It is no secret that the larger financial institutions are offering incentives for home owners experiencing difficulty with their mortgage payments to short sale rather than let the home go to foreclosure. Clearly it will take much longer and cost more money to foreclose. Foreclosures will only continue to drive prices down and keep the housing market weak in growth and recovery. I can sense the urgency with the lenders to stream line the process and get the properties off their books which is very helpful.
I think alot of us are wondering why the incentives are so high. Ranging from $15,000 to $35,000. I read an article where one person commented their opinion which made sense to me. " Are the lenders offering these large incentives for homeowners with underlying title issues and do not have the proper paper work to foreclose? With all of the previous allocations of abusive practices that have slowed the foreclosure process it is no surprise that they are taking extra precautions.
One of the concerns I have is; are homeowners going to jump at the chance to short sale their property in hopes to receive these incentives and is their decision to short sale contingent upon receiving incentives? Does this extend to mortgages backed by Fannie Mae and Freddie Mac? According to an article from C.A.R. released on 2/13/2012 it does not apply to Fannie and Freddie mortgages which makes up a pretty good percentage of loans out there. All guidelines are still unclear.
I believe this will light a fire for homeowners to make a choice to short sale sooner than later however; proper expectation should be set upfront. There is no guarantee that the homeowner will qualify. The number one incentive to short sale vs foreclose still rings true; The short sale will have less of an impact on your credit. Those who are frustrated with their current circumstances may say " I really don't care about my credit, nor do I care if I ever buy a house again." Seasons change and so do people and the things we want and desire. Wouldn't it feel better to know that even if you do not care now, if you do happen to change your mind, the option to buy is available? I like to keep my options open. It creates more possibility for the future.
Another incentive for a homeowner who has a non-recourse loan to short sale is the fact the Debt Relief Act expires at the end of this year. I believe it is not necessarily a good thing to sell to our clients cash incentives to put their home up for sale. I feel it is better to look at the facts of their situation and give them reality. Create a long term incentive to short sale instead of short term.
Tip of the day:
Citi Mortgage will not give incentives to a homeowner in a short sale if the BPO comes back higher than the offer. Whether or not their BPO is correct does not matter. If they do not counter and give an approval the incentives go away.
(Quote) You are the person who has to decide. Whether you'll do it or toss it aside; you are the person who makes up your mind. Whether you'll lead or will linger behind. Whether you'll try for the goal that's afar. Or just be contented to stay where you are.
Edgar A. Guest
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...
Friday, February 17, 2012
Tuesday, February 7, 2012
BPO Valuations
BPO Valuations have been harder to dispute. Due to the loss the lender will take on a short sale and the inability to pursue for a deficiency judgment they are becoming a bit more unrealistic on the values. It doesn't help that the BPO agent they send typically performs an exterior BPO. If the property is in a nice neighborhood but has alot of repairs such as water or termite damage, plumping issues or cracked tile; there is no way you will have a fighting chance if the BPO agent has not performed an Interior BPO. The BPO agent and the short sale lender will base their value on the last 3 sold properties in the neighborhood.
Values are still declining and will continue to for quite some time. One of the issues I see with the lenders basing the value off the last three sold comps is those listings were most likely sold 6-8 months ago. With the market decline there is no way that the BPO agents number is realistic. The fun part is trying to plead your case. It has been my experience that a short sale is an art of its own. It has to be set up correctly from the beginning. We have to be able to see a problem before it occurs in order to be able to overcome those potential challenges successfully.
We have to know the home inside and out. Any repairs need to be listed and if there is anything visible, pictures are always helpful. If there is severe damage it may be in your best interest to get a home inspection completed so you know exactly what you are getting yourself in to. This will also help you to be able to set expectations with your buyers. If a buyer finds out about damages after you get short sale approval you run the risk of the buyer either reducing their offer or they may back out all together and put you at risk of going to foreclosure.
A strong listing history is always helpful. We recently had a value dispute with one of our properties. We were getting killed because the property is in Solana Beach and prices in the neighborhood were higher than our offer. I had a strong listing history starting at the number the bank thought it was worth and did periodic price reductions. I was able to show them regardless of what their comps were, our listing history that shows where we started and where the offer came in was proof enough that the home is worth what a buyer is willing to pay. The second thing I had going for me was a list of detrimental factors such as; the home is located on a busy street across from a shopping center. The bank wanted $95,000 more than what our offer came in at however; after presenting all the above and detailed descriptions about the last three sold comps and how they differ from our listing we were able to get our value accepted.
We are going to continue to run into this issue and more value disputes will most likely have to be performed however; I believe if we take the appropriate steps in the beginning we will be able to achieve the ultimate goal which is a short sale approval. Good luck to you.
(Quote) Quality questions create a quality life. Successful people ask better questions, and as a result, they get better answers." Tony Robbins"
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...
Values are still declining and will continue to for quite some time. One of the issues I see with the lenders basing the value off the last three sold comps is those listings were most likely sold 6-8 months ago. With the market decline there is no way that the BPO agents number is realistic. The fun part is trying to plead your case. It has been my experience that a short sale is an art of its own. It has to be set up correctly from the beginning. We have to be able to see a problem before it occurs in order to be able to overcome those potential challenges successfully.
We have to know the home inside and out. Any repairs need to be listed and if there is anything visible, pictures are always helpful. If there is severe damage it may be in your best interest to get a home inspection completed so you know exactly what you are getting yourself in to. This will also help you to be able to set expectations with your buyers. If a buyer finds out about damages after you get short sale approval you run the risk of the buyer either reducing their offer or they may back out all together and put you at risk of going to foreclosure.
A strong listing history is always helpful. We recently had a value dispute with one of our properties. We were getting killed because the property is in Solana Beach and prices in the neighborhood were higher than our offer. I had a strong listing history starting at the number the bank thought it was worth and did periodic price reductions. I was able to show them regardless of what their comps were, our listing history that shows where we started and where the offer came in was proof enough that the home is worth what a buyer is willing to pay. The second thing I had going for me was a list of detrimental factors such as; the home is located on a busy street across from a shopping center. The bank wanted $95,000 more than what our offer came in at however; after presenting all the above and detailed descriptions about the last three sold comps and how they differ from our listing we were able to get our value accepted.
We are going to continue to run into this issue and more value disputes will most likely have to be performed however; I believe if we take the appropriate steps in the beginning we will be able to achieve the ultimate goal which is a short sale approval. Good luck to you.
(Quote) Quality questions create a quality life. Successful people ask better questions, and as a result, they get better answers." Tony Robbins"
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...
Subscribe to:
Posts (Atom)
