In Defense of the Short Sale Selling, Loan Mod Applying, Principal Reduction Requesting Public
I just read the AR newsletter featured post entitled, “Rewards for being a debtor... Punishment for those that are not,” and it really got me going this Sunday morning. An agent sets out her opinion as a free and clear homeowner who is troubled as she watches the government continue to offer program after program to try to solve the housing crisis. It is an interesting read but I disagree strongly that those who are being asked to wait in line for a government program are being “rewarded.” I know the fact that I live in California strongly affects my opinion in the matter -- the financial devastation here is just too great.
Interestingly, a few months ago, I was approached by a homeowner who felt similarly, and we had a great discussion. She was, what I would like to describe as the perfect hybrid, and thus a good illustration of the issues affecting us in California. Although she was not a cash buyer, she put $250,000 down on a $500,000 home. So, although she was a debtor, she clearly had the sensibilities of a cash buyer. And even with her large down payment, she was actually still underwater by $30,000 or $40,000 and she did not have the additional resources to sell or refinance her property. She also felt very strongly that people were being rewarded by the government for bad behavior. Of course she was going to continue to pay, she had invested so much with her down payment and all the payments she made toward her mortgage. However, a couple weeks after our conversation, she also lost her job due to the economic downturn. Personally, I hope that she is able to obtain some relief and save her home with a loan mod or complete a short sale and I don’t consider it a “reward.”
Here’s my take on the housing crisis. The lenders, in essence, introduced a bunch of straw buyers into the real estate marketplace. Their argument for why they did it is essentially that the government made the incentives to make fraudulent loans so delicious that they just could not resist. See they love money so much, they just had to do it. In fact, the money got so good and it was so easy that they wanted to speed up the process of making money even more, so they started committing more fraud (robo-signing) to make the original fraud more profitable. Yes, my friends this is high level finance we are dealing with here -- mere mortals just wouldn’t understand this stuff.
Resulting scenarios in California and other “Sand States” work something like this hypothetical: New home development built in 2004 - 2006. 200 houses and maybe 25 of the buyers could really afford the prices they paid AND they made down payments. And then there were of course those unfortunate enough to believe the bank would not loan you the money if you really could not afford it. These folks believed in the integrity of “the system” -- how unfortunate! They were sold interest only loans and ARMs that they cannot refinance out of now and they MIGHT have been able to keep up with their home enough to still have their name on the deed. They can make payments for awhile but they really can’t afford the prices they paid-- that's probably about 75 people out of the 200. Now they all received appraisals supporting those prices based on sales of homes made to at least 100 people who clearly could not afford those homes at all. Those bogus buyers were in essence straw buyers that quickly lost their homes. So, almost six or seven years after those homes were built, about 125 of those homes have probably gone through some sort of process, short sale or foreclosure. And more than likely almost all of those 25 people who could afford those prices are still left among the 75 who are still struggling or are applying for a loan mod.Now if you paid $500,000 for a $250,000 house because you were defrauded and $250,000 is subsequently reduced from the principal, where is the reward? If a court were to pronounce that judgment, not many would say it was unjust.
Those 25 people who could afford the prices they paid of course still feel defrauded, as it will take 10 -12 years of payments to get their loan balances down to the home prices of today and they cannot refinance to today’s lower interest rates. So, of course, the temptation to walk away is high -- but only because it is cheaper and more expedient than trying to sue. In fact, lenders are now beginning to include language in their short sale approval letters requesting waivers over their very many legal issues on these files. And in some cases, they are paying home owners to do short sales in order to clean the slate. So they are, in essence, seeking settlements. So, in my view, government efforts to intervene with “programs” are efforts trying to create a mass settlement of these legal issues. Something everyone can live with so we can all recover and move on. And, I do not envy those who are living in a home, cannot afford to sue, and are waiting around for the government to save them.
Many people I’m helping never envisioned being in the position of waiting on the government for a solution. Many are people who have never even had a derogatory on their credit report before these times. The solutions offered damage their credit, do nothing to address the investment they’ve lost, and in some cases they can be asked to pay taxes whether they get a loan mod, allow a foreclosure, or elect a short sale! Not to mention people who have lost jobs because this whole mess has affected the entire economy. Believe me, it takes a lot before people will walk away from a down payment and 6 or 7 years of payments, and that is what I see a lot of people doing in 2012. My phone has been ringing almost non stop for the past two months for short sale consults.
Rewards? Hardly. Are you going to benefit as a free and clear owner of property? Probably through a stabilized housing market and a better economy, but not directly, no. I do agree that the whole things stinks. However, saying that people who are applying for government assisted re-fi’s, loan mods with principal reductions, and short sales are being “rewarded” is not exactly accurate. They are, for the most part, good people trying to do the best they can in a bad situation.
Tni LeBlancis an independent Real Estate Broker, Attorney, Short Sale Agent, Certified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE) and Short Sale and Foreclosure Resource Agent (SFR) serving Santa Maria, Orcutt, Lompoc, Nipomo, and Arroyo Grande on the Central Coast of California.
* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice and is for information purposes only. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.
2011 Real Estate Market Update -- Orcutt Homes Sales
Orcutt CA
2010
2011
Homes Sold
419
452
Average List Price
$322,018
$289,805
Average Sales Price
$315,069
$282,307
Days on Market
80
103
$ per Square Foot
$171
$154
Foreclosures
127
138
Short Sales
96
123
Looking at the sales figures for 2011, the number of homes sold increased by about 8% in Orcutt. However, the average sales price went down 10% which is a considerable decline. Days on market increased to 103, so it took longer to sell a home in 2011. However, that figure is probably affected by the increase in short sale listings which stay on market while bank approval is obtained. Short sales increased by 28% in the Orcutt area. Foreclosures also increased but not as drastically -- they increased about 7%. Overall, the appetite for homes in the Orcutt is strong, but distress sales comprise 57% of the homes sold and that continues to put downward pressure on pricing.
If you are considering selling your Orcutt CA home and you would like a comparative market analysis, feel free to contact my office at (805) 938-9950 and set up an appointment. I specialize in short sales and distress sales. If you are interested in buying a home in Orcutt CA, I will be happy to assist you and provide a list of available homes in Orcutt CA and the surrounding area.
Tni LeBlancis an independent Real Estate Broker, Attorney, Short Sale Agent, Certified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE) and Short Sale and Foreclosure Resource Agent (SFR) serving Santa Maria, Orcutt, Lompoc, Nipomo, and Arroyo Grande on the Central Coast of California.
* Stick built SFRs & PUDs. Zip codes 93455. Based on the information from the Central Coast Regional MLS. The Association, the Multiple Listing Service, nor Mint Properties guarantees or is in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the real estate market. School district boundaries are subject to change and must be verified with the appropriate authority. Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice and is for information purposes only. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.
How to Frustrate Buyers and Alienate Buyer’s Agents
Truth in Advertising. Simple concept, but in the real estate world it can get complicated. The temptation to embellish is sometimes irresistible to a home seller. Just the other day, I was showing a home to a couple who have a large family. We have been on the hunt for a 4 bedroom in their desired location for quite some time. When we walked into a home with a large enclosed sun room with a closet, the husband exclaimed “I hope they aren’t counting this as the fourth bedroom!” And it hit me how many houses we’ve seen that claimed to have 4 bedrooms and really did not. Unfortunately, our market is moving so fast, there is often not enough time to preview or get the other agent on the phone in time to avoid these mini-disasters. Here was a family that really needed 4 bedrooms, not 3 bedrooms and an office, not 3 bedrooms and a crawl space you could build out, but 4 bedrooms, and they were consistently being misled. They’d seen it all in terms of creative advertising, and not surprisingly were getting a little jaded.
As a real estate agent, I’ve seen it all. I’ve seen vacant lots classified as single family homes -- “oh you want a house with that?” Not to mention advertising for features that didn’t even exist in the home. “Hey where’s the pool?” Only to hear “There is plenty of room for one out back and here are the plans I had drawn up.” To which I am tempted to reply, “How about you call us back when you draw up a real pool? Because right now you’re showing my client the person he doesn’t want to be -- you know the person who really wanted a pool but couldn’t afford to put one in? Yeah, he doesn’t want to be that guy, which is why he wanted to look at houses with pools already in them.” And as an agent, after driving out to some non-pool having house during prime Saturday showing time, I better at least see an over sized spa with some dirty water in it, or I’m going to be upset. I don’t want to look at blueprints and un-filed permits; I can dream at home, I don’t need the change of scenery.
The seller’s side of this equation I think is also very negative. Watching day after day of buyers trot through your home and reject it can be disheartening (and make you feel unnecessarily desperate). You’re going to start to think that people hate your house. When in reality, they just hate that it doesn’t have a gourmet kitchen...like you said it did. Now ultimately, unless you suddenly decide to upgrade, the buyer for your home will have to be okay with Formica countertops and vinyl floors. Trust me, people buy homes with Formica counter tops and vinyl flooring every day. Some of those people even like the houses they buy. The key is to attract buyers who want the attributes that your home actually has. By painting an accurate picture of your home in advertising, you will avoid frustrating buyers, alienating buyer’s agents, and wasting your own time.
Tni LeBlancis an independent Real Estate Broker, Attorney, Short Sale Agent, Certified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE) and Short Sale and Foreclosure Resource Agent (SFR) serving Santa Maria, Orcutt, Lompoc, Nipomo, and Arroyo Grande on the Central Coast of California.
* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice and is for information purposes only. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.
2011 Real Estate Market Update - Santa Maria Home Sales
Santa Maria CA
2010
2011
Homes Sold
582
596
Average List Price
$220,329
$210,405
Average Sales Price
$220,241
$205,604
Days on Market
70
85
$ per Square Foot
$142
$129
Foreclosures
243
267
Short Sales
156
151
Looking at the sales figures for 2011, the average sales price for Santa Maria homes declined about 6.6% and days on market ticked up 15 additional days to 85 days. Of course, the days on market figure includes short sale contingency days, which are the days needed for bank approval of a short sale, so it may not reflect how quickly inventory is being absorbed. That said, there definitely was softening in the Santa Maria real estate market. Surprisingly, the number of short sales did not increase, but instead edged down ever so slightly, and instead foreclosures sales increased by almost 10%. Overall, the total number of homes sold increased by 2.4%
If you are considering selling your Santa Maria CA home and you would like a comparative market analysis, feel free to contact my office at (805) 938-9950 and set up an appointment. I specialize in short sales and distress sales. If you are interested in buying a home in Santa Maria CA, I will be happy to assist you and provide a list of available homes in Santa Maria CA and the surrounding area.
Tni LeBlancis an independent Real Estate Broker, Attorney, Short Sale Agent, Certified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE) and Short Sale and Foreclosure Resource Agent (SFR) serving Santa Maria, Orcutt, Lompoc, Nipomo, and Arroyo Grande on the Central Coast of California.
* Stick built SFRs & PUDs. Zip codes 93454 & 93458. Based on the information from the Central Coast Regional MLS. The Association, the Multiple Listing Service, nor Mint Properties guarantees or is in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the real estate market. School district boundaries are subject to change and must be verified with the appropriate authority. Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice and is for information purposes only. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.
Sentrilock vs Supra: LockBox Hell & the Time Wasting Olympics
Rather than blogging most of the day (which I prefer), my Sunday was spent in Supra lockbox hell. One of the listings I have is at the intersection of three different lock box agreements. In my primary area we use Sentrilock (which I love), in another area they use Supra, and in yet another nearby area they now use the Supra iBox. If you wanted to be accommodating, you could have up to three lock boxes on any listing in this one area that intersects.
The area that now uses Supra iBoxes required that I upgrade my lock box and when I drove down to remove this new lockbox from a listing, I discovered that the box had not been properly assigned to me. Never had that problem with a Sentrilock box. As soon as you insert your card into a new Sentrilock lockbox it becomes yours. Apparently not so for Supra, you can walk off into the sunset, snap that baby on to the hose bib of your new listing and it has absolutely no idea who you are or why it is there.
Needless to say, after driving for 40 minutes to remove a lockbox on a Sunday... I was VERY committed to completing my task and removing it. I ran around in circles with Supra customer support about the shackle code which had apparently changed with the upgrade... “We can’t tell you your shackle code, but if you say it, we can confirm it,” “You can log in to the website and view your shackle code, but we can’t tell it to you,” “No the mobile version of the website does not have the shackle codes on it,” and then after driving to a hotel and logging in “Oh that lockbox is not on your account and in order to add it I need your shackle code.” OK really? I truly thought I had inadvertently entered "the Time Wasting Olympics,” and I should at least medal.
All this got me thinking... do other agents have a preference about lock boxes? I’m not a technology expert, so I tend to only know the features that I use. What I don’t like about Supra (beyond what happened to me today) is the fact there is no way for someone who does not have Supra Key access to use the box. I know that seems silly, after all a lock box is about security. However, in the two areas I sell that use Supra, listings inevitably also have a combo lock box for people who can’t access the Supra box. And a combo lockbox is no security at all.
Sentrilock has a couple of wonderful features, contractor codes that I can give to licensed contractors to access the property and “one day codes.” So, if a Realtor does not have a Sentrilock card, I can give he or she a code good for that day only to access the lockbox. If they give the code to someone else and they go the next day, it won’t work. This is an invaluable feature and I think makes Sentrilock MORE secure. Whereas Supra is such a vault, that agents tend to side step it with the use of a combo lockbox.
I would have to reluctantly say no. Bank of America is no longer terrible at short sales. This coming year will mark four years since my first Bank of America short sale, and as critical as I am of Bank of America, I must admit they they have improved. That first short sale took 8.5 months and at least 3 buyers to complete, and most of the time we were lost in a wilderness of bureaucracy. The market was still rapidly declining, so by the time they approved the short sale, the property did not appraise. Thankfully, the property was unique enough to the last and final buyer that they didn’t just move on. And, it didn’t hurt that the buyers were also using Bank of America for their loan. The loan officer did help in escalating the file as there was at the time no clear cut and effective method for escalating a file.
I think Bank of America has improved their processing time and in general they are becoming more accountable. Two improvements in particular stand out 1) They now use Equator. Equator is a secure online platform that allows you to upload documents and communicate directly with Bank of America about your short sale files. 2) The BofA Twitter Team. @BofA_Help on Twitter has proved to be a fantastic resource when ridiculous issues crop up on files. After you’ve exhausted the traditional channels to no avail, the Twitter Team can help you push that short sale off the tracks before the oncoming train arrives.
In my experience, Bank of America currently takes about 5 – 10 weeks processing short sale files. What is frustrating is that often they are capable of having approvals in 5 – 6 weeks, and there seems to be no rhyme or reason as to why one file takes 5 weeks and another 10 weeks. Often they get into a really great rhythm, and then they decide to tweak something in their internal processes, and if you happen to initiate a short sale at that time you end up being a 10 week file instead of a 5 week file. In my experience, currently most of the delays happen up front in their efforts to qualify every borrower repeatedly for HAFA or the Bank of America Cooperative Short Sale program, or because of a delay getting an appraisal ordered on the property. In addition, they often outsource their HAFA files and BofA Cooperative Short Sale files to outside entities which include UTLS, AMS Servicing, and REDC and getting a file back to BofA in Equator once it has been sent out can be difficult and time consuming.
Bank of America still has a ways to go. I don’t particularly care for the fact that they constantly tout their real estate agent website as a resource for short sales, but last time I looked I couldn’t even find any standard forms for a short sale on that site. And of course their new “introductory calls” are also annoying — on a recent one I told the rep that I would call her back if I ran into a problem down the road and she informed me that it was only a one time call and I couldn’t call her again. Kind of like when you go into a store and look for a salesperson to help you and can’t find one, but if you look like you don’t need any help, five different people offer you assistance. So, although they have improved, a certain amount of it is just showmanship. As a person that values substance over show — I find that part of it annoying, but the part that actually works — such as the Twitter Team, I like.
Before deciding whether to short sell your Santa Maria home, it is essential that you obtain legal and tax advice, and consult with an experienced local short sale agent. If you are considering a short sale of your Santa Maria, Orcutt, or Nipomo home and would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.
Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent.She is a Certified Distressed Property Expert (CDPE) and Certified HAFA Specialist (CHS) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.
* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.
5 Reasons Why the Short Sale Seller Still Cares About the Price
There is something about a short sale that makes some buyers think that the short sale seller is somewhat of a non-entity, a mere speed bump in front of their negotiations with the bank. But, that is not truly the case, the short sale seller is still the record owner and has their own concerns when considering the amount offered for their home. A short sale is not simply a foreclosure with a twist.
Nonetheless, I’ve heard the following statements time and time again from potential short sale buyers:
“This is where we want to start with the bank”
“We want the bank to counter us, not the seller”
“They should just be happy to avoid foreclosure!”
“Why does the seller even care, it’s a short sale!”
Here are 5 reasons why the short sale seller may still care about the price:
1) Potential tax liability. The goal of the short sale is to obtain debt
forgiveness from the bank; however, short sale buyers should consider that debt forgiveness may have negative tax consequences for the short sale seller. As a result a short sale seller may still care about the price, because often the higher the price, the less tax liability they face. Many short sale sellers will be able to avoid tax liability, but certainly not all will -- this is especially the case where the property was an investment and the seller is still solvent.
2) They have an opinion. Most people have an opinion about the value of their home. It is usually their largest investment and will probably be yours. Many short sale sellers could afford to keep their home if they purchased it at today’s prices and they have watched the market descend. They aren’t always thrilled that their home is selling for what they view as “peanuts.” Sellers who have maintained and improved their home tend to have a strong opinion about its value -- even if it is a short sale.
3) Neighbors. Yes, people care about their neighbor’s property values. Especially short sale sellers. These are not the folks who back a U-haul up to their home in the middle of the night and leave their former neighbors with a foreclosure to contend with. They tend to care. Many times short sale sellers are thinking about their neighbors who are trying to sell or refinance and they don’t want their financial distress to negatively affect their neighbors.
4) The Bank. Short sale sellers know that even if they don’t have an
opinion about the value of their home, the bank will. Submitting a low offer that is not likely to be accepted by the bank does little to improve their situation. Banks use Broker Price Opinions and appraisals to value short sale properties. If the comparative sales are 20% higher than your offer -- negotiations with the bank could be long, drawn out, and ultimately unsuccessful.
5) An Experienced Short Sale Agent. Hopefully,the seller has done
their homework. And, that includes hiring an experienced short sale agent to handle their short sale. If their agent has advised them well, a short sale seller has listed their home at a price that will likely attract a potential buyer AND lead to short sale approval from their bank. An experienced short sale agent already has an idea of what the bank will take and knows that accepting an unrealistic offer will often elongate the short sale process for the seller.
If you want to have your offer accepted and presented to the bank, it must be accepted by the short sale seller first. And, there are still many reasons why the seller may care about the price.
Tni LeBlancis an independent Real Estate Broker, Attorney, and Short Sale Agent. She is a Certified Distressed Property Expert (CDPE) and Certified HAFA Specialist (CHS) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California. * Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.
The content provided on this website is presented or compiled for your convenience and is provided for informational purposes only. The information provided on this website should not be construed as offering legal, financial or other advice to be relied on by the reader to make or refrain from making any decision or to take any action. The investment, mortgage or financial services or strategies mentioned in and throughout this website may not be suitable for you. Nothing in this blog should be construed as a solicitation of properties currently under contract with another broker. Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
CA DRE LICENSE #01871795
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.
I just read the AR newsletter featured post entitled, “Rewards for being a debtor... Punishment for those that are not
Here’s my take on the housing crisis. 
Something everyone can live with so we can all recover and move on. 
Posted by 
The seller’s side of this equation I think is also very negative. 
Rather than blogging most of the day (which I prefer), my Sunday was spent in Supra lockbox hell. One of the listings I have is at the intersection of three different lock box agreements. In my primary area we use Sentrilock (which I love), in another area they use Supra, and in yet another nearby area they now use the Supra iBox. If you wanted to be accommodating, you could have up to three lock boxes on any listing in this one area that intersects.
All this got me thinking... do other agents have a preference about lock boxes? I’m not a technology expert, so I tend to only know the features that I use. What I don’t like about Supra (beyond what happened to me today) is the fact there is no way for someone who does not have Supra Key access to use the box. I know that seems silly, after all a lock box is about security. However, in the two areas I sell that use Supra, listings inevitably also have a combo lock box for people who can’t access the Supra box. And a combo lockbox is no security at all. 
2) 
3) 
;)
;)
;)
