Monday, August 29, 2011

California Tops in Short Sale Fraud




LOTUS REALTY GROUP



I was sent an interesting article last week in San Diego Life style magazine from a client of mine and I wanted to share it with you. The synopsis of the story is that the FBI has announced a crackdown in short sale fraud and then Freddie Mac announced they will be teaming up to go after agents who are not operating properly. Freddie Mac short sales have increased from 4% of completed workouts in 2000 to nearly 14% in 2010. The California Department of Real Estate has also issued a consumer alert.



California has become one of the target markets for short sale fraud. Since there are one or more Real Estate professionals involved in a short sale transaction, the goal is to reach out to Realtor Associations in target markets to educate on the top issues in short sales today in hopes to help Realtors avoid short sale fraud. http://www.sandiegolifestyle.info/2011/08/short-sale-fraud/



There were a lot of comments from other REALTORS stating that the information in the article is misleading. Let’s go over some of the possible short sale fraud scenarios.


(Scenario 1)


Falsely indicating on a new short sale listing that there is an offer on a property in order to discourage legitimate offers and protect an accomplice's planned low bid.


Well, we all know that happens a lot in the industry. It is not a big surprise. Here is the bottom line; as a listing agent your fiduciary duty is to your seller and the short sale lender, not the buyer. The lender has a certain amount they want to net that may or may not be realistic but if you have your clients best interest in mind and want to be successful in the short sale then you will market that listing properly. Showing the bank you have had it on the market for a substantial amount of time. Go a step further and show the bank actual data of home sales; how fast they are moving and where prices are going. You can only work with one offer at a time so make sure you can prove it is the highest and best.


Value disputes on properties have become one of the biggest hold ups in short sales. What is even more interesting to me is that there are all of these Real Estate surveys stating that the lenders are holding up short sales. When short sales first came on the market there was a 10% close rate and a 9 month turn time. We are down to 2-4 months. 6 months max. It has been my experience that the top reasons short sales take longer to close are for the following reasons:



a. Home owner not prepared to show documents or hardship.



b. Negotiating HELOCS



C. Lost documents



d. Value issues



e. Non communication between all parties.


It is my opinion that all of these issues are in our control. The only situation out of our control is if a loan gets sold to another lender. Here are some tips to help you to work with the lender:


1. Have your client and the lenders best interest in mind.



2. Pre Qualify your client and make sure they are short sale candidates and are prepared to submit all documentation to show their hardship.



3. Create a listing history with extensive market data.



4. Submit a complete short sale package.



5. Set proper expectations with all parties.



6. Rule of thumb; the higher the offer the more gracious first lean holders will contribute to second lien holders.



(Scenario 2)



Manipulating the short sale listing price by making the house look more distressed than it really is (reverse staging), inflating repair estimates.



I honestly think that anyone who is doing this ruins valuations for those of us trying to do it right. Again, another reason that the short sale process is SLOWER than what REALTORS would like the time frames to be. The answer is quite simple in my opinion. Make sure the repairs you are documenting are VISIBLE. Roof leaks for instance create mold. Unstable foundations may require structural reports from certified professionals and some cases there are termite damages. The short sale lender is not going to cover these repairs. Typically if you have these reports and pictures up front and let a buyer know about them in hopes they will commit to the deal and offer a fair amount they feel good about, I do not feel that is short sale manipulation. I believe that is working smart. Preventing a buyer from backing out after we get approval due to non disclosure or a lender not covering damages.




(Scenario 3)



Flipping Schemes. A buyer buys a house at a short sale without putting down any of his own money and sells it a few hours later to a legitimate buyer at a much higher price.




(Scenario 4)



Manipulating the HUD-1 settlement statements so a flipper can skim away net proceeds from the sale for himself or other parties in the transaction without seller or investor knowledge.




Those of you who follow my events with my Real Estate attorney David Bright and read my newsletters I am sure you can guess my position on scenarios 3 and 4. That is short sale fraud at its finest.




In all of this I want to drive home one key point; the more people try to manipulate the system to make a quick buck the SLOWER short sales will take to close. Due to all of these legal issues it has forced lenders to investigate deeper, create new forms such as the NO FLIP AFFIDAVIT from GMAC and fight values.




I have seen record breaking turn times and in those transactions proper procedure was followed to a T. If we want a successful outcome we need to remember that we have to work with the lender. Not against them. As we move forward into this short sale market there are so many people that need our help. We as agents need to support our families as well. Intention is everything. Are we going into this transaction only for ourselves? Or do we really want to help?



One thing I have seen in this market is a lot of emotional stress and pain. If we are only trying to take from people that are already losing that does not keep clients coming back. I don’t know about you but I would like to set up my revenues for the future. Do right by my clients and build long lasting relationships with them to ensure repeating customers and referrals. And of course, stay under the radar with the FBI.




(Quote) Character is doing the right thing when nobody's looking. There are too many people who think that the only thing that's right is to get by, and the only thing that's wrong is to get caught. ~J.C. Watts



REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?




Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.



LOTUS REALTY GROUP



PROFESSIONAL SHORT SALE NEGOTIATORS



At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...



Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com




Monday, August 22, 2011

Job relocation and how it is impacting selling homes in today’s market


I was reading an article in Market Watch the other day in regards to job seekers deciding to pack their bags and move for a new position, according to a report released at the end of July by Challenger, Gray and Christmas. At the first half of the year, about 9.4% of job seekers relocated for a job, up from 7.6% within the same window of time in 2010, according to the outplacement consultancy firm. That is from a survey of about 3000 job seekers; many of the respondents are Managers and Executives.


Since there has been little improvement in the housing market in 2011, one might say the increased relocation in the first half of the year is due to the fact that prolonged unemployment is compelling more job seekers to relocate DESPITE the challenges of selling a home in this market. At some point, the job seeker may decide that it is worth taking a loss on their home sale to be employed again.




What about the seller that has a home that has depreciated in value significantly due to the housing crisis and CANNOT be sold traditionally? Not all homes in today’s market are equity sales and I am sure you would all agree that there may be more homes out there in pre-foreclosure and underwater than there are equity sales and the numbers are rising at an increasingly high rate.



I had clients recently in a similar position. One of the seller's company had went bankrupt and she was forced to take a position in Los Angeles . Not only did she take a pay cut but now she had to drive back and forth every day with gas prices at its highest level. The couple realized that they would not be able to continue the way they were. They needed to relocate to Los Angeles. They could not afford to pay rent there and a mortgage here. They had no choice but to sell their home.




Here is the challenge; this home is in San Elijo Hills. As you all know that is one of the highest depreciating areas in San Diego and one of the largest default areas as well. This home would never be able to be sold as a traditional sale. I was able to negotiate this hardship with the bank and they accepted a short sale.




I wanted to remind everyone that job relocation is a hardship in this market. A home owner has to be able to take care of their family. If they are forced to take a position somewhere else and there is no equity in the home a short sale is possible.



Lenders are adamant more than ever to keep foreclosures off their books and a short sale would be the best option for all parties involved. I am not confident that all homeowners going through this type of hardship understand what all of their options are. We have an opportunity to help families who are about to make some difficult decisions to make the right one.




Some families may decide that walking away would be the best option. As a Real Estate professional, we can explain the importance of trying to short sale verses walking away. Clearly a foreclosure on their record will impact their credit much worse than a short sale would. Also, if a homeowner is trying to seek employment elsewhere and a foreclosure is on their record that may impact the employer’s decision to hire. Some companies run credit checks and foreclosure may be a determining factor in either termination or not hiring at all.




I believe with the high unemployment rate and the downturn in the market we are going to continue to see this type of hardship. I would be on the lookout for families you can help to make the right choices giving them all possibilities to help accomplish their goals. This is also a great way to market you as a Real Estate Professional in the short sale market targeting families that need to relocate for a job position but cannot sell their home traditionally.




(Quote) We are the creative force of our life, and through our own decisions rather than our conditions, if we carefully learn to do certain things, we can accomplish those goals.

Stephen Covey



REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?



Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.



LOTUS REALTY GROUP



PROFESSIONAL SHORT SALE NEGOTIATORS



At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...




Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com



Wednesday, August 3, 2011

Why pay a short sale negotiator fee?

Dear REALTORS,



I wanted to thank those of you who came to my event last Thursday with David Bright. It was so nice to see you. We covered some very important topics in the short sale market. For those of you we had to turn away due to full capacity we apologize. Lotus Realty Group and David Bright will be having educational events every 3 months. We will be sure you are able to attend the next one.



One topic in particular I would like to go over in this news letter is all issues pertaining to a negotiator fee. I know that most of you do not want to pay a negotiator and parting with a 1% fee is painful for most of you. One of the questions for David Bright was; can the buyer pay the negotiator fee or is it the listing agent’s responsibility?



For those of you who have followed my events with my attorney David Bright understand that he feels very strongly on this matter. His reply was simply “The listing agent’s responsibility. Having a buyer pay a negotiator fee has a lot of dark ally’s in this industry today. As a business owner and having built my company to where it is today with a lot of sacrifices I cannot afford to go down any of those dark ally’s and one of my goals has always been to protect my clients as well. Homeowners and the REALTORS I negotiate for. I take pride in the fact that our company has a strong reputation of ethics and integrity along with our success rate in closing short sale transactions.



I was reflecting on the situation that drove us into this type of market in the first place. The lending industry liked to call it creative financing. Now, there are companies out there trying to do creative short sales and charge less money for their services to drive in the business. I am in my third year of business and I have seen these companies come and go.



I know how long short sales take to close. I also know how many you have to have in your pipeline to stay afloat. Not to mention the right team to handle the short sales from start to finish and how many deals that need to close on a monthly basis to make the numbers work to keep business doors open. But most importantly, from a legal stand Pointe, short sales have become a liability with all of the CREATIVE short sales taking place. Lenders and the DRE have extra eyes on short sale negotiators. Is it worth the headache and the risk to try to save some money or does it make more sense to hire a team of professionals who has your best interest in mind. A company who will protect you and your client.



I would like you to consider this; there are so many sides to a short sale transaction. As a negotiator I am negotiating the hardship, contributions and values. If a company is willing to give up their worth and accept less for their services, how hard do you think they will fight when negotiating your file? That saying, you get what you pay for is exactly right.




I wanted to share with you exactly what the 1% negotiator fee covers when you outsource your short sales to Lotus Realty Group.




Why use Lotus?



1. Qualified, experienced and professional staff. I was very mindful when hiring people for my company to assist me in executing my strategic, streamlined process to allow Lotus Realty Group to run like a well oiled machine and at the same time; people that would be a good reflection of who we really are and what we have to offer. Every person employed at Lotus Realty are licensed REALTORS.







Our staff:


Cari Drolet- Founder/CEO- 14 years in the industry from Lending to Real Estate. Licensed REALTOR, CDPE.



Stephen Bick- Broker of record/Business partner. Charter Financial Analyst. (CFA, CMA, CIRA.) Business Management and compliance.



Lana Boyle- Director of Operations- Bachelors Degree in business management. Licensed Broker, CDPE.



Jennifer Talasazan- Sales partner/Loan modification/Debt relief. Licensed REALTOR with back ground in the lending industry.


Donna Rommano- Transaction Coordinator- Licensed REALOR.




2. # 1 Real Estate Attorney, David Bright. David Bright is my attorney at Lotus Realty Group. My short sale package has all of the disclosures to protect all parties in the transaction. All disclosures were either co-created with David or approved by David. David is a huge asset to have on our team and he is always available for my clients.






3. Experienced negotiators with all of the large financial institutions and are able to handle all of the banks requests and requirements before the file hits their desk.






4. We have a stream lined process that allows our company to handle all files with ease. Our organizational skills are like no other. Nothing falls through the cracks.





5. In addition to negotiating your file Lotus Realty Group offers the following assistance to REALTORS:




A) Prospecting



B) Prequalifying



C) Full short sale package readily available to hand off to your clients to get started.



D) Pricing and listing



E) Marketing





6. Lotus Realty Group will only take qualified short sale transactions. We will only take deals we know we can close and not waste time on deals that do not make sense. This allows us to maintain our excellent track record of closing short sales.




7. Weekly updates



The goal is to build your pipeline with the right deals. If you have thirty in your pipeline on a regular basis you will be closing 2-3 monthly.



The questions to ask your self are:



A) Can you do the negotiating yourself and build your pipeline to where it needs to be?







B) Does it make more sense to hire a company for less than the 1% fee for negotiating your file where there is a lack of service and legal protection to save a little money and in return lose sleep at night?



Here a couple suggestions to help you with the 1% negotiator fee:



1. Ask the buyer’s agent to split the fee with you. If the buyer’s agent understands what it is he or she is paying for to ensure the deal closes it has been my experience that they are willing to contribute.







2. Offer 2.5 % to the cooperating broker in the MLS and 3.5% to the listing agent if you have to carry the full 1%.




REALTORS, we have truly created a system that works. Where do you see your business headed? What number do you need to make this year and next year? Have you thought about it? Have you written it down? What do you need to do to execute your business plan? Where is your time best spent?



I would like to end with a short story. When I first started my business I had my hands in several cookie jars. I was door knocking and taking listings, working with buyers, looking into a property management service as an addition to my business, and becoming my own broker to build a brokerage. It was EXHAUSTING!



When I changed my business model and decided to focus ONLY on negotiating for other REALTORS and perfecting that system all of the sudden I looked up and everything had come full circle. I get 3-5 of my own listings monthly by referral only. 6-10 new transactions from other REALTORS monthly. I have created this on a $500.00 monthly marketing budget. Sign calls come in and I hand it over to one of the agents on my team and just recently our company became our own broker of record. We are still in the process with the paperwork at the DRE but it happened. And it happened by laser focus on one particular part of the business.



I would like to encourage you to evaluate your current status and consider allowing Lotus Realty Group to help you achieve your goals.





(Quote) "Persistence is the ability to maintain actions regardless of your feelings. You press on even when you feel like quitting. When you work on any big goal your motivation will wax and wane like the waves hitting the shore. Sometimes you’ll feel motivated, sometimes you won’t. But it’s not your motivation that creates results - it’s your action.



Persistence allows you to keep taking action even when you don’t feel motivated to do so, and therefore you keep accumulating results. Persistence will ultimately provide its own motivation. If you simply keep taking action, you’ll eventually get results, and results can be very motivating." – Zig Ziglar





Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.



LOTUS REALTY GROUP



PROFESSIONAL SHORT SALE NEGOTIATORS





At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...




Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com