I trust you all had a nice and relaxing holiday weekend. Personally, I feel a sense of renewed strength and re-direction in my priorities, purpose and possibility. I have met with a lot of REALTORS to help them with their short sale businesses and I always like to ask a lot of questions in the beginning:
1. What is your main focus? Buyers, listings, short sales or all three?
2. How much time do you spend prospecting?
3. How much time do you spend with lead follow up?
4. When do you typically go on listing appointments?
5. How much marketing if any are you doing?
6. Are you currently time blocking and following a schedule?
What I hear the most from REALTORS in regards to these questions are the following:
1. Types of clients: I have been spending more time with buyers as a majority of the listings out here are short sales and I do not want to deal with a short sale.
2. Prospecting: I try to spend a little time here and there but I get pulled in different directions during the day and end up going with the flow of whatever comes up and needs attention.
3. Lead follow up: I usually get in 20 minutes to an hour.
4. Appointments: When ever my client is available.
5. Marketing: I do not have the money to spend on a lot of marketing.
6. Time blocking: I have a family and it is hard to keep a schedule.
I wanted to share a story with you. Before I started my business I was blessed with the rare opportunity to be a part of one of the top Real Estate teams in San Diego led by one of the top leaders in our industry today. I had a vision to help people in the current state of the market and I focused all of my attention on cracking the short sale code. At that time not many people were aware of how to approach this side of the Real Estate market. While I was on this team I had learned a lot of valuable lessons on how to be successful but I was also told something that has stuck with me: “Run your real estate business but don’t let it run you.”
Wow! There is a lot of truth and power in that statement. When I left and started my company I was eager to be successful and eager to get out there and knock on doors and help home owners who were in default. I quickly learned a few things:
a) I could not knock on enough doors nor could I get enough people to respond fast enough.
b) My time was spent in too many directions that was causing me to be in-effective and in-efficient and at the time I only had an assistant helping me.
c) I was slowly losing sight of what my true goal and purpose was for starting this company in the beginning.
I wanted to help people. I wanted to offer something special to home owners who were suffering and needed direction. That was my original motivation. The same person said something else that was very profound to me at the time however it was not remembered until I desperately needed direction. “Instead of focusing on one person to help, find a way to help many.”
Lotus Realty Group was born and I decided that I was going to put all my focus on helping REALTORS expand their business, take listings and close their short sale transactions. By putting my focus into ONE thing, one thing I knew I was good at and mastering that has allowed me to do the following:
1. Develop a system that runs like a well oiled machine for me and for REALTORS.
2. Receive 3-5 of my OWN listings monthly just through referrals and my newsletters thus keeping marketing costs down and saving the time it takes door knocking. The majority of my business is helping REALTORS close their short sale transactions therefore I am reaching more homeowners who need help than I could get to on my own.
3. Manage my time so I can work smart, effective and efficient!
By re directing my priorities, purpose and possibility, all the other parts of my business just started falling into place. We are in a time where there is a lot of uncertainty in the market and a lot of people that need your help. Some questions to ask yourself are:
a) What is your passion in this industry?
b) Where would your time be best spent?
c) Are you involved in a part of the market (short sales) that are going to be around for quite a while? If not, why?
d) Where do you see yourself in 5 years?
e) What is your desire for the future?
f) How can I help others right now that are suffering in this economy with the tools that I have and are readily available to me?
My possibility for the future is to offer a solid platform, foundation and culture for REALTORS at Lotus Realty Group. To offer extensive training, support and accountability and continue to help REALTORS expand their business, take short sale listings and close their short sale transactions. Well oiled machines. Imagine how many people we can help together.
Here are some tips that I have learned that have helped me tremendously grow my company:
1. Surround yourself only with people who share your possibility. People who uplift you and support you no matter what.
2. Pick one thing and with all your heart approach it with 100% commitment and determination to persevere in whatever obstacles may come your way.
3. Have a longing, a desire and be willing to do whatever it takes to achieve your goal.
4. Self mastery, discipline is necessary to give your very best.
5. Time management. To be effective and efficient time block for prospecting, appointments and lead follow up. When done properly you will be able to accomplish everything you need to accomplish with ease and grace.
6. Be willing to deal with all types of personalities.
7. Never, never, never, give up. (Guess who said that and you get a Starbucks card!!!!)
Now is just as good a time as any to put your business plan, your hopes and dreams for the future in motion. What’s your dream? Think about it.
(Quote :) Life is not easy for any of us. But what of that? We must have perseverance and, above all, confidence in ourselves. We must believe that we are gifted for something, and that this thing, at whatever cost, must be attained.
~ Marie Curie
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, April 25, 2011
Tuesday, April 12, 2011
Financial institutions expectations in a short sale transaction
REALTORS, there have been a lot of frequently asked questions in regards to some of the requested documentation that the financial institutions are asking for when submitting a short sale package. We are all experiencing changes in the industry constantly, from the rules and guidelines to the paperwork. Experience has taught me that if these expectations are not met up front it will only hold up the process in the end when we are trying to push these through.
Let’s start with one of the biggest challenges we are facing today in short sales.
Submitting the right offer.
What we are seeing with some of the major financial institutions this year is that they are paying close attention to low ball offers. A rule of thumb to keep in mind is they generally want to see 90-95% of the balance owed. Is that realistic? NO. So how do we remedy that and show the financial institutions we are bringing them the highest and best? We simply create a listing history. Hopefully REALTORS, you are not taking on listings with sale dates less than 3 weeks away, 12 months of delinquencies and excessive HOA balances. These types of deals will be nearly impossible to push through. But if you have a qualified seller who fits the parameters for a successful short sale transaction then you have time to create a realistic picture for the bank.
1. Price the property close to what is owed on the loan for 30 days.
2. Set 3 price reductions on the 1st and 15th of the month moving forward. By the time you get to the 3rd price reduction you will have created a listing history for the financial institution to show them that you actively and aggressively marketed this property for a substantial amount of time and you will have all your data to support the value of the offer you submit.
I can share with you from experience that moving forward the financial institutions wants the homeowner to call and inform them that the home will be listed as a short sale. Bank of America will now send an appraiser out to the property before the home is listed and tell the listing agent what to list the property at based on their value. You will be asked to give them a weekly update and price reductions will occur every 21 days. If you have not experienced this yet, you will. We at Lotus Realty Group have been educating you for over 2 years to follow this system. Now the financial institutions are starting to implement this. I had a Bank of America representative call me on one of my listings in Carlsbad that I actually listed quite high to start my listing history. I was told to raise the price by nearly $25,000 and schedule a price reduction in 21 days even after I told him that it was listed at my price for 3 weeks and I had not received one phone call from a buyer.
The financial institutions are really going to start cracking down on this so it is my suggestion that we all work smart:
a) Prequalify the seller and do not take on a listing that does not make sense.
b) Have an addendum that has the listing price and the dates and prices of your reductions signed by your seller so you do not have to keep going back to your seller to modify the terms of your listing.
c) Mark all price reductions on your calendar as reminders to stay on task.
d) In the mean time, make sure you are gathering all documents and have a solid short sale package ready to go so that by the time you get the right offer you can submit it right away. I would tell your sellers to automatically send updated financials every month.
e) Use counters and addendum’s to set expectation with buyers. They need to understand short sales are sold as is. There are fees a bank may or may not cover. I would also make sure buyers are DU approved, not just pre qualified through a letter through their lender.
f) Submit the short sale package with your listing history, 3 active, 3pending and 3sold MLS listings and a comparative market analysis with a nice cover letter to explain your circumstances.
g) Set expectations with all parities in regards to timelines to keep everyone on board.
h) Follow up tenaciously.
Here are some other requirements that will save you time if you request them up front:
1. Financial institutions are requiring 4506 T’ s to be completed. I have made this part of my short sale package.
2. There have been a lot of inquiries on whether or not the Equator system requires buyer information. Social security numbers, date of birth, phone numbers and addresses. YES. There may have been occasions where you can get by with generic information but a majority of the time it is required so I would get into the habit of requesting it up front.
3. We have seen a lot of offers come in without proof of funds and pre-quall letters. Equator will not accept an offer without it so make sure you request it up front. We receive a lot of incomplete packages and it really does slow the process.
REALTORS, we at Lotus Realty Group has worked hard to tighten up our systems and keep all of you up to date with all the changes in this ever changing industry. It is my hope to help you move through this frustrating and tedious process in an effective and efficient manner to help get you what you want in the time you want.
(Quote) We must use time wisely and forever realize that the time is always ripe to do right.
- Nelson Mandela
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
Let’s start with one of the biggest challenges we are facing today in short sales.
Submitting the right offer.
What we are seeing with some of the major financial institutions this year is that they are paying close attention to low ball offers. A rule of thumb to keep in mind is they generally want to see 90-95% of the balance owed. Is that realistic? NO. So how do we remedy that and show the financial institutions we are bringing them the highest and best? We simply create a listing history. Hopefully REALTORS, you are not taking on listings with sale dates less than 3 weeks away, 12 months of delinquencies and excessive HOA balances. These types of deals will be nearly impossible to push through. But if you have a qualified seller who fits the parameters for a successful short sale transaction then you have time to create a realistic picture for the bank.
1. Price the property close to what is owed on the loan for 30 days.
2. Set 3 price reductions on the 1st and 15th of the month moving forward. By the time you get to the 3rd price reduction you will have created a listing history for the financial institution to show them that you actively and aggressively marketed this property for a substantial amount of time and you will have all your data to support the value of the offer you submit.
I can share with you from experience that moving forward the financial institutions wants the homeowner to call and inform them that the home will be listed as a short sale. Bank of America will now send an appraiser out to the property before the home is listed and tell the listing agent what to list the property at based on their value. You will be asked to give them a weekly update and price reductions will occur every 21 days. If you have not experienced this yet, you will. We at Lotus Realty Group have been educating you for over 2 years to follow this system. Now the financial institutions are starting to implement this. I had a Bank of America representative call me on one of my listings in Carlsbad that I actually listed quite high to start my listing history. I was told to raise the price by nearly $25,000 and schedule a price reduction in 21 days even after I told him that it was listed at my price for 3 weeks and I had not received one phone call from a buyer.
The financial institutions are really going to start cracking down on this so it is my suggestion that we all work smart:
a) Prequalify the seller and do not take on a listing that does not make sense.
b) Have an addendum that has the listing price and the dates and prices of your reductions signed by your seller so you do not have to keep going back to your seller to modify the terms of your listing.
c) Mark all price reductions on your calendar as reminders to stay on task.
d) In the mean time, make sure you are gathering all documents and have a solid short sale package ready to go so that by the time you get the right offer you can submit it right away. I would tell your sellers to automatically send updated financials every month.
e) Use counters and addendum’s to set expectation with buyers. They need to understand short sales are sold as is. There are fees a bank may or may not cover. I would also make sure buyers are DU approved, not just pre qualified through a letter through their lender.
f) Submit the short sale package with your listing history, 3 active, 3pending and 3sold MLS listings and a comparative market analysis with a nice cover letter to explain your circumstances.
g) Set expectations with all parities in regards to timelines to keep everyone on board.
h) Follow up tenaciously.
Here are some other requirements that will save you time if you request them up front:
1. Financial institutions are requiring 4506 T’ s to be completed. I have made this part of my short sale package.
2. There have been a lot of inquiries on whether or not the Equator system requires buyer information. Social security numbers, date of birth, phone numbers and addresses. YES. There may have been occasions where you can get by with generic information but a majority of the time it is required so I would get into the habit of requesting it up front.
3. We have seen a lot of offers come in without proof of funds and pre-quall letters. Equator will not accept an offer without it so make sure you request it up front. We receive a lot of incomplete packages and it really does slow the process.
REALTORS, we at Lotus Realty Group has worked hard to tighten up our systems and keep all of you up to date with all the changes in this ever changing industry. It is my hope to help you move through this frustrating and tedious process in an effective and efficient manner to help get you what you want in the time you want.
(Quote) We must use time wisely and forever realize that the time is always ripe to do right.
- Nelson Mandela
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
Friday, March 25, 2011
Streamlined short sales.. Is it really happening??
REALTORS, financial institutions have worked hard to create a system that will help streamline the short sale process. I just spoke with a GMAC negotiator who says they have cut the time it would normally take for a short sale transaction by more than half. In the past an average short sale would take 4-6 months. Moving forward we will see closings within 2 months of submitting a short sale package. Bank of America, Wells Fargo and Wachovia are also creating programs to stream line the process. I have been reflecting on all of the short sale transactions we at Lotus Realty Group have closed in 2010 and the 1st quarter of this year and the progress we have made in our systems and organization as well. These improvements have enabled us to close deals more effectively and efficiently with the financial institutions. It has also allowed us to help REALTORS grow their businesses by expediting their short sales and freeing them up to do what they do best, PROSPECTING!!
Experience has taught me that no matter how streamlined the financial institutions are in processing short sales if we have not put the deal together properly with qualified party’s involved in the transaction we will be self-defeating and not get the results we desire.
I believe in helping homeowners in default who truly have a hardship and the only way to ensure that we are successful in doing so is to:
a) Take the right deal. (Pre-qualify, pre-qualify, pre-qualify)
b) Have an organized, structured system in place to ensure nothing falls through the cracks.
c) Have experience with the banks and know what they want.
d) Be tenacious and follow through.
e) Be a master negotiator.
f) Have a Real Estate attorney that can educate you and keep you abreast of the ever changing legal issues.
This has been a learning curve for all of us. Lender guidelines are constantly changing, market values are dropping rapidly and more and more homes are going into default not to mention all of the legal issues attached to short sales. I want all of us to be successful working together moving forward this year.
All short sales have obstacles to closing, some that are out of our control, but mostly ones we can control. For the last two years I have written newsletters to assist you in a market that has become inundated with short sales. An archive of these can be found on my website at WWW.LOTUSREALTYGROUP.COM.
Here is a recap of the top 10 obstacles to closing short sale transactions:
1. Home owner not being qualified and expectations not being properly set.
2. Non-cooperative clients.
3. Incomplete short sale package.
4. No listing history.
5. Low ball offers.
6. Homeowners not continuing to pay the HOA throughout the short sale (I would start telling clients to continue to make their payments if they can otherwise it turns into another lien we have to negotiate.)
7. Buyer’s lenders not cooperating and forcing us to file unnecessary extensions and putting us at risk of losing approvals.
8. Sellers not forwarding updated financials on a monthly basis for us to send to their lender.
9. Preliminary reports and statements of information not being reviewed for other liens attached to the property.
10. REALTORS…DON’T TAKE A LISTING THAT HAS A SALE DATE IN TWO WEEKS.
I believe if we can pay extra attention to these obstacles and do our best to handle these issues up front we will save time, money and be much more effective and efficient together and work in harmony with the financial institutions to steamline this process.
EXTRA TIPS FOR THE MONTH:
1. Some banks have their own short sale financial packets that they require to be filled out. I have had several homeowners frustrated because they feel they are filling paperwork out twice. It would be helpful to know who the banks are upfront. Once you know this call me and I will let you know what that particular bank will require. It will save a lot of time and effort on your seller’s part if we can get them the right paperwork from the beginning.
2. I know a lot of you are use to using electronic signatures. Most banks REQUIRE wet signatures. They ask for it at the end so let’s be ahead of the game and get them upfront.
Quote: An empowered organization is one which individuals have the knowledge, skill, desire, and opportunity to personally succeed in a way that leads to collective organizational success."
Stephan R. 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
Experience has taught me that no matter how streamlined the financial institutions are in processing short sales if we have not put the deal together properly with qualified party’s involved in the transaction we will be self-defeating and not get the results we desire.
I believe in helping homeowners in default who truly have a hardship and the only way to ensure that we are successful in doing so is to:
a) Take the right deal. (Pre-qualify, pre-qualify, pre-qualify)
b) Have an organized, structured system in place to ensure nothing falls through the cracks.
c) Have experience with the banks and know what they want.
d) Be tenacious and follow through.
e) Be a master negotiator.
f) Have a Real Estate attorney that can educate you and keep you abreast of the ever changing legal issues.
This has been a learning curve for all of us. Lender guidelines are constantly changing, market values are dropping rapidly and more and more homes are going into default not to mention all of the legal issues attached to short sales. I want all of us to be successful working together moving forward this year.
All short sales have obstacles to closing, some that are out of our control, but mostly ones we can control. For the last two years I have written newsletters to assist you in a market that has become inundated with short sales. An archive of these can be found on my website at WWW.LOTUSREALTYGROUP.COM.
Here is a recap of the top 10 obstacles to closing short sale transactions:
1. Home owner not being qualified and expectations not being properly set.
2. Non-cooperative clients.
3. Incomplete short sale package.
4. No listing history.
5. Low ball offers.
6. Homeowners not continuing to pay the HOA throughout the short sale (I would start telling clients to continue to make their payments if they can otherwise it turns into another lien we have to negotiate.)
7. Buyer’s lenders not cooperating and forcing us to file unnecessary extensions and putting us at risk of losing approvals.
8. Sellers not forwarding updated financials on a monthly basis for us to send to their lender.
9. Preliminary reports and statements of information not being reviewed for other liens attached to the property.
10. REALTORS…DON’T TAKE A LISTING THAT HAS A SALE DATE IN TWO WEEKS.
I believe if we can pay extra attention to these obstacles and do our best to handle these issues up front we will save time, money and be much more effective and efficient together and work in harmony with the financial institutions to steamline this process.
EXTRA TIPS FOR THE MONTH:
1. Some banks have their own short sale financial packets that they require to be filled out. I have had several homeowners frustrated because they feel they are filling paperwork out twice. It would be helpful to know who the banks are upfront. Once you know this call me and I will let you know what that particular bank will require. It will save a lot of time and effort on your seller’s part if we can get them the right paperwork from the beginning.
2. I know a lot of you are use to using electronic signatures. Most banks REQUIRE wet signatures. They ask for it at the end so let’s be ahead of the game and get them upfront.
Quote: An empowered organization is one which individuals have the knowledge, skill, desire, and opportunity to personally succeed in a way that leads to collective organizational success."
Stephan R. 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
Friday, March 18, 2011
Should my clients continue to make their mortgage payments in a Short Sale transaction?
I get this question asked to me a lot from REALTORS who are not sure how to answer a distressed homeowner on a listing appointment. There are occasionally the home owner’s that can continue to make their payments throughout the short sale process. Barely, but they can. Please keep in mind that you cannot advise your client either way but you can offer them advantages and disadvantages of making your payments and not making your payments. Everyone’s situation is different in a short sale and everyone has different goals and objectives. The other thing to understand is that short sales are designed for people that have a genuine hardship. I have negotiated short sales where the homeowner has never missed a payment, however, there has to be a genuine hardship.
Here are the advantages and disadvantages of making your payments and not making your payments in a short sale:
Advantages of making your payments:
A) The home does not go into foreclosure, giving you plenty of time to get the transaction done.
B) The homeowner will not receive any late payments reporting on their credit report.
C) It will be easier to find a place to rent when it is time to move.
Disadvantages of making your payments:
A) The homeowner will not receive any of this money back.
B) Homeowner may be denied for a short sale until he or she is late. (This is a requirement for FHA and the HAFA program) and certain lenders will not look at a short sale until a homeowner is behind.
C) The process may take longer.
Advantages of NOT making your payments:
A) Homeowner will qualify easier for a short sale when they are behind. This shows a severe hardship.
B) Homeowner can still live in the home while the short sale is being negotiated. I always let the homeowners know when it is time to move there will be an extra deposit most landlords will require due to the liability factor. If they choose to not make their payments, they should put some of that money away for their transition.
Disadvantages to NOT making your payments:
A) Once a homeowner misses three consecutive mortgage payments, the NOD is filed and the foreclosure process begins. (REALTORS, make sure you know the California foreclosure time lines)
B) Late payments will be reported on the homeowner’s credit report.
C) Thus, making it harder to find a rental.
It has been my experience that most homeowners in this market that are pursuing a short sale are looking for guidance. We need to be careful as REALTORS on the guidance that we give. If we give them truth and reality from all angles, homeowners will be able to make the best choice that fits their goals and objectives.
(Quote) Again and again, the impossible problem is solved when we see that the problem is only a tough decision waiting to be made.
Robert H. Schuller
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.....
Here are the advantages and disadvantages of making your payments and not making your payments in a short sale:
Advantages of making your payments:
A) The home does not go into foreclosure, giving you plenty of time to get the transaction done.
B) The homeowner will not receive any late payments reporting on their credit report.
C) It will be easier to find a place to rent when it is time to move.
Disadvantages of making your payments:
A) The homeowner will not receive any of this money back.
B) Homeowner may be denied for a short sale until he or she is late. (This is a requirement for FHA and the HAFA program) and certain lenders will not look at a short sale until a homeowner is behind.
C) The process may take longer.
Advantages of NOT making your payments:
A) Homeowner will qualify easier for a short sale when they are behind. This shows a severe hardship.
B) Homeowner can still live in the home while the short sale is being negotiated. I always let the homeowners know when it is time to move there will be an extra deposit most landlords will require due to the liability factor. If they choose to not make their payments, they should put some of that money away for their transition.
Disadvantages to NOT making your payments:
A) Once a homeowner misses three consecutive mortgage payments, the NOD is filed and the foreclosure process begins. (REALTORS, make sure you know the California foreclosure time lines)
B) Late payments will be reported on the homeowner’s credit report.
C) Thus, making it harder to find a rental.
It has been my experience that most homeowners in this market that are pursuing a short sale are looking for guidance. We need to be careful as REALTORS on the guidance that we give. If we give them truth and reality from all angles, homeowners will be able to make the best choice that fits their goals and objectives.
(Quote) Again and again, the impossible problem is solved when we see that the problem is only a tough decision waiting to be made.
Robert H. Schuller
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.....
Thursday, March 3, 2011
How to approach HOA liens in a short sale
REALTORS, we are running into a lot of issues with HOA liens when negotiating a short sale. There are situations out of our control. Sometimes we may take on a listing and the homeowners have not made a payment in 12 months along with their mortgage payments and they are severely hardship stricken and they cannot come current or contribute to the payoff to get the deal closed. In that scenario, who do you suppose is going to be responsible for paying this? We first have to see if the lender or Debt Settlement Company is willing to contribute to the payoff. We can also try to negotiate with the HOA and or attorney’s office they may have passed it to in order to see if we can get a principal reduction or lien release. Lastly, depending upon what was negotiated with the lender and HOA, the balance will most likely come from the buyer and or agents to close.
We are seeing HOA liens in the amounts of $30,000. Most of that are legal, administrative and maintenance fees that have been attached to the delinquent HOA dues. The idea is to catch it while it is in the delinquent stages before it gets passed off to an attorney’s office and becomes an actual lien attached to the property. Another option after all of these previous steps I mentioned have been taken; is to get the balance down as much as possible and try to work it in to the offer if you can. Not a lot of buyers are willing to come out of pocket $30,000 for an HOA lien but working it into the offer may be an option. If this is the case you want to make sure you have a solid listing history on the property with comps to support whatever offer you send over with a letter of explanation in regards to the HOA balance. A lender is not going to pay that high of a balance either. If the lender is Bank of America, they most likely will not cover any of it. So we want to make sure that we are explaining to the lender our dilemma and why we have structured the offer the way we have. Put the ball in their court.
Here are some tips on things we can control:
1. Ask the homeowner if they are current. If they are not current find out the amount of the HOA and number of months they are behind to figure out an estimate of the balance owed. See if they are willing to come current or contribute to the payoff. Keep in mind that a short sale can take anywhere from 2-4 months plus and the amount owed will go up every month along with penalties and interest. If they can make a payment or contribute this will keep the delinquencies from turning into a lien attached to the property. Do not be afraid to ask the right questions. The homeowners need to understand what it is going to take to avoid foreclosure.
2. If the homeowner is current on the HOA; advise them to continue making payments if possible to avoid further delinquencies and the possibility of a lien being attached the property. Explain that this makes it difficult in a short sale transaction.
3. When you have a buyer’s agent submit an offer, use a counter to set expectation with the buyer explaining that there may be fees a lender will not cover and the buyer will be responsible to contribute to those fees to close the deal. The idea is to keep agents from contributing money out of their commissions. I am sure you all can agree this is a frustation, but not a necessary one in my opinion if we are working effectively and efficiently and setting proper expectations.
HOA liens are becoming harder and harder to remedy at the end when we are trying to close. Doing our diligence up front will help structure the deal right the first time and save us from these pitfalls in the end and ensure a smoother transaction.
Quote: "Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall."
— Stephen R. 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
We are seeing HOA liens in the amounts of $30,000. Most of that are legal, administrative and maintenance fees that have been attached to the delinquent HOA dues. The idea is to catch it while it is in the delinquent stages before it gets passed off to an attorney’s office and becomes an actual lien attached to the property. Another option after all of these previous steps I mentioned have been taken; is to get the balance down as much as possible and try to work it in to the offer if you can. Not a lot of buyers are willing to come out of pocket $30,000 for an HOA lien but working it into the offer may be an option. If this is the case you want to make sure you have a solid listing history on the property with comps to support whatever offer you send over with a letter of explanation in regards to the HOA balance. A lender is not going to pay that high of a balance either. If the lender is Bank of America, they most likely will not cover any of it. So we want to make sure that we are explaining to the lender our dilemma and why we have structured the offer the way we have. Put the ball in their court.
Here are some tips on things we can control:
1. Ask the homeowner if they are current. If they are not current find out the amount of the HOA and number of months they are behind to figure out an estimate of the balance owed. See if they are willing to come current or contribute to the payoff. Keep in mind that a short sale can take anywhere from 2-4 months plus and the amount owed will go up every month along with penalties and interest. If they can make a payment or contribute this will keep the delinquencies from turning into a lien attached to the property. Do not be afraid to ask the right questions. The homeowners need to understand what it is going to take to avoid foreclosure.
2. If the homeowner is current on the HOA; advise them to continue making payments if possible to avoid further delinquencies and the possibility of a lien being attached the property. Explain that this makes it difficult in a short sale transaction.
3. When you have a buyer’s agent submit an offer, use a counter to set expectation with the buyer explaining that there may be fees a lender will not cover and the buyer will be responsible to contribute to those fees to close the deal. The idea is to keep agents from contributing money out of their commissions. I am sure you all can agree this is a frustation, but not a necessary one in my opinion if we are working effectively and efficiently and setting proper expectations.
HOA liens are becoming harder and harder to remedy at the end when we are trying to close. Doing our diligence up front will help structure the deal right the first time and save us from these pitfalls in the end and ensure a smoother transaction.
Quote: "Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall."
— Stephen R. 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
Tuesday, February 15, 2011
CITI Bank Short Sale
A short sale is a frustrating experience. It can leave the homeowner and even the REALTOR disillusioned and negative about financial institutions in general however, CITI Bank is one of my top 3 Lenders I like to work with. Or should I say debt collector as banks no longer want to be addressed as the lender. Once a home owner defaults on their mortgage they are no longer a servicer of a loan; they became the servicer of a debt. I received an email from a client who was very disturbed by the amount of phone calls they were getting due to their missed mortgage payments. Please do not be mistaken. A short sale will help avoid foreclosure and help reduce the hit to your credit significantly but this does not stop the servicer of the debt from making all attempts to collect.
Additional Documents to include in the short sale package:
As most of the financial institutions, CITI Bank has tightened up their time lines. They want to get short sales off their books as fast as possible. Nevertheless; the deal still needs to make sense and the home owners have to qualify. CITI Bank has their own financial packet that needs to be completed. Some additional documents CITI may ask to include in your short sale package are the Deed of Trust and the original mortgage note. Mortgage coupons for existing payments may need to be provided as well.
Additional Requirements:
CITI Bank requires borrowers to be in default by at least one month and have no means to pay off the mortgage and other existing debts. This is where prequalifying the home owner is important. If you have a home owner who is continuing to make his or her payments, has a nice savings account and a surplus every month after all expenses are paid; they may not be successful with CITI or any other financial institution for that matter unless the home owner is prepared to make a contribution in the form of cash or a new note.
Time Frames:
I love working with CITI Bank because I know what they are looking for. Knowing that, I am not going to submit a package unless I have the following:
a) A qualified seller
b) A qualified buyer (with an offer in line with the value and or listing history so that CITI knows we aggressively marketed the property)
c) A complete short sale package with all of CITI’S applicable documents.
It has been my experience that if I follow these guidelines I will have a BPO ordered in 5-10 business days after submission, a negotiator in 2 weeks and an approval in less than a month. Add to this a 30 day escrow and we are looking at a closing in less than 2 months as opposed to the 3-4 months as most other financial institutions.
Extra tip:
CITI seconds tend to sell off the debt to a collection agency. We want to avoid this at all times. Once the debt gets sold to a collection agency we lose the power of leverage when it comes to the payoff. Most seconds will settle for 10% of the balance. Collection companies will want 30-40% and they will be firm on their request therefore hurting your chances of being successful. My suggestion is if at all possible, have your client make a payment every now and then while the short sale is in process to keep it in the system. This will reduce the risk of this occurrence.
The goal is to work smart. Effective and efficient. Knowing ahead of time what the financial institution requires will allow you to do the following:
a) Take the right deal
b) Gather the applicable documents that are required of that particular financial institution (as each has their own)
c) Educate your client on what to expect.
d) Give you more than enough time to build a solid proposal to get you the results you desire in a timely manner.
Furthermore, building a solid reputation as well which leads to REFERRALS!!
(Quote) It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership.
Nelson Mandela
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
Additional Documents to include in the short sale package:
As most of the financial institutions, CITI Bank has tightened up their time lines. They want to get short sales off their books as fast as possible. Nevertheless; the deal still needs to make sense and the home owners have to qualify. CITI Bank has their own financial packet that needs to be completed. Some additional documents CITI may ask to include in your short sale package are the Deed of Trust and the original mortgage note. Mortgage coupons for existing payments may need to be provided as well.
Additional Requirements:
CITI Bank requires borrowers to be in default by at least one month and have no means to pay off the mortgage and other existing debts. This is where prequalifying the home owner is important. If you have a home owner who is continuing to make his or her payments, has a nice savings account and a surplus every month after all expenses are paid; they may not be successful with CITI or any other financial institution for that matter unless the home owner is prepared to make a contribution in the form of cash or a new note.
Time Frames:
I love working with CITI Bank because I know what they are looking for. Knowing that, I am not going to submit a package unless I have the following:
a) A qualified seller
b) A qualified buyer (with an offer in line with the value and or listing history so that CITI knows we aggressively marketed the property)
c) A complete short sale package with all of CITI’S applicable documents.
It has been my experience that if I follow these guidelines I will have a BPO ordered in 5-10 business days after submission, a negotiator in 2 weeks and an approval in less than a month. Add to this a 30 day escrow and we are looking at a closing in less than 2 months as opposed to the 3-4 months as most other financial institutions.
Extra tip:
CITI seconds tend to sell off the debt to a collection agency. We want to avoid this at all times. Once the debt gets sold to a collection agency we lose the power of leverage when it comes to the payoff. Most seconds will settle for 10% of the balance. Collection companies will want 30-40% and they will be firm on their request therefore hurting your chances of being successful. My suggestion is if at all possible, have your client make a payment every now and then while the short sale is in process to keep it in the system. This will reduce the risk of this occurrence.
The goal is to work smart. Effective and efficient. Knowing ahead of time what the financial institution requires will allow you to do the following:
a) Take the right deal
b) Gather the applicable documents that are required of that particular financial institution (as each has their own)
c) Educate your client on what to expect.
d) Give you more than enough time to build a solid proposal to get you the results you desire in a timely manner.
Furthermore, building a solid reputation as well which leads to REFERRALS!!
(Quote) It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership.
Nelson Mandela
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
Friday, February 4, 2011
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