Not by along shot. Anyone who believes otherwise either has their head in the sand or works for NAR! It is common knowledge that when it becomes cheaper to own than to rent, then we will see the beginings of a recovery. In my neck of the woods, we're not there yet. 

Example: A 3 bed 2 bath home generally rents for between $1500 to $1800 per month in my area. That means a loan amount in the neighborhood of between $240,000 & $290,000. That's just for the loan now you have to factor in taxes, insurance and HOA fees. These three combined can cost close to $1,000 per month in my area, effectively lowering the buying power to between $80,000 and $120,000 in order to rent the property at market value and break even on a monthly basis. If you are putting 20% down then that would mean a sales price of between $100,000 & $150,000 would be required to make this deal work.

In South Florida I bought my 3/2 for $124,000 in 2001. I have said it in the past and i will go out on a limb to say it again, we will not see a rcovery until prices go back to 2001-2002 levels. Right now a 3/2 is still in the $190,000 to $220,000 range. So I expect price declines through the 3rd quarter of next year then a possible recovery will start to take place.

Another factor compounding this situation is that foreclosures have driven up HOA fees thus squeezing the profit margins even greater. When homeowners stop paying their mortgage, they also stop paying HOA fees and the rest of the community gets to foot the bill. The problem is not as prevalant in communities built and occupied before 2003, go figure.

I have been coming across more and more homeowners who are in a quandary. They are not behind in their mortgage nor in any stage of foreclosure, yet they want to sell their home which has dropped in value and would end up being a short sale. Although more and more banks are accepting short sales that are not in default, it is hit or miss. An impending foreclosure really motivates the bank. The thought of yet another non-performing asset does not bode well with the balance sheet so the bank really doesn't want to become a homeowner.

So as a homeowner in this situation what are your options? Well for one keep paying as agreed and wait for the market to turn around. If that isn't an option because of an upcoming ARM reset, forced relocation, or other outside circumstance out of your control, then you have some tough choices to make. You have to look at your monthly expenses and arrange them according to priority and see if paying your mortgage makes logical and economical sense. For example if your refrigerator is empty and you have 1/4 tank of gas and your choice is pay your mortgage or eat and be able to get to work then the answer should be obvious.

I would never advise anyone to miss mortgage payments for the sole purpose of gaining leverage for negotiating a short sale.  This is the same type of thinking that got us in this mess to begin with. There is nothing wrong with not paying your bills if you can't, it's using it as a strategy for some other reason is what I have a problem with. 

Owners of investment property may have a tougher time but it really depends on the individuals financials. If he has a portfolio of investment properties and wants to short sell one because it is under performing, good luck. On the other hand, the small time investor with one or two properties may have a fighting chance if you present a good case.

Of course there are people in our business advising this type of behavior my only response to those who are thinking of it to speak with a competent attorney and/or accountant.

Your thoughts and comments are always appreciated.

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The National Association of Realtors concluded a survey in which people looking for real estate services were asked if they had a choice, would they prefer to have all their services under one roof. Amazingly the response was in favor of having all their services handled at the same location by some of the same companies.

Being one to react to the demands of my clients, here is a list of my preferred business partners; my one stop shop so to speak. Be sure to mention me when you contact them.

Mortgage Consultation Services-State Lending Corporation
Benny Garcia
9835 Sunset Drive, Suite 108
Miami, FL. 33172

I don't know about any other Realtors, but I have been keeping pretty busy. While most agents around the country are struggling, I am doing pretty well. Grant it this isn't 2005, but I'll take it. You see I recognized early on that we would be in this situation (somewhere around 2005) and that the only business closing would be distressed properties and homeowners who where highly motivated by some underlying factor, ie-job transfer, death in the family, inheritance, etc.

I chose to carve out my niche in distressed properties and the fruits of my labor over the past two years is finally paying off. People thought (and still do) I was crazy to "limit" myself to such a market. Now those people are calling up and begging me for information on how to handle a short sale listing they took on that they have no idea how to close.

It never ceases to amaze me that everyday I talk to agents who are broke and sitting on the sidelines waiting for good times to roll around again. I ask them how they are handling their short sales and I get the standard reply: "I don't take those listings" or "They cut your commission, I don't bother with them." Oh yeah, then give them to me because for the foreseeable future it's going to be the only game in town.

I don't want to brag but I have it down to a science. So much so I hired a team to help me handle the short sales. I have turned the negotiation process into a minor inconvenience. Typically after an offer is received and forwarded to the bank for approval, there is a 30-45 day waiting period. During this time I take advantage and get all the ducks in a row to be ready to close within two weeks of approval. So the sales cycle is only extended by a few weeks if you do this right.

The only thing I can say is I hope everyone else keeps turning away distressed listings, heck if you send me any I might even pay a referral fee. Did I mention that the agents sending me their business aren't even asking for referral fees. They feel sorry for me.

Noel Padilla

Usually whoever pays for the title search gets to choose the title company unless otherwise agreed upon. However, in effort to maintain control over the transaction sellers have been requiring buyers to use their title company. I have also seen banks feed the work to their subsidiaries by requesting or implying that the buyer must use their title company.

I like to use my preferred title company so I can maintain some sort of control over the transaction. After all guess who invest the most time in a transaction? That's right the agent. The agent may have driven these folks around for months before they found something they like or spend tons of money on marketing. Only to have the transaction in the hands of a stranger who really has no incentive than a pay day is nerve wracking. It's a bit different when you have developed a personal relationship with someone and they don't want to let you down. That's where you really work as a team and most of those transactions go smoothly.

Noel Padilla

Something I have been seeing more and more lately is sellers requiring the buyer to prequalify with their preferred lender as a condition to the offer, especially with REO (Bank Owned Properties) properties. The buyer is not required to use the lender but the seller wants the pre-qual letter to come from his lender.

This has caused some of my buyers to back out of a few deals because they thought the notion was ridiculous and a bit shady. No matter what you say to your buyers they will have heartache with this practice unless you can effectively convince them that this is not unusual and it is quite common when making an offer on an REO property.

The seller is trying to ensure that once an offer is made that it won't fall apart because of financing issues. We all know agents out there who will allow their clients to back out of deals with fictitious "no longer qualifies" letters because they found another property or the warm and fuzzies are over and they don't want to move forward anymore. These agents actually think they are doing a great service to their clients by allowing them to beat the system this way. This practice ruins the integrity of every transaction and is the reason why so many deals fall apart. Hence you wind up with sellers who want buyers to prequalify with their preferred lender.

There is really no harm in prequalifing your buyers with the sellers' preferred lender as long as a new credit report is not pulled. What I usually do is have the buyer take his prequal letter to the preferred lender along with any other documents they may request. Make it clear to your buyers not to allow the preferred lender to pull new credit. I also give the preferred lender a call to ensure this.

I hope I cleared some things up. I would hope that some lenders chime in to give their two cents.

Noel Padilla

Usually when clients call me regarding my services, they have missed a few payments and they are in various states of the foreclosure process. I will try to explain what can be done to avoid foreclosure.

They are only a few options and here is a quick list:

1. Reinstatement-This where the homeowner reinstates the mortgage by paying up all missed payments and
    fees and becomes current with the mortgage. After all the fees have been payed up then the homeowner can 
    continue to pay the mortgage payments as they had.
2. Forbearance-More commonly known as a re-payment plan. Allows the homeowner to negotiate a re-payment
    of missed payments and fees to reinstate the mortgage.
3. Sell The Property-If there is equity in the property then the home can be sold and the foreclosure can be 
   "cured" thus avoiding the foreclosure.
4. Rent The Property-The property can be rented however the mortgage must be made current. A rental
    agreement will not stop the foreclosure process.
5. Refinance-If the credit rating hasn't been too badly damaged, a refinance may help especially if the monthly
    payments can be reduced.
6. Deed-in-Lieu of Foreclosure-Commonly known as the friendly foreclosure. This involves for the bank to agree
    to foreclose and take the property back without the lengthy process. This is not recommended for properties
    with equity because the owner gives up the right to the property and any equity. This option is technically still a
    foreclosure and will show up as such on your credit report. Sometimes the bank will forgo any other recourse
    but that will also have to be negotiated.
7. Bankruptcy-Can not avoid the foreclosure but may allow the owner to reorganize debt. It rarely stops a
    foreclosure it usually only stalls it. Another drawback is that it makes it difficult to sell the property and almost
    impossible to negotiate with any third parties.
8. Short Sale-When the homeowner owes more than the property is worth, a sale can be negotiated and
    an approval obtained from the bank to accept an amount less than is owed.

Most of these options involve negotiation with the bank and a decent credit rating. If the credit has been affected already, then the only real option that can help is the short sale. In my experience when homeowners use the other options available, they wind up in the same predicament a fews months down the road because the underlying cause of their situation was never resolved.

Also important to note-they are only two things that follow you for the rest of your life, a felony conviction and a foreclosure. True after 10 years it will drop off your credit report, however almost every lending institution has the magic question-Have you ever had a foreclosure? If you've had one you must answer yes, answering no could be considered fraud and that would open you up to a host of other legal problems.

Noel Padilla

Back in March of 2007 I felt compelled to enter the foreclosure market because I quickly realized it would be the only market in my area and most of the country. I hate to say it but my predictions are coming to frutation and I am afraid this is only the beginning.

I have put together this blog to provide timely information that is interactive for the public to use without the pressures of a sales pitch. I provide real life solutions to difficult financial situations in regard to impending foreclosure or distressed property sales.

In the end, if you find yourself in one of these trying situations, you have to ask yourself one question-What options do I have for me and my family? If I have done my job providing concise accurate information, the answer should be pretty simple-contact a professional with the knowledge and resources to help you through these difficult times and provide the right solution for you and your family. This doesn't necessarily mean losing your home-you have options available to you.

Noel Padilla

Before we can define what a Certified Distressed Property Expert is, we need to define what a distressed property is. A property can become distressed for a variety of reasons but the most common is a foreclosure. Any situation that has caused a property owner to have difficulty making mortgage payments or even selling the property is said to be in a distressed state. Basically any property which has foreclosure looming.

Now that we have defined a distressed property, what is a Certified Distressed Property Expert (CDPE)? This is not only a designation earned by a licensed Realtor but it is also an acronym that signals to the public that the person displaying it has gone through extensive training to successfully mitigate a foreclosure. This can be done by negotiating mortgage terms, helping to negotiate a refinance or the most likely-help sell the property.

Sometimes these properties have lost significant value either by physical damage, changes in the zoning, lack of curb appeal or host of other factors one of which occurring today is market conditions. If the value of the property drops below what one could sell the property for then the property is said to be short and any sale would be considered a "Short Sale", which has become very common lately. Negotiating a short sale is where a CDPE really shines.

These transactions are extensively time consuming and tedious. They require diligent follow-up, tons of paperwork and detailed analysis. Not to mention all the work that goes into drafting market reports and gathering all the information to convince the bank to accept a sales amount that will net them less. Not an easy task. Some of these sales can take anywhere from 3 to 12 months to close, depending on the complexity of the transaction.

All this is done in addition to the normal marketing efforts required to sell the property. You can see why less than 1% of Realtors nationwide have the training and knowledge to successfully negotiate a short sale. I am one of those in the less than 1% that has dedicated my time, effort and finances to educate myself in this sector of the market.

In March of 2008 50% of all homes sold were in some sort of distressed state.......Half! If you have a distressed property you can't chance your home sale on someone who doesn't have the tools to get things done. This market is going to be here for sometime. Experts predict 2 to 3 years, I predict closer to 10 years which began in 2006 so we are 2 years in to the 10 year cycle.

Buyers are not immune to the phenomenon. They are getting great deals on these distressed properties but guess what, if they are dealing with someone who doesn't know the mechanics of a short sale, the deal will fall apart after waiting months. It is equally important to buyers and sellers of distressed property to use a person who can get these transactions to the closing table.

Noel Padilla