Did my short sale listing ... just go to "try" to get a loan modification? And should I disclose it?

Yes! This can and has happened.  A property is short sale listed (listed over 1 month) and the homeowner ask about the new plan for loan modification.  My suggestion was to go back to the lender and try to get the modification.  When agents call about the property I now have to disclose that the owner is trying to get a loan modification.  Most will not submit an offer after you tell them that, but you do have to disclose this kind of information. 

I beleive it is wise for the homeowner to continue to list the property until they are told in writing that they have the modification.... otherwise, they may find themselves in a very stressful and lost of time situation.  Not that we do not believe the new program of loan modification will work.... but what if it does not?  

As agent, it is my responsiblity to tell the homeowner to try.  And in all sincerity I pray that it does work for them.  I'd rather lose the listing if it means the homeowner get to stay in their home.

For those that thought they did not have any opinions left - when the President announced his new program that is set up to help as many people that are facing mortgage problems and of losing their property -- this is really a good thing.  Although some will not get the help because they either will not ask for it, have already lost their home, the property is not their primary property, or they just don't qualify under the new plan.

Everyone have the right to try.  So if the property is already listed, or going to be listed as a short sale -- i believe it is wise for that homeowner to go on and list the home in parelle to trying to get a modification.  Because we have seen it in the past that the homeowner still did not get help from the lender.  Having the property listed is just being one step ahead if it should come down to still needing to sell their property - short sale.

The big question is:  Should it be disclosed that the homeowner is trying to get a loan modification?  And I believe the answer is YES! After all... the name of the game is... DISCLOSE, DISCLOSE, DISCLOSE!

Rosemary Brooks, Family Realty Group - the Mother and Daughter Team (866-543-0461)

 

 

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Clients need honest assistance now more than ever

Sadly these days America is scandal central. It's hard to read through a publication such as The Wall Street Journal, or the average local paper for tha matter, for even one day without coming across a story about how some other fund, fund manager, investment adviser, development group, builder, contractor or other assorted cretins have absconded with a large sum of money leaving untold victims in their wake. The dollar total alone is staggering but the human cost is immeasurable.

In this market we've had several large developers go under, leaving piles of liens and unpaid loans in their wake. Several took out development loans or received money from homeowners or services from contractors and simply walked away with the cash, forget the pretense of business expenses. To me there is a crisis of conscience here. It seems like some well placed folks lost theirs or just plain never had one.

I list a lot of property and therefore meet a lot of sellers. Many are very beaten down. They might have lost jobs, spouses or suffered a demotion or transfer. I can almost script their disappointment when I tell them what their home is worth now. This economic crisis appears to be falling particularly heavily on the shoulders of the American homeowner. This shell shocked soldier of the new American economy has no foxhole to duck into, unlike those at the top who jet off to count their cash in Barbados, the Caymans or Switzerland. These people are stuck and don't think it's right to just burn their house down and run away.

The temptation is always there for the listing agent to look at older comps and try to figure out the best pitch to get the listing. In an unstable market where little is selling, doing good CMAs can require as much work time as I used to spend when I was a rookie because you look so hard at the very few comps, or go farther afield to find any sales. In this market however I've found that rosy prognostications should be discarded and clients need to be given the realities:

1.) You're not selling against your neighbors, you're selling against the banks, or asset liquidators for failed banks  2.) Prices are not stable  3.) Sellers must market condition their homes 4.) You may need to take a loss to sell even though you've been in the home ten years in some cases. 5.) Your home might not sell anyway.

I don't list foreclosures so I'm feeling the pain of the resale homeowner. Retail product has to fight fiercely against distressed sales and often loses anyway. Buyers have been militantly conditioned by the media and our industry to adopt a take no prisoners approach. In the midst of all this we need to try to make a living and be able to look at ourselves in the mirror.

After I was done with a listing presentation recently a seller prospect with absolutely no equity asked me a question I used to hear a lot last year, "How many of your homes that you list are you selling?" My answer was "pretty much none of them, but I think most of the nation is in the same boat." She was quiet for a moment then said, "Can we get my home on the market on Wednesday?" I almost hugged her and I left with my integrity intact. In this market, I'll take that as a victory.

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The real skinny on why Appraisers use foreclosures to value your home!

Okay first let me BUST a MYTH out there. The administration is telling people that even though YOU are not going to get bailed out while your neighbor who is going through foreclosure is, you should be happy because YOUR home will not suffer further loss in value if we can get these foreclosures sold and no longer sitting vacant, etc.

 

While there is truth to this it sure does not make those of us who have been working hard to keep our mortgage payments current feel a whole lot better. Many will start falling behind on their payments just to get bailout help...sad but true.

But here is the real deal on how appraisers are dealing with the valuation of your home in this foreclosure crisis. We DO NOT typically use foreclosed sales to compare against your home. We first evaluate your individual neighborhoods, streets, subdivisions and trust me when I tell you it can vary street by street in today's market.

If and only IF your subdivision, street or neighborhood is full of foreclosures, more so than your typical arms-length transactions, then we WILL using foreclosures as our primary source for analysis.  WHY? because these sales have now defined your neighborhood. If there are more sales in your area which are not foreclosures then we will use those sales primarily.

Therefore your home may NOT necessarily decline in value due to a few scattered foreclosures in your area. Now here is where it gets a little muddy in the water....If you have a home right next to yours or a couple of doors down that has been foreclosed upon and especially if it looks "run down" and obviously vacant, this WILL have an effect on the value of your home to some degree regardless of the number of foreclosures in your area. WHY? because if you were looking to buy a home and the one next door to yours is quite frankly and eye sore, this has an impact on how the market perceives your home. Sad and not fair but true!

 

The foreclosures in your area or on your street and their proximity to yours has an effect from that point outward as if in a circle. The further the foreclosure/s are from your home, the better off you are!

Again, let me repeat, if you only have a few foreclosures scattered about your development, street (unless you only have a few homes on your street) or defined neighborhood, chances are you are not going to be heavily impacted as appraisers will use non-foreclosure sales whenever it is reasonable to do so and is not misleading to the lender to do so.

One thing I want to make clear! Appraisers do not determine the value of your home...Let me repeat this. Appraisers DO NOT determine the value of your home.....The MARKET DOES! We analyze the market and as long as we do this correctly and as long as we utilize properties that are truly comparable to yours and make the appropriate adjustments for any variances, then the market LEADS us to the appropriate opinion of value....So don't blame the appraiser for the value of your home okay? It is the market you need to blame.

One final note. Appraisers are supposed to protect banks from lending risks. Banks need appraisers to analyze NOW more than ever what the market is doing, what the value of the property is currently, what the trends have been and where they are likely headed.

Banks & Mortgage Companies in the past did not really care too much about the fact that we were trying to protect their interests as they wanted to close loans. Sad fact but true and that is why we are in this mess Today. Appraisers many times are considered a necessary evil and Lenders pressured many Appraisers to do what they wanted. Unfortunately many succumbed to that pressure.

Banks are now going the opposite direction and running scared. They are dictating to appraisers what the comparable properties should be. They are non believers in what our reports are telling them. Before they wanted the highest possible value, now they want the lowest. They are telling us based upon some National Report that we MUST report our area as declining! Well here in Georgia there are some area that are NOT declining but STABLE. I personally do not let lenders dictate to me and I know for a fact I have lost business over this...but I digress...

Bottom line is they are still not letting us do our jobs! We have no vested interest in these properties, if they had let us do our jobs from the start, we would not be looking at a Trillion Dollar plus spending bill. Can you tell I am just a little frustrated. I AM!

So as a consumer what can you take aways from all of this. Keep up with what is going on in your neighborhood and do not let lenders determine the value of your home. You get a copy of your appraisal report, review it carefully. If you do not agree with it, protest it! Many banks use review appraisers who either have not even seen your home or who have only driven by your home to refute the original appraisal report. Don't let that happen to you because these review appraisers do not know the home like the first appraiser!

As Realtors, you can do the same thing. You have access to the same information we as appraisers do and even more than we do as you guys see many of the INTERIORS of the comparable properties used by appraisers which we do not see. Sure we have photos of the interiors if you post them on MLS/FMLS but the pictures do not always tell the whole story! So help your clients in this lending process by not letting them reduce or change the value of the first appraisal report without good reason.

Okay I am off my soapbox now, I hope this has helped you to understand how appraisers operate in this market or at any time.

Any questions, just ask!

Mary Thompson-Certified Real Estate Appraiser

www.marytappraisals.com

  

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