I previously wrote the response below to a fellow active-rainer who apparently handles short sales completely different than myself, or any other agents who I've known to actually close them. She has since DELETED my comment so I felt compelled to post this on my page.
Her blog post was all about multiple offers and even suggested that our fiduciary responsibility was with the bank, instead of the seller.
As a potential short sale seller, wouldn’t you rather have an agent looking out for YOUR best interest, and not your lenders? Obviously you’d want to bring the BEST offer to your lender as to not have to worry about as much potential monies or taxes owed. But most importantly you want to get the property sold and move on with your life. Methods like sending in multiple offers will not only confuse the lender and make their work much more difficult but it could potentially lead to NO Approval ~ and who wants that?
Elizabeth, I read your post and most of the comments; I have to say this is so upsetting to me. As a prominent short sale agent in Florida, I have to say that your way of thinking is completely OFF.
First of all, our listing agreement is with the SELLER, not the bank. We owe it to our seller to assist them in obtaining the best offer possible. In our listing agreements here in Florida we have a check box that asks if the seller is to receive offers after they have accepted one and we check that as a NO. Why would a seller obligate themselves to sell their property to multiple people/times any way?
There can only be ONE buyer for each HOUSE/Seller. If you are having your seller sign multiple offers then you are opening yourself up to extreme liability as any one or ALL of those buyers can sue your seller for specific performance. The bank is not a party to the contract therefore they cannot make the rules. The seller is still the seller. The bank is a third party authorization required to release the lien.
We have agents in our area doing the same thing you are doing and they are not closing many short sales. It is confusing, misleading and improper.
Short sales should be treated like a regular sale, that's what you said. So in a regular sale would you allow your seller to accept multiple offers? Of course not, so why would you allow your short sale seller to accept multiple offers?
Price the listing correctly, present all offers and have the seller pick the best one! The multiple offer game makes no sense at all. We have an obligation to present all offers, Yes. But the seller should not be accepting multiple offers, ONLY 1! Then that CONTRACT goes to the seller's lender for their approval.
Also, from a buyer's standpoint why would they wait around to see who's offer is going to be the lucky one to be picked after 30-60 days of sitting at the bank? Not in our market, too much other inventory to put in legit offers on.
I really hope that others read my comment before they decide to do business in the same fashion as you are proposing. It only muddies up the process for all involved.
Today I read another article written by another Florida real estate agent. He also says he works on many short sale files. He claims that it will take 6-9 months for an approval on a short sale. I find that an excessively long time to wait. When we first began handling short sales the first few took us 60-90 days for an answer. This was due to 1) our inexperience & 2) the banks not having systems in place for short sales.
Within a few months of handling short sales our approvals were coming in on an average of 40 days. Some came in within days; others took 30-45 days. Within the past several months, we’re seeing these numbers RISE. We are now seeing it take 45-60; and in rare cases 90 days for an answer. Why? My thoughts are 1) banks are inundated with short sale packages 2) banks are waiting to see what the government & potential bail outs will be 3) banks are changing their guidelines
What can we do? We can help by properly educating ourselves, our peers & our sellers & buyers. We can start by pricing short sales correctly. Marketing them frequently & handling offers as we would ANY sale. We can create short sale packages that include every document that the lender may need in a concise and easy to navigate assembly. We can follow up often to make sure documents are received and being looked at. We can update the buyer’s agent or buyer frequently as to keep them involved & interested. It will take much longer if we have to go through 2-3 or more buyers.
I’ve written other articles on this topic as well. It just seems like there is still so much misinformation out there that I felt compelled yet again to address this.
If you are in need of a real estate agent who truly works short sales & understands the process please give me a call. I have been able to help many homeowners with this process and I can help you too. Remember, there should be no charge to you ~ upfront or at closing if handled correctly.
We look forward to working with you.
Yours in Success, Susan Milner Florida Future Realty, Inc. 239-542-8521 Susan@SusanMilner.com
Facing foreclosure or deciding to do a short sale? This article was written by a Florida attorney and goes over the differences of a deficiency judgment and promissory note. You should defintely read this if you are facing either. We handle many short sales here in Lee County and get asked these questions quite often. While we are not attorneys we can not give legal advice. We always suggest a potential short sale seller speak with an attorney to go over their specific situation before they list with us. We can be reached at (239) 542-8521 or on my cell phone at (239) 218-2229. http://www.The-Extreme-Team.com. We look forward to hearing from you.
Whether to agree to a negotiated promissory note in a short sale or allow the house to go to foreclosure is one of the most discussed topics around. It deserves a simple comparison.
A negotiated promissory note is ALWAYS better than a deficiency judgment resulting from a foreclosure. Here is why:
Deficiency Judgment -
1. You have a foreclosure judgment against you and if you fill out most applications about your background you will have a question on if you had a property foreclosed upon you.
2. You have a deficiency judgment which is a money judgment against you which means ANYTHING you buy is subject to attachment by the creditor, be it a car, a toaster, or a new swing-set for your kids.
3. Your wages can be garnished.
4. Your bank accounts can be frozen and attached - without any notice in advance to you.
5. You will be subject to periodic depositions in aid of execution and have to provide copies of all of your financial matters - several times a year. If you repeatedly don't show up the court can hold you in contempt of court and even put you in jail (YES - JAIL!!) until you comply.
6. In Florida (check other states) you can enjoy each of the above for 20 full years before the judgment is no longer enforceable.
7. The judgment usually carries interest. Check your state for the rate. For judgments rendered in 2009 the Florida statutory rate is 8%.
8. FANNIE-MAE underwritten mortgages cannot be obtained until 5 years after the foreclosure judgment.
Negotiated Promissory Note -
1. You pay an agreed amount according to the promissory note, which is usually monthly and often at no interest.
2. If you no longer can pay you may be able to negotiate a new payment amount or abate payments for a period of time.
3. You may be able to re-negotiate the terms of the promissory note in the future.
4. The promissory note is not a judgment so it does not show up on the credit report.
5. If a foreclosure suit was entered, even if it went to a foreclosure judgment (but not a sale), the lender will likely dismiss the suit and vacate the judgment, clearing your record - even before you start paying on the promissory note.
6. If you stop paying on the promissory note the note holder can then seek a money judgment for the unpaid amount.
7. FANNIE-MAE underwritten mortgages can be obtained after a short sale in just 2 years.
8. Once you repay the promissory note the lender should remove degrogatory credit report postings regarding the payment of the mortgage for "less than the agreed amount", instantly repairing your credit score.
Bankruptcy -
Many people speak to me about Bankruptcy as the better option. It is an option - but when it should be used is a big issue.
Declaring bankruptcy is a LAST RESORT. In a chapter 13 (personal reorganization) you are effectively "betting the farm" that you can perform for the 5 or so years of planned payments. If you default you revert to either a dismissal or a chapter 7 total liquidation- and you cannot refilefor many years. Bankruptcy also is a final chapter so to speak. There are no further remedies available to you for protection from creditors. It is like one bullet in a pistol - you need to decide when is it absolutely, positively without any doubt necessary to pull the trigger. You need to expand your horizons to not just today, but tomorrow and maybe thousands of tomorrows (days) before you can walk back into bankruptcy court. Chapter 13 and Chapter 7 have their useful purposes but they must be used prudently and carefully. A bankruptcy is the worst hit you can give your credit report.
If a promissory note just does not work out and the lender is relentless and THEN gets a judgment for payment of the note amounts, you will then be in no worse situation than if there was a deficiency judgment. In my opinion you will be in a better position if you weigh the positive and negatives of each position and work your way slowly and methodically through the available remedies step by step. If at the end of the line it did not work out, then you have the bankruptcy alternative remedy. But without giving each step an opportunity to work for you makes no sense - don't throw your self overboard!
Copyright 2009 Richard P. Zaretsky, Esq.
Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.
Cape Coral holds an annual Red White & BOOM! Fourth of July event near the foot of the bridge. This year is no different. So grab your friends and family and prepare for a good time. This year will feature similar features of the past. You'll find loads of great food, great vendors, local business sponsors, fun for kids, music & don't forget the FIREWORKS!
See you this Saturday ~ July 4, 2009!
All this excitement for just a $1.00 entry fee.
We're expected to be there - hope to see you as well! Enjoy the photo from previous years!
Ready to make an offer on a short sale? Here are the steps to make sure your offer stands a chance. Remember, a short sale simply means that the seller is upside-down on their mortgage. Their lender may, or may not, know that they are even trying to complete a short sale. The house may or may not be in some level of pre-foreclosure. The bank has no obligation to approve or even respond to a short sale offer. There are many documents that must be submitted with a short sale offer for it to be considered. As a buyer, you don't a lot of control but here are some basics that will help you with your short sale purchase.
* Please note, this is my opinion (a short sale listing agent) for the highest chances of success. Many listing and buyer’s agents will handle it differently. We have much experience with short sales and this is how we’ve been successful. *
Good luck!
Have a pre-approval letter (if obtaining a loan) or proof of funds letter (if paying with cash) ready. Make sure the proof of funds letter or bank statement is recent. Also make sure it shows enough funds to cover the purchase price you are offering. If you have a pre-approval letter make sure it was written in the last 30 days.
Hire a REALTOR who understands the short sale process. If they claim that ‘short sales never close’ or that ‘short sales are a waste of time’ or something similar find another agent to work with. It is true, not all short sales close. But, if you work with a listing agent who does successfully close short sales you have at least a 90% chance of it closing.
Look at houses that are priced correctly and in your price range. In this market you cannot look at homes well above your budget. Houses are selling at, over, or very near listing price. Also make sure the house is listed near market value. Not sure what market value is? Make sure your agent pulls comparables for any listing you consider making an offer on. If the house has a market value of $75,000 and the listing agent has it listed at $50,000 WALK AWAY. This agent doesn’t know how to price a listing. If on the other hand, they know they priced it low to entice auction-style bidding, put in your highest & best.
Make sure that before you put in an offer your agent has shown you comparables. I know I just said that but this is critical. If the offer is not within market value the bank will most likely decline, or not respond to, your offer.
Make sure that your agent speaks with the listing agent to see if they've had any communication with the seller's lender. Make sure that they have had experience with actually closing short sales. Make sure that they have the seller's documents ready for submission or already submitted.
Make sure your agent asks the listing agent how they are handling offers. You want to be sure that the seller is going to sign the winning offer. And sign only ONE offer. Short sales can take 30-90 days for an answer and you certainly don’t want to wait for 90 days to find out that there was a higher or better offer they were working on also. Make sure that they are only going to accept one offer. If it is yours then make sure you have a signed copy of it. If it is not yours move on to the next.
Some listing agents have special documents they require in order to submit the offer. Make sure all of these documents are including. Here are the must haves & below are the might ask fors.
As-Is Contract for Sale & Purchase - filled out and signed (if FHA or VA then add that addendum)
Short Sale Addendum - FAR has one we use - make sure checkboxes are checked & this is signed
Pre-approval letter or proof of funds
Escrow deposit or terms describing when the escrow will be deposited.
Additional addendums or disclosures (real property disclosure, chinese drywall disclosure, lead-based paint disclosure, hoa disclosure - are some examples)
Your offer is submitted through your agent to the listing agent. The seller responds. Remember, the seller is still the owner. They must sign the offer for it to become a contract. The bank will NOT sign the offer. The bank will send a letter of approval if they approve the sale.
You should receive a signed copy of the offer, now a CONTRACT. This is a legally binding contract subject to third party approval (the seller’s lender).
You wait. Depending upon the terms agreed upon. We usually suggest a 45 day window for approval. Sometimes this takes longer. Sometimes it is a short time frame. 45 days is a good starting point though.
The listing agent will update your agent. Usually updates should be weekly; more frequently near the end when additional addendums may need to be signed.
Once the approvalis received you need to make sure your funds or loan is ready to go. Sometimes the bank only gives 20-30 days to close. You must be ready. Get your inspections out of the way & be ready to close.
You close just like any other purchase. The closing should take place at a Title Company or attorney’s office. You will get a Title Insurance policy. The buyer should, in most cases, not be responsible for any outstanding fees, liens or bills, unless otherwise negotiated.
Congrats. You just made it through a short sale closing.
I know this is an awful lot of information. Especially if you have never purchased a home or if you have but have never been exposed to short sales. Having a real estate professional on your side who truly understands short sales is critical.
Our office closes many short sales each month. Our agents understand the process and know the right questions to ask to make sure there is a chance of the short sale making it to closing.
For more information on the short sale process or to speak with one of our agents about how we can be of assistance please call our office at (239) 542-8521 or Toll-Free at 1(888) 764-6665.
We get calls all of the time from buyers looking for HUD homes in and around Ft. Myers, Florida. Our office is a HUD registered broker. We have been pretty much since our opening. We have several real estate agents who can assist you with your search. Below is a list of the current Fort Myers HUD homes. We also list & sell many different bank's REO (real estate owned) or sometimes called Bank Owned of Foreclosed. If you'd like to view the list of foreclosures let us know. We can send you an updated list as frequently as you'd like: Ft. Myers Foreclosure List.
And here are the current HUD Homes in Fort Myers, Floridal:
You can search for all of the properties available in Lee County right online from the comfort of wherever you have internet access. Our website contains a user friendly real estate search engine and is 100% free to use. Go ahead, check it out: Fort Myers Real Estate Compare properties, see photos, get notified of new listings that match your criteria, save your favorites, schedule showings and more!
We get calls all of the time from buyers looking for HUD homes in and around Cape Coral, Florida. Our office is a HUD registered broker. We have been pretty much since our opening. We have several real estate agents who can assist you with your search. Below is a list of the current Cape Coral HUD homes. We also list & sell many different bank's REO (real estate owned) or sometimes called Bank Owned of Foreclosed. If you'd like to view the list of foreclosures let us know. We can send you an updated list as frequently as you'd like: Cape Coral Foreclosure List.
You can search for all of the properties available in Lee County right online from the comfort of wherever you have internet access. Our website contains a user friendly real estate search engine and is 100% free to use. Go ahead, check it out: Cape Coral Real Estate Compare properties, see photos, get notified of new listings that match your criteria, save your favorites, schedule showings and more!
We've been busy with exciting changes at Florida Future Realty, Inc. Our office is now set up with a great living-room cafe-style meeting area, computer work area, private agent desks, conference room & work area.
Below are some of our new photos.
If you are in the area, stop by and say hello. We're open Monday - Friday from 9AM-5PM and Sat/Sun by appointment! (239) 542-8521.
Lenn is SO Correct (as usual). Take the time to make sure someone CAN buy. Just because they have a letter saying everything is ok - please think about it yourself too! Read Lenn's tips.
AGENTS: HAVE YOU EVER HAD A CONTRACT FAIL, EVEN WITH A "LENDER'S LETTER" ? . . . . .
Not a week goes by that we don't read a blog post about a contract that fell apart due to a loan officer's last minute advice that the buyer doesn't qualify. Sometimes the contract has been accepted and the burden is then on the BUYER'S AGENT to advise the listing agent that, "SORRY, the loan officer just called and . . . . . . ."
We old timers know how to read the numbers and are not surprised by untimely qualifying issues.
Use a Financial Statement! Learn to read the numbers!!
We use a simple Financial Statement. We use a simple calculator. We look at our buyers assets and liabilities and "qualify" our buyers or buyers who write contracts on our listings.
We do not rely on loan officers to qualify. Qualifying a prospective home buyer isn't rocket science. This is a simple calculation. We're not qualifying buyers for credit and we rely on trusted loan officers to do that. We use qualifying ratios to determine price range. However, the agent needs to do two calculations. One for the ratio of mortgage payment/income and one for all debt/income.
How many times have we read ActiveRain blog posts about a contract that fell apart even though it was accepted by the seller (and listing agent) based on a "Pre-Approval" letter.
Question: Was that "pre-approval" letter based on anything more than a review of the credit report?? Hey! What about documenting the income and liabilities?
SELF EMPLOYED BUYERS ARE DIFFERENT. What do you mean, "the buyers have additional debt". What do you mean the self employed buyer has business expenses? Didn't the loan officer review the tax returns of the self employed buyer???
FRONT RATIO/BACK RATIO. We use ratios of 30% for an estimated PITI/gross monthly income and 40% for All Debt/monthly gross income.
30/40%. The concept was learned in real estate school. It is further perfected in our CE classes for Real estate finance. It's important and separates the agents who consistently have successful closings from the agents who simply write a lot of contracts.
Step 1. Provide the buyer with a Financial Statement Form.
Step 2. Run a qualifying loan amount based on 30% of Gross Monthly Income.
Step 3. Add the down payment, if any, for the estimated price range.
Step 4. Run a qualifying 40% of gross monthly income for all debt.
You can adjust the ratios based on the amount of the down payment and other factors, but these are reasonable qualifying ratios for most loan types. VA is different but these ratios will still work for basic qualifying.
If the buyer is self employed, the agent MUST base their calculations ONLY on taxable income, not gross income, as with a salaried buyer. This shouldn't be a surprise to real estate agents since we also file a Schedule C for self employed.
AVOID LAST MINUTE SURPRISES. Buyer's agents can save everyone a lot of angst by simply learning how to qualify their buyers. Seller's agents can save everyone the angst of failed contracts by simply requiring a Financial Statement with an offer and qualifying a buyer marking an offer on their listings. Don't be surprised at the last minute when the loan officer calls and advises that the buyer can't get financing.
When writing an offer, the first document is the Financial Statement handed to the buyer to complete while the agent runs an Estimated Closing Cost. Those two documents alone will determine whether or not the offer should even be made. The Financial Statement is going to give the agent information to qualify a buyer and the Estimated Buyer's Closing Costs is going to put in writing the cost to close. Often buyers are surprised by these numbers. Sure, if the buyer's have made loan application they should have received a Good Faith Estimate from the loan officer. Yet, every week we read of buyers who are "disqualified" at the last minute.
This is just good business practice. The cost of a failed contract is enormous to the buyer and seller, not to mention the agents and brokers.
Failed contracts are almost completely avoidable.
YOU MUST ASK FOR FINANCIAL INFORMATION. I've had new agents indicate that say that they couldn't ask a person how much money they make. I tell them that they are in the wrong business. Then I teach them how to qualify a buyer. It isn't rocket science.
FOR LOAN OFFICERS who believe that agents shouldn't get involved in qualifying buyers and "send the buyer to a lender first", all I can say is, when the contract fails due to a worthless "Pre-Qualified" letter, it's the agent who has to break the news to the seller's agent. We may have worked with a buyer for months and, based on a Pre-Approval letter believe that we are on firm footing to write a contract, negotiate a contract, manage inspections, prepare for settlement, etc.
So this post should officially take me over 100,000 points on the rain. I have been here awhile and quite honestly a lot of the leaders here when I first started were barely ahead of me with rankings and now they have about 4-5 times as many points. Regardless, I can now join the "100,000 PT club". People that don't blog ask me all of the time why I blog. I figured that would be a good subject for this post.
Why should I blog?
I blog for search engine rankings. I blog to allow potential customers and referring agents to better get to know me. I blog to share my thoughts, opinions and market conditions.
Where should I blog?
Why do I blog on ActiveRain? Well, because of the network really. Do many of my potential customers even know what Active Rain is? No, they don't. But many of my peers do. They are on here building relationships. Customers can find the site; no doubt. But you could also build your stand alone blog ANYWHERE; and done correctly you can rank there as well.
If you do not have a lot of time to set up all of the SEO of your blog then start here at Active Rain. Active Rain posts DO rank well. There are other real estate web companies who claim that Active Rain posts don't rank. That is not true. Sure, if you hire an SEO specialist to design your site and write your keyword rich content and create your links you'll do very well. But who has the time and money for that? You can do it here; for a lot less time and money.
I have other blogging sites as well. It is difficult to keep them all updated with the best information. Sure, some things never change but many do. Also, the search engines like to see change. They want to know that your blog is updated regularly. They don't want to send people to a site that has been dead for years; or even months.
What should you write about on your blog?
I'm not an SEO expert but I get it. Write about what you do. Write about your ideal customer. Write so we can learn more about what interests US. Don't just write an ad. Don't just write a joke. Make it relevant; make it interesting. Keep them coming back. Soon you'll have 1st page rankings too!
Yours in Success,
Susan Milner
If you were looking for information about Cape Coral Real Estate you are close with this post; please click through for more!
Lee County public school's Spring Break is fast approaching. This year it is scheduled for April 6-14, 2009. This means that your children will be off of school from Saturday April 4 through Tuesday April 14, 2009. This gives them a total of 10 days off.
If you cannot get away from work there are Spring Break camps at many schools and through some of the city park's programs.
If you can get away there are so many great places to visit that are within a few hour drive as well!
Licensed Real Esate Broker, Susan Milner shares her knowledge & opinions on real estate. Having lived in Cape Coral for the past 14 years she puts emphasis on that area. Susan holds GRI & e-PRO designations & is a proud member of the National Association of REALTORS.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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