Short Sales Class - Phoenix - September 15, 2011


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  • Lender owned sales make up 53% of the sales each month, however only 21% of the homes for sale are lender owned. Indicates a very fast market for lender owned homes.
  • Graph shows the market trendsPoints to Note - Steady increase in short sales - Massive uptick and correction in lender sales - Lender owned sales are 53% of the total sales
  • Example that market wide data is only good to a certain point. Queen Creek was hit particularly hard with investors and has always been on a fairly different path to recovery. Yet the media has never pointed it out.
  • This graphs shows the very consistent pricing between the different types of homes.
  • Data based on previous slide with 13 month average and 41,533 homes sampled.
  • The 95% rule, a home listed at a price that will attract an offer will almost always sell within 95% of the final list priceAlso, banks aren’t desperate to sell their listings and they won’t drop the price more than a traditional sale or a short sale
  • Graph shows the original list price compared to the final sales price and lets buyers know homes do not sell far from their original list price. This also points out banks don’t over price more than anyone else.
  • Research needed to understand the Auction process better
  • Short Sales Class - Phoenix - September 15, 2011

    1. 1. Short Sales – Start to FinishPresented by Marcus FlemingAnd Justin Toenjes
    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 title
    3. 3. 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
    4. 4. - 10,000 20,000 40,000 50,000 60,000 70,000 30,000Jan-02 Apr-…Jul-02 Oct-…Jan-03 Apr-…Jul-03 Oct-…Jan-04 Apr-…Jul-04 Oct-…Jan-05 Apr-…Jul-05 Oct-…Jan-06 Apr-…Jul-06 Oct-…Jan-07 Apr-…Jul-07 Oct-…Jan-08 Number of Active Listings Apr-…Jul-08 Oct-…Jan-09 Apr-…Jul-09 Oct-…Jan-10 Apr-…Jul-10 Oct-…Jan-11 # of Active Listings - Cromford Report Apr-…Jul-11
    5. 5. Number of Active Listings60,000 # of Active Listings - Cromford Report50,00040,00030,00020,00010,000 -
    6. 6. 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
    7. 7. 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
    8. 8. 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?
    10. 10. Homes for Sale by Listing Type Short Sales 20%Lender Owned 15% Traditional 65%
    11. 11. Inventory Sold Pending Active Pending Solds Inventory Inventory REO 2,448 3,479 3,479 0.70 1.00Traditional 10,592 4,738 3,360 3.15 1.41Short Sales 3,202 11,623 2,144 1.49 5.42
    12. 12. % of Homes Sold, Expired, Cancelled100%90%80%70%60% Expired50% Cancelled Sold40%30%20%10% 0% Short Sales Traditional Lender Owned
    13. 13. Home Sale in Queen Creek % of Total Sales by Listing Type120% Traditional Lender Owned Short Sale100%80%60% 43%40% 34% 23%20% Source: ARMLS Single Family Homes 0%
    14. 14. 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
    15. 15. Negotiations and Research• Purpose: Looking for a reason…• The 40 Questions to Ask • Listing agent • Sellers • Banks • You’re agent• Contract need to know• Photos (documentation)• Meet the Sellers• 90 day non-refundable earnest
    16. 16. Negotiation Strategies - SS• 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%
    17. 17. 100% 105% 75% 80% 85% 90% 95% 70%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
    18. 18. 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?
    19. 19. Sit and Wait, Finally Explained!• The short sale approval process (chart)• Parties involved (chart)• Types of liens• Getting updates • Frequency and quality• Approval Notice
    20. 20. 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
    21. 21. Short Sale Approval Process
    22. 22. 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
    23. 23. 0% 2% 4% 6% 8% 10% 12% 14% 16% 20% 18%Apr-71Jun-72Aug-73Oct-74Jan-76Mar-77May-78 Jul-79Sep-80Nov-81Jan-83 18.45%Mar-84May-85 Jul-86Sep-87Nov-88Jan-90Mar-91May-92 Jul-93Sep-94Nov-95 30 Yr Fixed Source: Freddie MacJan-97Mar-98May-99 Interest Rates 1971 - Today Jul-00Sep-01Nov-02Jan-04Mar-05May-06 Jul-07Sep-08Nov-09 Interest RateJan-11
    24. 24. Interest Rates Past 18 months 30 Yr Fixed Source: Freddie Mac5.50% Interest Rate5.00%4.50% 4.27%4.00%3.50%3.00%
    25. 25. 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
    26. 26. Home Inspections• Most common concerns • Plumbing • AC • Maintenance • Termites • Fresh Paint
    27. 27. Home Warranties• What is a home warranty?• What is covered?• What is excluded from coverage?• Benefits of a home warranty
    28. 28. Home Warranties• Managing the risk of unexpected repairs• As-is, what can be covered?• Pre-existing conditions • Known • Unknown• Home inspections and warranty coverage
    29. 29. Title and Closing• Getting a clean title • Last minute liens • Title insurance• Mortgage Electronic Registration System• Recording Process• Keys!