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Phoenix - Short Sales - November 17, 2011

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Phoenix - Short Sales - November 17, 2011

  1. 1. Short Sales – Start to FinishPresented by:Marcus Fleming and Justin Toenjes
  2. 2. Introductions• Redfin • Website Search • Changing the game for the consumers • Transparency• Marcus Fleming• 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. 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
  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 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
  7. 7. 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
  8. 8. Shifting GearsStarting your search for a short sale
  9. 9. 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
  10. 10. 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?
  11. 11. Market Statisticsunderstand today’s market not the media’s market
  12. 12. 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
  13. 13. Homes for Sale by Listing Type Short Sales 22%Lender Owned 14% Traditional 64%
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. What What if… if… What if… What if… What if… What if… What What if… if… What if… What if…
  18. 18. 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
  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 • You’re 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• Be realistic• % of Listings that don’t sell: 60%
  22. 22. % of Homes Sold, Expired, Cancelled100%90%80%70%60% Expired50% Cancelled Sold40%30%20%10% 0% Short Sales Traditional Lender Owned
  23. 23. 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
  24. 24. 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%
  25. 25. Time to Build the Offer…and wait for the approval
  26. 26. 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
  27. 27. 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
  28. 28. 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
  29. 29. Short Sale Approval Process
  30. 30. 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
  31. 31. 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
  32. 32. 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
  33. 33. 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
  34. 34. 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
  35. 35. Home Inspections• Most common concerns • Plumbing • AC • Maintenance • Termites • Fresh Paint
  36. 36. Home Warranties• What is a home warranty?• What is covered?• What is excluded from coverage?• Benefits of a home warranty
  37. 37. Home Warranties• Managing the risk of unexpected repairs• As-is, what can be covered?• Pre-existing conditions • Known • Unknown• Home inspections and warranty coverage
  38. 38. Title and Closing• Getting a clean title • Last minute liens • Title insurance• Mortgage Electronic Registration System• Recording Process• Keys!

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