   Fresh Paint...
Home Warranties•   What is a home warranty?•   What is covered?•   What is excluded from coverage?•   Benefits of a home w...
Home Warranties• Managing the risk of unexpected repairs• As-is, what can be covered?• Pre-existing conditions • Known • U...
Title and Closing• Getting a clean title• Last minute liens  •   HOA  •   Mechanic/Contractor  •   Tax  •   Lawsuit  •   T...
Wrap Up – Take Aways• Perspectives  • Owner’s mindset  • Listing agent’s struggle  • Bank’s attitude• Picking your team• S...
Wrap Up• Research • The home • The situation • 40 questions• Pricing expectations• What Ifs • Home is priced wrong • Owner...
Wrap Up• Writing the offer• Your under contract now what?• Explained: wait time for approvals • Parties involved• Getting ...
Wrap Up•   Home Inspections•   Home Warranties•   Getting a clean title•   Signing and closing process
Thank you for joining us!
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Short Sales - Phoenix - February 9, 2012

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Transcript of "Short Sales - Phoenix - February 9, 2012"

  1. 1. Short Sales – Start to FinishPresented by:Vince Scarano and Justin Toenjes
  2. 2. Introductions• Redfin • Website Search • Changing the game for the home buyers • Transparency• Vince Scarano• Justin Toenjes
  3. 3. 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?
  4. 4. Short Sales Start to Finish• 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
  5. 5. 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
  6. 6. - 10,000 20,000 30,000 40,000 50,000 60,000Jan-02 70,000May-02Sep-02Jan-03May-03Sep-03Jan-04May-04Sep-04Jan-05May-05Sep-05Jan-06May-06Sep-06Jan-07May-07Sep-07Jan-08May-08Sep-08 Number of Active ListingsJan-09May-09Sep-09Jan-10May-10Sep-10Jan-11May-11Sep-11 # of Active Listings - Cromford ReportJan-12
  7. 7. Getting a Short Sale Listed• Seller’s mindset • Home maintenance • HOA dues• Foreclosure Process • 90 days • Trustee’s sale date• Bank’s attitude• Listing agent’s struggle • Pricing strategies • Some things are too good to be true
  8. 8. Shifting GearsStarting your search for a short sale
  9. 9. Picking Your Team• Trust• Qualifying Your Realtor • Experience, education, designations • What does it mean to you? • Full time vs Part time
  10. 10. Picking Your Team• Qualifying Your Lender • When to pick your lender • Rates are just the beginning • And not the end all be all • New lender pay compensation• Partner Lenders/Referrals • A hidden value
  11. 11. Searching for Short Sales• Active, AWC and Pending • What do they really mean?• Home Searching Websites • Accurate • Reliable • Unique source of data • ARMLS• Pre-foreclosure lists • What are they?
  12. 12. Market Statisticsunderstand today’s market not the media’s market
  13. 13. Number of Active Listings Single Family Dwellings50,000 Homes for Sale45,000 Selection of40,000 Homes35,00030,000 Competition25,00020,00015,00010,000 5,000 - Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12
  14. 14. Homes for Sale by Listing Type Traditional Short Sales 14% 21% Sales Short 17%Lender Last Year ThisOwned 11% Traditional 72% Lender Owned 65%
  15. 15. Inventory – Single Family Homes Sold Pending Active Pending Solds Inventory Inventory REO 1,130 1,500 1,207 0.94 1.24Traditional 7,030 2,793 1,780 3.95 1.57 Not all these homes will sellShort Sales 1,653 5,294 1,520 1.09 3.48
  16. 16. 10% 20% 30% 40% 50% 60% 70% 80% 0%Jan-09Feb-09Mar-09Apr-09May-09Jun-09 Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10 Jul-10Aug-10Sep-10Oct-10Nov-10Dec-10Jan-11 Entire Phoenix Valley Source: ARMLSFeb-11Mar-11 Market StabilizingApr-11May-11 Single Family Home Sales % of Total by Type 2008-2011Jun-11 Jul-11Aug-11Sep-11Oct-11 Traditional Short SalesNov-11 Lender OwnedDec-11Jan-12
  17. 17. Home Sale in Queen Creek % of Total Sales by Listing Type120% Traditional Lender Owned Short Sale100%80% Market data, stats and trends60% are very local. Despite the news 43%40% 34% 23%20% Source: ARMLS Single Family Homes 0%
  18. 18. Avg $/sqft for 3 Bedroom Homes By Listing Type$120 Traditional Lender Owned Short Sale$100 $80 $60 $40 $20 Source: ARMLS $- 41,533 Homes Sampled
  19. 19. Research…its time well spent
  20. 20. Negotiations and Research• Purpose: Looking for a reason…• The 40 questions to ask • Listing agent • Sellers • Banks • Your agent• Contract need to know
  21. 21. 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
  22. 22. Setting the Pricing Expectations… Correctly
  23. 23. Setting the Expectations• Be realistic • Pricing • Owner’s situation • Countless “What if’s”• % of short sales that don’t sell: 55%
  24. 24. % of Homes Sold, Expired, Cancelled100%90%80%70%60% Expired50% Cancelled Sold40%30%20%10% 0% Short Sales Traditional Lender Owned
  25. 25. Final Sale to List % By Listing Type104% Homes are selling for above102% list price100%98%96%94% Traditional Lender Owned Short Sale92%90%
  26. 26. What What if… if… What if… What if… What if… What if… What What if… if… What if… What if…
  27. 27. 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
  28. 28. Tenants• AZ Law protects tenants• Investors don’t want to lose their tenant• Owner might create fictitious lease• How to protect yourself • Documentation • Contract exits
  29. 29. Time to Build the Offer…and wait for the approval
  30. 30. Moving Forward…• Writing the Offer • Tips, tricks, pointers • Keep it clean • Low and lower method• Youre Under Contract, Now What? • Sit and wait… and wait… and wait… • Do an early home inspection • Revisit the home, occasionally • Offers on multiple short sales?
  31. 31. Sit and Wait, Finally Explained!• The short sale approval process (chart)• Parties involved (chart)• Getting updates • Frequency and quality• Approval Notice and Transferability
  32. 32. 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
  33. 33. Short Sale Approval Process
  34. 34. 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
  35. 35. 10% 12% 14% 16% 18% 20% 0% 2% 4% 6% 8%Apr-71Jun-72Aug-73Oct-74Dec-75Feb-77Apr-78Jun-79Aug-80Oct-81Dec-82 18.45%Feb-84Apr-85Jun-86Aug-87Oct-88Dec-89Feb-91Apr-92Jun-93Aug-94Oct-95Dec-96Feb-98 Interest Rates 1971 - TodayApr-99 30 Yr Fixed Source: Freddie MacJun-00Aug-01Oct-02Dec-03Feb-05Apr-06Jun-07Aug-08Oct-09 Interest RateDec-10 3.92%
  36. 36. Interest Rates Past 18 months 30 Yr Fixed Source: Freddie Mac5.50% 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 Nov-11 Dec-11 Jan-12
  37. 37. Home Inspections• What to look for• Big ticket items • AC, roof, appliances • Deliberate damage• Severe neglect• What an inspector won’t find and won’t test • Visual inspection • Hidden defects • Untested system defects
  38. 38. Home Inspections• Most common concerns • Deferred Maintenance • AC • Roof • Termites • Scorpions • Fresh Paint • Handy Hubby projects
  39. 39. Home Warranties• What is a home warranty?• What is covered?• What is excluded from coverage?• Benefits of a home warranty
  40. 40. Home Warranties• Managing the risk of unexpected repairs• As-is, what can be covered?• Pre-existing conditions • Known • Unknown• Home inspections and warranty coverage
  41. 41. Title and Closing• Getting a clean title• Last minute liens • HOA • Mechanic/Contractor • Tax • Lawsuit • Title insurance• Signing process• Recording process• Keys!
  42. 42. Wrap Up – Take Aways• Perspectives • Owner’s mindset • Listing agent’s struggle • Bank’s attitude• Picking your team• Searching for short sales• Market Conditions • Low inventory • High competition • AWC excess
  43. 43. Wrap Up• Research • The home • The situation • 40 questions• Pricing expectations• What Ifs • Home is priced wrong • Owner damages the house • Tenants
  44. 44. Wrap Up• Writing the offer• Your under contract now what?• Explained: wait time for approvals • Parties involved• Getting a loan • Credit Scores • Underwriting guidelines • Interest rates and rate shopping
  45. 45. Wrap Up• Home Inspections• Home Warranties• Getting a clean title• Signing and closing process
  46. 46. Thank you for joining us!
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