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In the State of Nevada, short sale negotiating falls under the category of "loan modification or foreclosure consultant" as defined in Assembly Bill 152 which modified NRS Chapter 645F. You can read AB152 here: Download AB152_LoanMod_ForeclosureConsultant
In summary there are three options for negotiating short sales in Nevada:
- Attorneys
- Properly licensed companies/3rd party negotiators per the Mortgage Lending Division
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A licensed real estate agent as a part of a real estate transaction.
As excerpted from the RE Division position statement:
There may be no separate or distinct payment or compensation for performance of
activities defined as loan modification, foreclosure consulting or providing of covered
services outside of a real estate transaction.
Activities that by definition might include aspects of “Loan Modification Consultant,”
“Foreclosure Consultant,” or “Provider of Covered Services” must be part of a real estate
transaction. As such, a commission paid to a licensee through a real estate brokerage as
a result of those activities defined in NRS 645.030 and/or NRS 645.040 shall serve as
evidence that the activities engaged in by the real estate licensee were “acting under the
authority of their license.”
Guest Contributor, Steve Kitnick provides the following details and commentary on the subject:
Currently, in the Las Vegas Real Estate Market, multiple offers are common place. Demand defintely outweighs the supply - inventory levels are lower than normal - primarily due to the slow release of REO properties on the market.
In my opinion, the best practice in a multiple offer short sale is to ...
- Review all the offers with the seller
- Possible options for handling multiple offers:
- the seller accepts or counters one offer, rejects other offers in writing with option of remaining in a back-up position
- use a multiple offer notification form to inform all cooperating agents and their prospective buyers that they are in a competing offer situation. The form should have a time frame to submit highest and best offer
- counter all of the offers using a proper multiple offer form which puts all parties on notice of the multiple offers and contains contract language that states the offer is not valid until re-signed by the seller (this option also allows all prospective buyers to present their final and best offer or withdraw their offer)
- Utilize a short sale addendum to the purchase agreement that includes all the necessary contract language and disclosures regarding shorts sales
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- Submit the fully executed best offer to the lender for approval
- Keep all parties informed of status as appropriate; notify respective agents if any offers have been rejected by seller
- in the event another offer is subsequently received, the GLVAR Short Sale Addendum contains this language:
6.Other Offers; Right of First Refusal.
Buyer and Seller acknowledge that the Seller's Agent is required by the Multiple Listing Service to place the property in "Contingent" status after the Purchase Agreement is executed, while the transaction is subject to Lender Approval. The Parties understand that additional offers may be received by the Seller's Agent, which must be presented to the Seller pursuant to Nevada law. If Seller receives a bona fide written offer from a third party for the purchase of the Property, which offer Seller is willing to accept, Seller will give Buyer written notice thereof, including the material financial terms and conditions. Buyer shall have the right for 3 business days after receipt of such notice to meet the price and terms as contained in the third party's offer. To exercise this right, Buyer shall provide a written addendum including the new price and terms, as well as a pre-approval letter for the new Purchase Price. If Buyer fails to exercise this right within the time specified, Seller reserves the right to terminate this Agreement and to accept the third party's offer and forward it to Lender for review.
I do not agree with the practice of sending all offers to ths lender(s) without the seller's acceptance and letting the lender decide. We have seen some agents following this practice - to avoid having to place the property into contingent status. I believe this method only further clogs up an already over-loaded system and slows the process down.
When Taking the Listing
- Explain to the client that competing offers may be received.
- Discuss with the client options for handling multiple offers.
- The client decides how they want to handle multiple offers.
Strategic default is a hot topic in the press, on the blogs and in the real estate industry. Homeowners are starting to weigh all their options and make "business" decisions about whether to stay or walk away from their home. In many cases, the homeowner/borrower is truly unable to continue to make the payments due to a variety of hardships, job loss or major changes in their income. There are a variety of alternatives to foreclosure including a short sale. The best advice for homeowners in this situation is to consult with qualified legal, tax and real estate professionals to gather the best advice and information in order to make the best decision for themselves.
Have you noticed a lot of recent press criticizing the HAMP program as short-sighted and delaying the inevitable onslaught of more foreclosures? The underlying theme is pointing to "negative equity" as a primary factor for homeowners "strategically defaulting" - ultimately deciding to let their home go to foreclosure or short sale.
In case you missed some of those recent articles and resources:
Amherst Securities testified before the House Financial Services Committee (12-8-09) - Download Amherst Securities Group - HAMP Testimony
Two main points from this report:
1. Single largest problem with housing market is negative equity.
2. Current modification program does not address negative equity and is destined to fail.
WSJ Development Blog (1-4-10) NY Fed: Most Successful Mortgage Modifications Reduce Borrowers’ Principal
An excerpt from that article...
Borrowers who receive loan modifications that reduce loan balances and not simply interest rates are far less likely to re-default on their loans, according to a new study from the Federal Reserve Bank of New York. Modifications that write down loan balances “can double the reduction in re-default rates achieved by payment reductions alone,” the study says.
Negative Equity Report for Q3 (Calculated Risk Blog 11-24-09)
Data Highlights
- Nearly 10.7 million, or 23 percent, of all residential properties with mortgages were in negative equity as of September, 2009. An additional 2.3 million mortgages were approaching negative equity, meaning they had less than five percent equity. Together negative equity and near negative equity mortgages account for nearly 28 percent of all residential properties with a mortgage nationwide.
- The distribution of negative equity is heavily concentrated in five states: Nevada (65 percent), which had the highest percentage negative equity, followed by Arizona (48 percent), Florida (45 percent), Michigan (37 percent) and California (35 percent).
Other articles/reports/studies:
Lenders Pursue Mortgage Payoffs Long After Homeowners Default This article from Bloomberg.com points out what we believe is just the tip of the iceberg - mortgage companies pursuing the deficiency or shortage from a foreclosure or short sale. The laws that allow a mortgage company to pursue a deficiency judgment varies from state to state. There are several reasons why we haven't seen a lot of reporting on this - but this could change soon:
- Banks/lenders have been seriously bogged down just handling the high volume of defaulting loans, short sale requests, loan mods
- Not really politically-correct or good PR at the moment given our current economic and housing crisis
"The FDIC tracks the amount banks collect after defaulted loans were written off. These mortgage recoveries rose 48 percent to a record $1.01 billion in the first nine months of last year compared with the year-earlier period, according to the Washington-based regulator. Recoveries on defaulted home-equity loans almost doubled to $392 million, the FDIC data shows. The figures dont include money retrieved by trusts overseeing mortgage-backed securities, such as the one that holds the loan on Kings former home, or efforts by distressed- asset funds and companies that buy bad loans to profit from collection rights"
Good News / Bad News
- Bad news for Las Vegas and Nevada is that it appears we have a long way to go before we fully recover from the housing crisis.
- Good News is there are great opportunties for investors, home buyers looking to purchase in the local market.
Become a Certified Short-Sale Professional - get the latest information regarding alternatives to foreclosures and processing short sales from A to Z. Live, classroom training in Las Vegas - Check this Training Schedule for details.
The Las Vegas real estate market may be showing signs of recovery. The Greater Las Vegas Association of Realtors (GLVAR) released its local housing statistics for December 2009 with some interesting findings for the year.
According to GLVAR, sales of existing homes in Las Vegas were up 64% in 2009. GLVAR reported 46,879 local housing sales in 2009. That represents a huge spike from 28,618 total sales in 2008 and trails only the 71,963 homes sold during the record year of 2004. The increasing sales continue to be driven by low prices. GLVAR reports that the average single family home sold in the area in December 2008 was $204,000 in December 2008. By December of 2009, that number had fallen to $165,000.
To read the full report: PDF file Download 2009_12_Dec (released 1-8-10)
Las Vegas Foreclosure Report for 2009
From RealtyTrac's Year-End 2009 Foreclosure Market Report™ :
... a total of 3,957,643 foreclosure filings — default notices, scheduled foreclosure auctions and bank repossessions — were reported on 2,824,674 U.S. properties in 2009, a 21 percent increase in total properties from 2008 and a 120 percent increase in total properties from 2007
More than 10 percent of Nevada housing units received at least one foreclosure filing in 2009, giving it the nation’s highest state foreclosure rate for the third consecutive year. Nevada foreclosure activity in December increased 27 percent from the previous month but was still down 22 percent from December 2008. Fourth quarter foreclosure activity in Nevada was down 37 percent from the previous quarter thanks to substantial decreases in October and November.
2009 foreclosure stats would have been worse but for initiatives to slowdown foreclosures from the Lenders as well as the by the Obama Administration - including HAMP (Home Affordable Modification Program) and alternatives to foreclosures like short sales.
GLVAR reported a total of 33,974 bank-owned residential properties sold for 2009.
Las Vegas Short Sales for 2009
According to the National Association of Realtors, almost 500,000 transactions in 2009 were short sales, representing almost 10 percent of all home sales.
In Las Vegas, a total of 5,422 residential properties sold and closed in 2009.
2009 Residential Closings Recap
The GLVAR 2009 report quotes a total of 46,879 local housing sales. However, published graphs displaying the annual residential closings for 2009 totals 47,084 (a 205 discrepancy… Not sure why).
REO/Bank-Owned sales = 33,974 (72.2%)
Traditional residential sales = 7,688 (16.3%)
Short Sale Closings = 5,422 (11.5%)
Foreclosure Information - Avoiding Foreclosure
- www.realtytrac.com National, state, county foreclosure statistics, trends, resources, information
- RentalForeclosure.com Tenants can find out if a property is in Foreclosure - NOD filed
- Freddie Mac - Working with Your Lender to Avoid Foreclosure
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Hope Now - an alliance between counselors, mortgage companies, investors, and other mortgage market participants. This alliance will maximize outreach efforts to homeowners in distress to help them stay in their homes and will create a unified, coordinated plan to reach and help as many homeowners as possible.
- Housing Help Now- National Foundation for Credit Counseling
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Home Foreclosure and Debt Cancellation - (IRS.gov) and The Mortgage Forgiveness Debt Relief Act of 2007 (FAQ)
Nevada Foreclosure Information
- Nevada Foreclosure Help - Useful resources and info from Nevada Department of Business & Industry
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Nevada Hope at Home collaborative effort between Nevada Public Radio, local nonprofit organizations and local financial institutions to help provide residents in southern Nevada access to reliable, easy-to-find information on the foreclosure crisis in southern Nevada
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Nevada Revised Statutes - Chapter 107 - Deeds of Trust
Government Resource Websites
- www.FinancialStabilty.gov
- www.makinghomeaffordable.gov
- www.Treas.gov
- www.USA.gov
- www.WhiteHouse.gov
- www.Hud.gov
The recently revised Residential Purchase Agreement from the Greater Las Vegas Association of Realtors added the CLUE report as a due diligence option for buyers to request. Here is some more information about the CLUE report and how to obtain one.
What is a CLUE report?
The C.L.U.E.® (Comprehensive Loss Underwriting Exchange) Report. CLUE is a report of claims information generated by ChoicePoint, a consumer-reporting agency. Insurance companies report claim information to ChoicePoint, such as the type of claim and how much they paid on a claim. In exchange, insurance companies can access the claims history of a specific consumer or property. A CLUE report generally contains up to five years of personal auto or personal property claims history.
A CLUE report contains:
• Your name
• Date of birth
• Policy number
• Date of loss
• Type of loss
• Amount the insurance company paid
• Description of the covered property
• Property address (for homeowner coverage)
• Specific vehicle information (for auto coverage)
How insurance companies use CLUE reports
An insurance company may request a CLUE report when you apply for coverage or request a quote. The company uses your claims history, or the history of claims at a specific property, to determine if it will offer you coverage and how much you will pay. They believe past claims indicate that you’re more likely to file a claim in the future.
Who maintains this database?
The major issuer of CLUE reports is ChoicePoint, a Georgia company that is one of the country's biggest compilers and sellers of personal consumer data. A property loss database is also maintained by Insurance Services Office (ISO) which calls its database the Automated Property Loss Underwriting System, or A-PLUS. The Fair Credit Reporting Act entitles you to a copy of your CLUE report.
TO ORDER A CLUE Reports: Visit www.ChoiceTrust.com or call (866) 312-8076 (automated voice line). NOTE: The homeowner must be the person ordering the report. If you are a buyer, check with your insurance company, they may be able to obtain the CLUE report as a service to you.
More info about CLUE Reports:
PrivacyRights.org website (Fact Sheet 26 - CLUE Insurance Databases)
The first key step to becoming an effective short sale listing agent is to know how to properly pre-qualify the seller and determine the likelihood of a successful short sale. Steve Kitnick and I have compiled the following strategies and questions to assist you in that process.
Become a Certified Short-Sale Specialist
Telephone Strategies
(Remember, the purpose of the telephone call is to "get the appointment, not to conduct your presentation!"
- When setting the appointment ask a few qualifying questions:
- “Is this your primary residence or an investment property?”
- “Are you current on your payments?”
- “Have you received a Notice of Default?”
- “Is your name on the loan?”
- Set the expectation for the meeting and ask the seller to gather key documents for the most productive appointment, e.g.
- Current mortgage statement(s) with loan information, payoff or current loan balance(s)
- Any notices or letters from the lender
- Other issues affecting the property
- Don’t over sell or over commit on the phone: “I know things are tough. But, it’s hard for me to do an unbiased study until I get there. We’ll talk about the numbers then, OK?”
- Know in advance that the seller will likely react negatively
Listing Appointment Strategies
- Bring down the walls by building rapport - you do this by asking pertinent questions and "listening"
- Use a consultative / educational approach
- “Why are you considering a short sale?”
- “Tell me about the circumstances leading to your current situation”
- Ask questions! Use the list below as your guide
- Explain the short sale process
- Set expectations and what is required of them and what you will be doing to facilitate a successful sale and closing
- Ask this key question after you have built rapport and trust: “Are you willing to do what is necessary to get this short-sale accomplished?”
Questions to Ask The Seller to Determine the Likelihood of Successful Short Sale
1) Is your name on the loan? Are there any co-borrowers?
2) Whose name(s) is/are on title?
3) Why are you considering a short sale?
4) Have you missed any payments?
5) Has a Notice of Default been filed?
6) What caused you to get behind in your payments?
7) Are you considering or currently in a bankruptcy?
8) Have you spoken to an attorney or accountant regarding legal and/or tax ramifications?
9) How many loans are there?
10) Who is/are the loan(s) with?
11) How much do you owe?
12) Are you aware of any pre-payment penalties?
13) How much is/are the payment(s)?
14) Have you refinanced recently?
15) Are you current with your CIC monthly dues and other related housing expenses
(sewer, water, trash, etc)?
16) Are you current with any SID/LID or other assessments?
17) Other than the loans, are there any other liens? (CIC, SID/LID, property taxes,
mechanic's lien, IRS tax liens, child support
18) I presume you live here, is that correct? Will you continue to live here?
19) Will you maintain the property?
20) Can you contribute to paying any closing costs?
21) Would you be willing to sign an installment note if required?
22) Do you own any other real estate?
23) Do you expect your situation to change any time soon?
ATTENTION LAS VEGAS REAL ESTATE AGENTS!
Steven Kitnick Seminars, LLC. in association with RealtyU® Presents
Certified Short-Sale Professional Designation Course
Friday, May 1st, 9:00am - 5:30pm SOLD OUT -
Prudential Americana Group REALTORS®
2140 E. Pebble Rd., #160 Las Vegas, NV 89123
Added date June 5th
Reserve your seat and ENROLL NOW!
This program qualifies you for the Certified Short-Sale Professional Designation. The CSP designation is managed by the Short-Sale Council, an exclusive membership organization specializing in assisting agents in mastering the skills of managing short-sale transactions. Earn the CSP designation by attending the full-day, live short-sale class held by Steven Kitnick and Jan O’Brien. Course investment is $299. Be a member in good standing with the Short-Sale Council. Your first year’s dues of $99 are sponsored by RealtyU®.
At the End of this Course, You Will Be Able to Do the Following:
• Know if a short sale will be successful before signing a listing contract
• Understand what needs to be included for a successful short sale submission package
• Know the importance of each item the lenders require for a short sale
• Have multiple lead generation sources for short sale prospects
• Know the timeline for the foreclosure process and how to extend it if necessary
• Understand how to make simple quick calculations to determine if a short sale will be accepted by a lender
• Master the key steps to successful short sale listings and close more sales
At the Prudential Real Estate Affiliates (PREA) National Sales Convention held March 29-31, one of the keynote speakers, Geoffrey Colvin (Senior Editor-at-large for Fortune Magazine) presented a compelling talk on our economic recovery, how we got here and how we are going to get out of it.
As he was speaking, the thought that came to me was... What if everyone could stop focusing on the next "great depression" but rather see "The Great Opportunity". What have you been focusing on in the past months? Are you open to the opportunities in your market? Are you making the appropriate adjustments in your business plan and daily tactics to capitalize on the abundant opportunities?
The key points of Colvin's speech that resonated with me included:
- What the leading companies are doing differently during this down turn and recovery:
- Investing in their core
- Protecting their most valued assets (their people)
- Communicating like crazy (with optimism, the victories and sucesses)
-
Creating new solutions for new problems
This last point is "the golden nugget." Are you actively creating new solutions for new issues? What is your "Great Opportunity" and what action steps are you taking to make it your new reality?
Looking for Real Estate Investment Opportunities in Las Vegas?
Get a Free VIP Membership at LasVegasForeclosureConnection.com - Search All Available Las Vegas Foreclosures/REOs
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Jan O'Brien - Las Vegas Homes (Broker | Real Estate Speaker & Trainer)
Las Vegas,
NV
More about me…
Realty ONE Group
Address: 6475 S. Rainbow Blvd, Suite 102, Las Vegas, NV, 89118
Office Phone: (702) 898-1010
Cell Phone: (702) 858-9191
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A blog about Real Estate Business Systems, Team Building Strategies, Technology, Business and Life Coaching Tips and the Las Vegas Real Estate Market.
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