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Pleasanton short sale webinar 12 19 2012 v2


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Pleasanton short sale webinar 12 19 2012 v2

  1. 1. Short Sales – Start to FinishPresented by Lynda Divito – Redfin’s Bay Area Listing SpecialistDecember 19, 2012Follow: @RedfinbayareaLike: 1 of 21
  2. 2. 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 titleSlide 2 of 21
  3. 3. What is a short sale? ● A short sale allows the homeowner to avoid foreclosure, minimize financial damage and move on from a burdensome, unaffordable mortgage. ● In many cases, a short sale allows the borrower to qualify for a new mortgage in just 24 months, as opposed to five years or more after a foreclosure. ● A trained real estate agent can negotiate a short sale with your lender if you have three qualifications. ► First, you must show some type of financial hardship. ► Second, you must have a monthly shortfall, meaning your monthly expenses are greater than your monthly income. ► Finally, you need to prove that your debts are greater than the value of your assets (certain investments, property, etc.)Slide 3 of 21
  4. 4. 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 ImpactSlide 4 of 21
  5. 5. What Qualifies as a Distressed Property? ● Property that is in poor physical condition ● Property that is or will soon be in some stage of the foreclosure process ● Property that has an owner who is experiencing a period of financial instability ● Property on which the mortgage obligation exceeds its current value, causing its owner to sellSlide 5 of 21
  6. 6. Market Trends ● 2012 ► 34% sub prime in foreclosure or default ► 7% prime in foreclosure or default ► 15.77% FHA in foreclosure or default ► 8.72% VA in foreclosure or default ► 5,881,000 mortgages are not being paid in 2012Slide 6 of 21
  7. 7. Foreclosure Activity and 30-Year Interest Rate – Pleasanton, CA Slide 7 of 21
  8. 8. Foreclosure Activity by Month – Pleasanton, CASlide 8 of 21
  9. 9. 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 dateSlide 9 of 21
  10. 10. Getting a Short Sale Listed● Verifiable financial hardship● Preparing of all financial paperwork for the ‘short sale package’. Bank statements, w2’s, employment history, hardship letter, frank Dodd certification, 3rd party authorization, arms length agreement, ect● Prep the listing and put on market● Negotiate short sale. If it’s a HAFA short sale, the bank gives approval before the house is listed and the bank sets the listing price.● The bank gives approval and a date to close by so the buyer/buyers agent has to be ready to close sometimes very quickly.● The seller walks away with absolutely no proceeds from the sale of the home at all…HAFA offers a 3K incentive for moving out but the banks cover all closing costs, commissions and debt forgiveness.Slide 10 of 21
  11. 11. Understanding Cause of Distress● Verifiable financial hardship ► Loss of employment ► Reduced income ► Business failure ► Damage to property ► Death of a family member ► Illness ► Many others… ► It is estimated that most American families can only maintain their current living expenses for 30 days or less when income is interrupted for any reasonSlide 11 of 21
  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 valueSlide 12 of 21
  13. 13. From the buyers perspectiveSlide 13 of 21
  14. 14. 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?Slide 14 of 21
  15. 15. 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● 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 15 of 21
  16. 16. Sit and Wait, Finally Explained!● The short sale approval process (chart)● Parties involved (chart)● Types of liens● Getting updates ► Frequency and quality● Approval NoticeSlide 16 of 21
  17. 17. 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 #1 Sellers 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 DepartmentSlide 17 of 21
  18. 18. Short Sale Approval ProcessSlide 18 of 21
  19. 19. 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, HomepathSlide 19 of 21
  20. 20. 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 defectsSlide 20 of 21
  21. 21. Home Inspections● Most common concerns ► Plumbing ► AC ► Maintenance ► Termites ► Fresh PaintSlide 21 of 21
  22. 22. Home Warranties● What is a home warranty?● What is covered?● What is excluded from coverage?● Benefits of a home warrantySlide 22 of 21
  23. 23. Home Warranties● Managing the risk of unexpected repairs● As-is, what can be covered?● Pre-existing conditions ► Known ► Unknown● Home inspections and warranty coverageSlide 23 of 21
  24. 24. Title and Closing● Getting a clean title ► Last minute liens ► Title insurance● Mortgage Electronic Registration System● Recording Process● Keys!Slide 24 of 21