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Short Sales - Phoenix - June 30, 2011

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Short Sales - Phoenix - June 30, 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. # of Active Listings Number of Active Single Family Homes 60,000 Total Listings 50,000 40,000 30,000 20,000 10,000 0
  5. 5. 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
  6. 6. 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
  7. 7. 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?
  8. 8. MARKET STATISTICS
  9. 9. Inventory Solds Active Pending REO 3,792 4,052 4,086 Traditional 2,571 10,503 2,833 Short Sales 2,051 11,750 4,056
  10. 10. Percent of Homes For Sale by Listing Type REO 15%Short Sales 45% Traditional 40%
  11. 11. % of Homes Sold, Expired, Cancelled100%90%80%70%60% Expired50% Cancelled Sold40%30%20%10% 0% Short Sales Traditional Lender Owned
  12. 12. # of Homes Sold, Expired and Cancelled70,00060,00050,00040,000 Expired Cancelled30,000 Sold20,00010,000 - Short Sales Traditional Lender Owned
  13. 13. 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 $- Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
  14. 14. 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
  15. 15. 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%
  16. 16. 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?
  17. 17. Sit and Wait, Finally Explained!• The short sale approval process (chart)• Parties involved (chart)• Types of liens• Getting updates • Frequency and quality• Approval Notice
  18. 18. 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
  19. 19. Short Sale Approval Process
  20. 20. Getting a Loan• #1 Question • Credit inquires and FICO scores• Pre-qualification vs pre-approval• Revised underwriting guidelines• When to lock your interest rate • Short sales• Loan Options • Conventional, FHA, Rehab, Homepath
  21. 21. 0% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2%Apr-71Apr-72Apr-73Apr-74Apr-75Apr-76Apr-77Apr-78Apr-79Apr-80Apr-81Apr-82Apr-83 18.45%Apr-84Apr-85Apr-86Apr-87Apr-88Apr-89Apr-90Apr-91Apr-92Apr-93Apr-94Apr-95Apr-96Apr-97Apr-98 30 Yr Fixed Source: Freddie Mac Interest Rates 1971 - TodayApr-99Apr-00Apr-01Apr-02Apr-03Apr-04Apr-05Apr-06 30 Yr FixedApr-07Apr-08 Source: Freddie MacApr-09Apr-10 Interest Rate
  22. 22. 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
  23. 23. Home Inspections• Most common concerns • Plumbing • AC • Maintenance • Termites • Fresh Paint
  24. 24. Home Warranties• What is a home warranty?• What is covered?• What is excluded from coverage?• Benefits of a home warranty
  25. 25. Home Warranties• Managing the risk of unexpected repairs• As-is, what can be covered?• Pre-existing conditions • Known • Unknown• Home inspections and warranty coverage
  26. 26. Title and Closing• Getting a clean title • Last minute liens • Title insurance• Mortgage Electronic Registration System• Recording Process• Keys!

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