The 5 Most Common Complaints of Short Sale and REO Buyers (and How to Avoid Them)….as they pertain to Fullerton Homes, Brea Homes, Placentia Homes, La Habra Homes, Yorba Linda Homes, OC Homes..

The 5 Most Common Complaints of Short Sale and REO Buyers (and How to Avoid Them)

Roughly forty percent of the homes for sale on today’s market are short sales and foreclosures! Distressed properties are well known for their value (a reputation which is sometimes accurate, and sometimes not), but they also have a reputation for causing buyers to become distressed, too!Transactional snafus, last-minute surprises and long, drawn-out escrows that never close seem to be par for the course.

Instead of avoiding these properties altogether, get educated about the most common dramas that go down in these deals, and how you can avoid falling victim.

1.  Run-on (and on, and on) escrows.  When you’re buying a home (or selling one, for that matter), time is absolutely of the essence.  And buyers reasonably expect that the big time suck in real estate is in the house hunting process itself; seems like once you find a home you want to buy and the seller agrees to your price and terms, things should move pretty quickly, right?

Not so much, when it comes to some distressed property sales. I’ve heard tell of the occasional, swiftly-moving escrow on an REO (real estate owned – by the bank). But for the most part, these transactions take anywhere from a few days to a few weeks longer than “regular” sales, because of the extra signatures, supervisor-level approvals and even investor involvement required to seal the deal.  Banks don’t have the same sense of urgency individual home sellers do, and it’s not uncommon for the people who need to sign on the dotted line to be on vacation or scattered across the country, adding days’ or weeks’ worth of time to the escrow.

And short sales are also an entirely different animal when it comes to escrow timelines. While a standard sale from an individual seller to an individual buyer might take 45 days from contract to closing, a short sale can take anywhere from 45 days to 6 or 8 months (!) to get the deal closed, after the seller has accepted the contract.

Avoid the drama by: expecting your escrow to run long, and being pleasantly surprised if it doesn’t.  Expectation management is everything. Make sure you take these extended timelines into account when you’re working with your mortgage broker on the issue of when to lock your interest rate, and how long your rate locks will last. You might even need to plan on and/or set aside an allowance for the cost of extending your low interest rate, if rates are rising rapidly during the time you’re waiting for the deal to be done.

2.  Bank won’t take lowball offer.  If I had a dollar for every time I’ve received a question from an outraged reader to the effect that a buyer has had their short sale or REO offer rejected on grounds that it was too low,  even though the bank has no other offers, I could buy a foreclosure myself (admittedly, it’d be one of those $150 foreclosures in some blighted town with tax liens and no plumbing, but still).

Banks owe their shareholders and investors a duty to get as much as they can for these properties. Just because you see it’s on the market and listed as a short sale or a foreclosure doesn’t mean they’re going to give it to you for a fraction of its worth. The bank’s goal is to get a purchase price as close as possible to the home’s fair market value, as determined by the recent sales prices of similar, nearby homes, with some adjustments made for the property’s condition.  Fact is, many banks would rather see the listing agent reduce the price by a moderate amount, and wait to see what offers come in, than to accept an offer 30 percent below the asking price just because there are no other offers on the table.

Avoid the drama by:  working with your agent to make a realistic offer, based on recent comparable sales in the neighborhood, not just on what you think you can get away with.  You can waste a lot of time, spin a lot of wheels and lose out on a lot of properties making lowball offer after lowball offer on distressed homes. Sit down with your broker or agent, review the ‘comps’ and make a smart offer that reflects a good value for you, is within your budget and is not bizarrely out of the realm of the fair market value of the property.

3.  Last minute postponements/cancellations.  These transactions have an uncanny way of being delayed at the last minute – or never going through at all, through no fault of the wanna-be buyer. You signed docs yesterday, put your dog in the crate this morning and just hopped in the moving truck, only to get a text from your broker that the deal didn’t close because the escrow company which was selected by the bank flubbed the checkboxes on a single sheet of paper (it happens). Or, you’ve been in contract (with the seller) on a short sale for four months, and the bank refuses the sale entirely because the seller refuses to kick even $1 of their own cash into the deal, despite having a flush savings account.

Avoid the drama by:  staying as flexible as possible with your moving plans as long as possible.  Best practice is to plan on some overlap between the time you can be in your last place and your scheduled move-in date.  Also, if you’re in contract on a short sale, you should take the point of view that you don’t have a firm deal until you get the bank’s approval of the transaction. So don’t even think about starting to make moving plans or paying for home inspections and appraisals until you know the bank has greenlit the deal and that the purchase price and terms they’ve approved work for both you and the seller.

4.  The bank’s black box.   Make an offer on a normal home and you’re likely to know what the outcome will be within a few hours or a few days, at the outside. If things take longer because the seller is out of town or some such, the listing agent tells you that, and you at least know what’s going on.

Make an offer on a bank-owned property or a short sale?  It’s a crap shoot – could be days, but could also, easily, be weeks or months before you know what’s going on.  And no amount of calling, pleading, prodding or nudging is likely to get you much information on how your offer or the seller’s short sale application is being handled or what (if any) progress is being made.  And that “black box” into which your offer disappears at the benk level is very frustrating.

Avoid the drama by:  continuing your house hunt until you have an answer back.  Maniacally pestering the listing agent for answers or harrassing your buyer’s broker into spending hours on hold with the bank is highly unlikely to get you any insight. (With that said, it does make sense for your agent to check in regularly – sometimes even daily –  with a short sale or REO listing agent to stay updated on any developments with the property and to make sure your offer/transaction stays in the front of their mind.)

Most of the angst in these situations arises when a buyer feels they passed on properties that would have really worked for them when they pinned their hopes on a distressed home.  You can only control your efforts and activities, not the bank’s.  So, consult with your own broker or agent about staying proactive in viewing and even pursuing other properties until you have a firm “yes” from the bank on your short sale or REO offer.  Until that time, and usually for a short time after you get the bank’s approval, you have the right to back out of the transaction if you need to (make sure your broker briefs you on precisely when your right to rescind your offer or exercise contingencies – i.e., bail – will expire).

5.  Double standards. In a “regular” equity sale with no bank involvement, both buyer and seller are obligated to meet various timelines.  Seller has to provide disclosures by X date, open the property to inspections – with utilities on – by Y, and close and move out by Z.  REO and short sale buyers, on the other hand, are often dismayed to find that  even though the bank might take weeks or months to sign or handle its deliverables, the bank will insist that the buyer show up, sign or send a check quick-like.

Avoid the drama by: chalking it up to the (admittedly irritating) way things are – the price you pay to buy from the bank.  Realize that working with the bank on the bank’s terms is unavoidable when you buy a distressed property. Then, go into the deal with realistic expectations – including the expectation that the bank will drag its feet, despite expecting you to keep every deadline – and you’ll be less frustrated, and less likely to make poor decisions out of frustration.

Also, make sure you do respond in a timely manner to the bank’s requests and your obligations under the contract.  I’ve seen banks capitalize on buyer delays in returning signatures and removing contingencies to accept higher offers they received in the interim.  Don’t lose your home on a technicality because you assume that the bank’s lackadaisacal timelines apply to you as well.

Posted by By Tara-Nicholle Nelson | Broker in San Francisco, CA and reposted with permission.

For more information call Sharon Gunther at 714-322-8986 or you can find me on the web at www.SharonGuntherHomes.com.

Is a Short Sale or a Foreclosure My Best Option?…. This is a good question for those with Fullerton Homes, Brea Homes, Yorba Linda Homes, Placentia Homes, La Habra Homes, OC Homes!

Is a Short Sale or a Foreclosure My Best Option? We get asked this question quite often. In a rapidly changing market, it is difficult to give absolute answers. Much depends on your family’s personal situation. However, if you realize that you can no longer make the payments, you may have to decide between doing a short sale or letting the home go to foreclosure. Here are three things you may wish to consider: 1.) Impact on Your Future Ability to Get a Mortgage There are many different lending institutions, each with their own requirements when it comes to your ability to obtain a mortgage in the future. However, a common trend is to be much more lenient with someone working through a short sale rather than letting the house go to foreclosure. As an example, the Fannie Mae site, Know Your Options explains you: May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years) You can get further information here. However, in a rapidly changing environment, make sure you get the latest information available from the actual lending institutions mentioned. 2.) Impact on Your Credit Score There has been much dialogue on this issue. The question is whether or not a foreclosure will have a more severe impact on your credit score than a short sale. A recent FICO study sheds needed light on this question. Here is a chart from that report. The first chart shows the impact on the score for each stage of delinquency, and the second shows how long it takes the score to fully “recover” after the fact. We can see that there is very little difference in impact on your credit score whether you choose a short sale or a foreclosure. 3.) Impact on Your Family during the Move Usually a family asking this question is already experiencing major financial difficulties. This may be putting immense pressure on both parents and the children. If you allow your home to go to foreclosure, you move and leave it vacant or you stay waiting for an official to knock on your door demanding you move. That added burden can cause even more stress for a family. In the short sale process, you work with the bank and pre-determine the day you will move. The new purchasers usually move in the same day. Your family moves with a plan and you don’t leave the neighborhood with a vacant house to deal with. There is a level of dignity in this type of move that does not always take place in a foreclosure situation. Bottom Line For several reasons, a short sale may be the better option for your family. It is best to get professional advice if faced with this decision. Reposted from KCM by permission. For more information call Sharon Gunther at 714-322-8986 or visit her on the web at www.SharonGuntherHomes.com.

Almost 14,000 Houses Sold Yesterday…….not all of them were Fullerton Homes, Brea Homes, Placentia Homes, Yorba Linda Homes, LaHabra Homes, OC Homes…

Almost 14,000 Houses Sold Yesterday One of the biggest misconceptions in today’s housing market is that homes are not selling. That is simply not true. Last month’sExisting Sales Report from the National Association of Realtors (NAR) showed that homes were selling at an “annual rate of 5.10 million”. That’s an average of 13,973 every day – 365 days a year! And the monthly Pending Sales Report, which measures the number of houses going into contract each month, has showed increases in six of the last nine months promptingLawrence Yun, NAR’s chief economist to say: “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own. The index means modest near-term gains in existing-home sales are likely.” We realize that 40% of the sales are distressed properties and that 22% of buyers are investors. Yet, that still doesn’t negate the fact that homes are in fact selling… and 60% of them are NOT foreclosures or short sales. And Yun believes this uptick will continue: “Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year.” Bottom Line Homes are selling. You probably will need to offer a compelling price if you put your house on the market. But if you do, it will sell. Posted: 03 May 2011 04:00 AM PDT by KMC and reposted with permission. Call Sharon Gunther at 714-322-8986 to find out how you can purchase your next home! Or visit her on the web at www.SharonGuntherHomes.com.

Are Housing Prices on the Way Up?…………………this applies to Fullerton Homes, Brea Homes, Yorba Linda Homes, Placentia Homes, La Habra Homes, OC Homes!

Monday Morning Cup of Coffee

by JON PRIOR Monday, April 25th, 2011, 5:23 am

A look at stories across HousingWire’s weekend desk, with more coverage to come on bigger issues:

Existing home sales were up slightly in March, and analysts at Standard & Poor’s expect it to be the start of a better spring for real estate.

The National Association of Realtors reported a 3.7% gain in existing home sales in March. S&P said in a report late Friday that because pending home sales – usually an indication of transactions to come – increased in February, existing home sales should increase in April.

“Pending home sales were down in December and January, but showed a modest increase in February,” analysts said. “As a result, April’s existing home sales are likely to improve. Standard & Poor’s believes the spring months are likely to improve sales as well. Pending sales usually lead existing home sales by one to two months.”

Analysts at Barclays Capital agree, saying the existing home sale data for March is a good sign for U.S. housing. In fact, BarCap analysts said in their own report the housing market bottomed late in 2010.

“The soft housing data in February rekindled fears in some quarters about further weakness emanating from the housing sector,” BarCap said. “The incoming data for March suggest this fear was overstated, as the rebound in both starts and existing home sales indicates that recent weakness is transitory, perhaps due to adverse weather, and affirms our view that the housing market bottomed late last year.”

The average level of housing starts in the first quarter of 2011 was 563,000 units, which was 5.4% higher than in the previous quarter. Still, both BarCap and S&P analysts agreed as many have for some time now that there is much work to be done on the foreclosure inventory before a recovery can take hold.

“The road to recovery for housing will be protracted, given the high inventory of foreclosed properties and relatively tight credit standards that we expect to remain,” BarCap said. “Job growth will continue to be a key factor in supporting housing demand in 2011.”

Public housing authorities have until this summer to apply for up to $110 million in grants for education and job training to those who receive rental assistance from theDepartment of Housing and Urban Development.

The initiative comes through three programs, allowing public housing authorities to provide the grants for boosting employment figures. The unemployment rate dipped to 8.8% in March.

“All of these programs have a good track record of collaborating with community service providers to leverage the education and job training that help low-income families move to economic independence,” said HUD Secretary Shaun Donovan.

The application deadlines for the three programs begin to expire in June.

On Wednesday, Federal Reserve Chairman Ben Bernanke will hold a press conference with reporters in Washington, the first Fed chief to ever do so.

This summer, the second waive of quantitative easing, QE2, through which the Fed set out to buy up to $600 billion in U.S. debt and free up markets, will expire. Since 2008, the Fed loan window has remained at 0%.

But the conference will follow a two-day meeting with the Federal Reserve Board of Governors to determine what their next move will be to jolt a recovery still shaky since the financial collapse of 2008.

There were no bank failures over Easter weekend. Last week, there were six, the most so far this year, bringing the total to 34.

Reposted by permission of Realtor.com.

For more information call Sharon Gunther at 714-322-8986 or visit her on the web at www.SharonGuntherHomes.com

…with Liberty and JUSTICE for All! …and this means for Fullerton Homes, Brea Homes, Yorba Linda Homes, Placentia Homes, La Habra Homes!

…with Liberty and JUSTICE for All!

Foreclosures: Are They Increasing or Decreasing?Posted: 02 May 2011 04:00 AM PDT There seems to be much confusion about the number of distressed properties which are currently entering the housing market. This inventory has a tremendous impact on pricing in any particular region. For this reason, we want to bring a little clarity to the situation. Mortgage delinquencies are decreasing andforeclosures are increasing. Still confused? Let us explain. Delinquencies are decreasing The great news at this time is that the number of people 90+ days behind on their mortgage payment is falling. As the employment picture slowly brightens and families adjust to their current financial situation, more people are paying their mortgage on time. This has created headlines touting that the foreclosure situation is easing. Those headlines are correct. However… Foreclosures are again flowing to the market We must still clear the large inventories of foreclosed properties that exist. We had a small reprieve over the last few months as many distressed properties were caught in a logjam created as banks corrected faulty paperwork. That bottleneck is beginning to clear. This month’s LPS Mortgage Monitor shows exactly this situation in this graph: As further evidence, Campbell/Inside Mortgage Finance just released their HousingPulse Distressed Property Index (DPI). The Index indicated that: … nearly half of the housing market is now distressed properties. This trend is likely to continue as a backlog of foreclosures and mortgage defaults make their way through the housing pipeline. What does this mean? We will keep hearing what seems to be conflicting reports on the foreclosure situation. Remember that delinquencies and foreclosures are two different measures and can go in different directions. Here is an additional slide from the Mortgage Monitor to help you distinguish the differencies. Bottom Line More people are paying their mortgage. Once we clear through the existing distressed property inventory, the market will finally gain momentum. (Posted: 02 May 2011 05:06 AM PDT by KMC and reposted with permission) For more information call Sharon Gunther at 714-322-8986 or visit her on the web at www.SharonGuntherHomes.com.

Renting: Truly a Better Option? This is a question for those shopping for Fullerton Homes, Brea Homes, Yorba Linda Homes, La Habra Homes, Placentia Homes, OC Homes…

Renting: Truly a Better Option? After the last five years, more and more people are hesitant about purchasing a home. We definitely understand their concern. However, is the alternative option actually a better choice? Renting in the current housing market might not make good financial sense. Just this week the Harvard University Joint Center for Housing Studies released a report analyzing conditions in the rental market. The study found: Rental markets are now tightening, with vacancy rates falling and rents climbing. With little new supply of multifamily units in the pipeline, rents could rise sharply as demand increases.  This increase in rental costs is already taking place. In their Spring 2011 Housing Report released earlier this week, hotpads.com stated: …that rental listing prices across the US climbed 7.4 percent while for sale listing prices retreated 8.8 percent since this time last year (April 2010 – April 2011). Just yesterday, Trulia released its second quarter 2011 Rent vs. Buy Index. In the report, they stated that buying a home has become more affordable than renting in nearly four out of five (78%) major cities.  ”With home prices nearing a double dip and more foreclosures expected to flood the housing market over the next two years, the decision between renting and buying a home across most of the country has clearly moved in favor of buying,” says Ken Shuman, Head of Communications at Trulia. “As we head into the summer buying season, those looking to buy a home should be encouraged by improvements in the market and feel optimistic about their chances of finding an affordable home, much more so than in previous years.”  “Aspiring homeowners should focus their energies on locking down a low mortgage rate sooner than later. While home prices are unlikely to return to pre-crash levels, today’s low interest rates will likely rise thanks to inflation and spikes in the Fed rates,” notes Shuman. “As the government wind downs its role in the mortgage markets higher mortgage interest rates will be inevitable.” Bottom Line Though purchasing a home is not an easy decision after what has taken place in the market over the last five years, realize rental prices are about to soar. You should probably take this into consideration when determining your best housing choice. Reprinted by permission..KCM For more information call Sharon Gunther today at 714-322-8986!

Should You Get a Second Opinion? This is a great question if you are looking for Fullerton Homes, Brea Homes, Yorba Linda Homes, Placentia Homes or La Habra Homes!

Should You Get a Second Opinion?

Buying and/or financing a home are major decisions for anyone. We all look for referrals from friends, family and co-workers who have gone through the process successfully. But we wonder…

“Are there geographical differences?”

“Has the market changed since they did their transaction?”

“How has the ever-changing technology impacted real estate since their closing?”

“Are my personal circumstances (income, assets, and credit) the same as the person who is giving the referral?”

So, how do you know if the agent and/or loan officer you are working with (regardless of how you found them) is a “keeper”? It’s got to be more than a personality match in the current environment. It’s about effectiveness and leadership. I believe that you need to judge them by three criteria:

1. Are they an EXPERT?

Do they know everything about the home, the neighborhood, the other available homes, the pricing trends, the loan product and qualification thresholds, etc.? Are they able to target a likely buyer, if you are selling? Are they certified or have specific designations? What formal training have they had (say, in the art of negotiating, as an example). Do they know anything about quality of construction or when you are likely to need to replace a roof or boiler?

2. Are they looking to serve?

Unfortunately, many sales people operate in their personal best interests. Today, more than ever, you need someone who puts your needs ahead of their own. Whether you are looking to sell quickly or for the most money, you need an agent who acts in the best ways to help you achieve those objectives. Likewise, when looking to buy, is your agent asking you the right questions and listening, so that they can streamline your search?

3. Do they have creative solutions to your challenges?

Are their presentations to you basically the same as every other agent? Do their print ads, postcards, open house plans, and promises of fifty websites sing as monotonous? You need an agent with unique approaches though marketing plans that are comprehensive with online and offline components that speaks to a targeted buyer pool (Gen X, Gen Y, Baby Boomers, certain employment groups, particular cultural components, and so on).

If you believe you are working with a great agent and/or loan officer, thank your lucky stars and be loyal to them because they are worth their weight in gold. On the other hand, if you’re concerned that you have a run-of-the-mill person, don’t settle! Go on a search for excellence. It’s too important not to.

Reposted from KCM by permission!

Call Sharon Gunther for a second opinion: 714-322-8986     or…find her on the web at www.SharonGuntherHomes.com