Transcript of "Short Sales - Phoenix - February 9, 2012"
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 short sale? • What would you like to get from this class?
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
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 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
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
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 time vs Part time
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
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?
Market Statisticsunderstand today’s market not the media’s market
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
Homes for Sale by Listing Type Traditional Short Sales 14% 21% Sales Short 17%Lender Last Year ThisOwned 11% Traditional 72% Lender Owned 65%
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
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
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%
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
Setting the Expectations• Be realistic • Pricing • Owner’s situation • Countless “What if’s”• % of short sales that don’t sell: 55%
% of Homes Sold, Expired, Cancelled100%90%80%70%60% Expired50% Cancelled Sold40%30%20%10% 0% Short Sales Traditional Lender Owned
Final Sale to List % By Listing Type104% Homes are selling for above102% list price100%98%96%94% Traditional Lender Owned Short Sale92%90%
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
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
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 Contract, Now What? • Sit and wait… and wait… and wait… • Do an early home inspection • Revisit the home, occasionally • Offers on multiple short sales?
Sit and Wait, Finally Explained!• The short sale approval process (chart)• Parties involved (chart)• 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
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
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
Home Inspections• Most common concerns • Deferred Maintenance • AC • Roof • Termites • Scorpions • Fresh Paint • Handy Hubby projects
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 • HOA • Mechanic/Contractor • Tax • Lawsuit • Title insurance• Signing process• Recording process• Keys!
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
Wrap Up• Research • The home • The situation • 40 questions• Pricing expectations• What Ifs • Home is priced wrong • Owner damages the house • Tenants
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
Wrap Up• Home Inspections• Home Warranties• Getting a clean title• Signing and closing process