Friday, June 22, 2012

Watch our recent KOGO Interview discussing short sales:

Thursday, June 21, 2012

How do you avoid your short sale transaction falling apart?

Quote) “Coming together is a beginning. Keeping together is progress. Working together is success. "Henry Ford"





REALTORS, this is going to be a huge year for short sales. It is already happening. Home owners are rushing to take advantage of the Mortgage Debt Relief act that is expiring at the end of the year. More and more homeowners are realizing that it does not make sense to stay in a home that is continuing to depreciate and cut their losses now. As we move forward I wanted to share with you the most common problems I have seen in short sale transactions that can blow up your deal and put your sellers at risk of foreclosure. Here are the top 3:



HOA Delinquencies




As you know this can pose a problem once we receive Lender approval. From the time you take your short sale listing and the time it takes to get the short sale approval, the HOA fee will continue to go up along with penalties and interest. There is also the risk of the association attaching a lien to the property. I strongly suggest that you advise your clients to continue to pay the HOA if at all possible. If that is not a possibility then we need the HOA contact information to request a current payoff statement. We can atleast have an amount to work with to set expectation with a buyer. Obviously the amount will change depending on the amount owed and the association as the months go by. Some lenders will pay HOA delinquencies however; BofA will not and with a majority of the transactions being serviced by BofA this can be a difficult situation to work out.



Setting expectation with the buyer in the form of a counter stating that the lender may or may not cover certain fees and in the event this happens the "buyer" will be responsible for the additional costs up too $2000. That is just an example. The number you use will depend upon delinquencies, repairs, home warranty, termite, etc. In addition, if granted; homeowners are now allowed to contribute their relocation assistance money to costs such as these. Again, we will need to set that expectation with the sellers up front. It is extremely important that we are asking the sellers the right questions up front and explaining to them what will be expected of them as well. Which leads me to my next issue.



Seller/Buyer Cooperation



There is nothing more frustrating than working months on a short sale, getting approval and then a seller or buyer not willing to follow through with the transaction because they did not have all of the information up front about the short sale process, time frames, what needs to take place in order to be successful which will obviously vary from case to case. One of the things I look for is cooperation from the seller and the buyer. If I set expectation up front and I still feel that I am not going to get the cooperation I need from all parties to be successful I simply will not work with that person. This is a long process. I personally do not want to work on a short sale that is nearly impossible due to others lack of priority especially when I do not get a commission unless the deal closes. Why would we take on deals we will not get paid for?



That is why the pre-qualification process in the beginning needs to be thorough and honest. Don't tell your clients what they want to hear, tell them what they need to hear, the truth. I heard a quote a couple weeks ago that is so true in every situation in life be it personal or business; "The bitterest TRUTHS are far better than the sweetest lies." The truth will save you alot of waisted time, money and energy. Finally, this last issue has been catastrophic in short sales and quite honestly it is time for all of us to evaluate what is most important : Do I want to be right or do I want to be happy and close the deal?



Buyers lenders



Here is what we are looking at; extensions on approvals are not falling off trees. We have repeatedly explained that the short sale lenders are going to put a stop to extensions past a certain point. There is no guarantee that the short sale lender will grant one. The banks are finally working with us on short sales and have shortened their turn times however they want to close ON TIME. Buyers lenders are dropping the ball time and time again and requesting extensions. Sale dates, approval dates and rate lock expiration's are not being treated as priority. In addition, buyers lenders are requesting documents that should have been requested weeks before we received short sale approval.



I cannot stress enough that the minute a buyer puts an offer on a short sale that buyers loan officer needs to be on top of that loan. There needs to be a system they have to foresee problems before they happen and prepare accordingly so when that short sale approval comes from the short sale lender we will be able to close on time. We are dealing with peoples lives. This is not okay. All parties involved in the transaction need to understand the situation and what it is going to take to get it done and close on time and THEN all of us together need to move in that direction to see it through to the end. If one person in the transaction such as the buyers lender goes off task and requests an extension this is not working together and puts us at risk of foreclosure and looking poorly in our clients eyes.







Short sales are here to stay for awhile. There has got to be excellent organization, communication and follow through. If one of those important key pieces is missing in your transaction there is good chance the file will not close and you will have waisted your time and caused yourself unnecessary stress as these are all situations that are in our control.







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...



















400 S. Sierra Ave. Ste.102 Solana Beach, CA 92075



858-764-7300



http://www.lotusrealtygroup.com

Friday, June 1, 2012

Bank of Americas NEW short sale system

" We trained hard, but it seemed that every time we were beginning to form up in teams we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing, and a wonderful method it can be for creating the illusion of progress while producing confusion and inefficiency." Petronius Arbiter- 210 B.C


Bank of America recently announced changes to their internal short sale system that would make the process run more effective and efficient. This has been one of many instances where changes have been made. I can appreciate the effort as short sales can be extremely time consuming and leave buyers and sellers pessimistic about the outcomes however; reorganizing their systems have created confusion for files that have been in process for months. The same issue was created when Bank of America first introduced the Equator system years ago. Files that had originally been faxed over had to be initiated in Equator therefore the turn time for a file was 9 months before Bank of America could train their staff properly and work out the kinks.


You will find the current issues the same as before. Until Bank Of America can get their teams running like a well oiled machine we will continue to have issues with files that got caught in the transition. I believe the new system will eventually be very helpful and shorten the time frames however; in the mean time we need to continue our diligence with the files and at the same time remain calm and patient. If we are calm and patient so will our clients as we are setting proper expectations with them.


Here are some details to some of the changes you need to be aware of:

1. Bank of America may require a homeowner to be delinquent 31 days before considering a short sale. This is per investor so you will not know if this is required until the file gets submitted to the investor for final approval. As you know to get to the final approval stage it takes some time. If your seller is not delinquent the investor may feel this is a strategic short sale and decline the file until their is a true hardship. I have also seen CHASE investors do this as well.


2. If you out source your short sale to a third party negotiator the LISTING AGENT still needs to complete a BofA third party authorization form.


3. If a homeowner receives a letter in the mail stating they are pre qualified for the BofA Cooperative short sale it does not mean they are approved for it. Please note the following in regards to the Cooperative short sale program:

a) Bank of America does not require the home to be owner occupied.


b)The amount a homeowner may get for relocation assistance is determined by the balance of the loan, loss amount, location of the property and the offer. If the seller receives an "Acknowledgment of Interest" the amount of the incentive will be reflected on the document.


c) If the seller receives relocation assistance money between $5000-$30,000, they will receive a 1099 however; if the home is their primary residence they will not be taxed. If it is an investment property they may be taxed. I would have your client speak to a CPA in this regard.


Again, setting proper expectations with the seller and the buyer will save allot of time and energy. When changes like this occur blaming can take place with all parties involved in the transaction. Experience has taught me that frustration most likely occurs due to lack of understanding and communication. Learning and communication are things that we can control. The better we can do this the better we can serve our clients.


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...