Shari Posey's Diary of a Mad Realtor

$75 Billion Fed Funding for Making Home Affordable BUT Nobody Answers the Phone

Shari Posey (Prudential California Realty) — Fri, 04 Dec 2009 11:22:58 -0600

I submitted a new short sale offer for one of my listings to Bank of America. Bank of America rejected the last offer without it ever getting past the SPO review. It's fancy terminology when you fax your short sale package and workers in India scan the documents, a BPO is done and several weeks go by, a computer simply takes the offer price and the BPO price and either moves it to the next level of waiting or rejects it. At this point, no human has ever looked at a single page of the entire 50 page short sale package I so carefully prepared.

In this case, the BPO price came in so high that if we could get that price, the property wouldn't be a short sale. In fact, it was the initial list price because the owner really didn't want to have to do a short sale but we couldn't get any offers at that price.

So after the rejection, four Bank of America short sale employees told me to just put it back on the market and get a higher offer than the one that was rejected, even $1,000 higher. So, I did that. It took another 3 weeks to get an offer but we got one that is $1,000 higher. However, today I was told by an employee that they will not order a new BPO until 3 months have passed.

It got me thinking...I thought I read that ALL Fannie Mae loans would be at least considered for short sale. I though it was a requirement for the servicers to at least attempt to avoid foreclosure. So, I called Fannie Mae and got into an automated phone system that said, "If you would like to see if you qualify for the $75 billion federally funding Making Home Affordable Program, please press 1." I pressed 1 and this is what I heard next..."No one can take your call right now. Please call back later."

I am so thrilled to have a portion of my income go towards Bank of America and Fannie Mae, I think I could scream!

Debunking Best-Selling, Award-Winning Economists

Shari Posey (Prudential California Realty) — Mon, 30 Nov 2009 14:21:05 -0600

So who am I to think I'm smarter than two best-selling, award-winning economists? Not long ago I read, Freakonomics, written by Steven Levitt and Stephen Dubner and I was shaking my head from page one through the end of the book. Granted, it was written quite a few years back and they have a new best-seller that I haven't read but I'll bet the premise is the same...the premise that numbers don't lie.

I'm ready to debate and debunk their theory...I think numbers lie a lot!

The more I am absorbed in the housing market, the more complicated I see the economy. I certainly don't have the answers to our economic woes but I absolutely know that the numbers reported by the media, banks and the government do not reflect anything at all. I believe it is impossible to know the real state of the economy because the numbers are so false.

Just in my small sphere of experience here are some flaws in the numbers...

#1. Number of Homes for Sale is not an accurate picture of the number of Homes that don't have an owner.

EX.--In our condo complex there is a bank-owned property on the market that got offers quickly, but there is also a bank-owned property that the bank is holding off the market. And there are 3 other units that are in pre-foreclosure trying to do short sales that may come on the market. I would say that if all of these properties came on at the same time, prices would drop dramatically, yet is it fair to say that banks are propping up the market but strategically timing properties to come on the market?

#2. Sales price does not reflect the actual value.

EX.--One of my clients recently purchased a condo that was originally listed as a short sale with an offer of $215,000. The bank would not approve it and they foreclosed on it. Then the REO department of the bank listed it for $170,000 and it got tons of offers over the asking price. It actually was in escrow twice for $190,000 cash but the buyers backed out. There were offers higher than $200,000 but they all had low downpayments. I called at the right time and convinced the agent submit our offer with a big down payment for $175,000. So what is the real value of the unit even though the sale price was $175,000?

#3--A minor change in the number of foreclosures does not correlate with economic recovery, decline or stability.

EX.--Many foreclosures are the result of true hardships from unemployment, a spouse's death or some other life-altering tragedy. Yet, it's no secret people go through foreclosure for financially strategic reasons. Additionally, millions of homeowners are in limbo, not paying the mortgage and trying to get a modification or a short sale; or just not paying yet the banks have not started foreclosure proceedings. What does a change in foreclosures represent if the change is not dramatic?

#4. The number of cell phone users and the number of subscribers who upgrade phones are more valid indicators of the economy than housing figures.

If this sounds silly think about it for a minute...You don't need a cell phone to live and they are not addictive cruches difficult to give up like smoking. Of course most plans are only $100 per month, but I've got to think that if we were close to another Great Depression, people would have the sense to drop their cell phone plan and use pay phones again. People are manic about getting newest phones, texting, Tweeting, etc. These people are not worried about their next meal. If there is ever a dramatic drop in cell phone subscribers or the newest iPhone flops, then start worrying big time!

The more I read various economic theories, the more I realized how complicated our economy is today. Is there a chaos theory? I think there is. I'll have to read about it.

Be Careful of "Expert" Advice

Shari Posey (Prudential California Realty) — Sat, 20 Dec 2008 14:34:45 -0600

The Wall Street Journal today highlighted a new book by Harry S. Dent entitled, "The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History." I thought to myself it sounds like an excellent self-help book for the coming year. Then I did a quick look on Amazon and I discovered Dent's last book, published in 2004 is entitled, "The Next Great Bubble Boom: How to Profit from the Greatest Boom in History, 2005-2009." In the editor's description of that book, Dent predicts...

** The Dow hitting 40,000 by the end of the decade (2010)

** The Nasdaq advancing at least ten times from its October 2001 lows to around 13,500, and potentially as high as 20,000 by 2009

** The Great Boom resurging into its final and strongest stage in 2007, and even more fully in 2008, lasting until late 2009 to early 2010

In the editorial description of his new release, Dent predicts:

**The economy appears to recover from the subprime crisis and minor recession by mid-2009 -- "the calm before the real storm."

**Stock prices start to crash again between mid- and late 2009 into late 2010, and likely finally bottom around mid-2012 -- between Dow 3,800 and 7,200.

**The economy enters a deeper depression between mid-2010 and early 2011, likely extending off and on into late 2012 or mid-2013.

So, now we are all supposed to shell out $18 bucks to see how he got it WRONG by a few critical years but we should believe that now he's right!

Who is Harry S. Dent??? His website says he's an "economics expert" trusted by "financial professionals." In addition to book and audiotape sales on his website, you can also attend his seminars and hire him to speak for your group. It goes to show you that anyone can make money peddling any type of advice as long as it's what people want to hear.

The moral of this story for me is that I should continue to learn and absorb information, reflect upon it but be careful about applying "expert" advice.

Use Your IRA to Buy Real Estate!

Shari Posey (Prudential California Realty) — Tue, 16 Dec 2008 10:51:14 -0600

It seems like bank failures are yesterday's news and today traditional companies we've known for generations are on the verge of collapse. On top of that, very sophisticated investors are losing fortunes investing with "trusted" experts.

The more I read The Wall Street Journal the more I believe in real estate. How can I say this while values continue to drop? I feel real estate is something I have more control over than a mutual fund run by some manager who invests in companies I don't even know that have cooked the books. I am not a sophisticated stock investor who understands hedge funds, swaps or shorts, but I understand a 2-bedroom home in a good neighborhood can rent for about $2000, which is enough to cover my expenses.

Here's How to Buy Real Estate with an IRA Account:

As long as you have approximately $100,000 to invest, you can have a nice return here in Long Beach. California. (All-cash investments are the easiest because very few lenders will make a loan on an IRA.)

You will need to transfer your IRA into a "self-directed" account. Most traditional brokerage companies like Charles Schwab, Fidelity, etc. do not offer this type of fund but a number of others do. Fees vary greatly so you will have to compare prices and services carefully. You can use multiple IRA accounts to buy one piece of property but the rent and expenses will be distributed between them.

Here's an example of a potential opportunity:

A nice one-bedroom/one-bathroom condo in Bixby Knolls recently came on the market for $92,000. Property taxes are $95 per month and HOA dues are $145 per month, so by charging $850 a month rent you will have $610 added to your IRA account each month...that's more than 7% profit! Additionally, over time the property value should increase when you want to sell down the road.

I purchased a townhome in Tennessee a few years ago and recently sold it to "roll" it over into a property in Long Beach. You can invest anywhere you feel you will get a good return.

Please let me know if you are interested in diversifying your IRA to include real estate.

Reduce Your CA Property Taxes!

Shari Posey (Prudential California Realty) — Mon, 20 Oct 2008 16:46:18 -0500

If you feel that the value of your property has decreased significantly from when you purchased it, you can apply to get reassessed at a lower value. Some homeowners have gotten small automatic assessments but you can get potentially much greater savings by applying on your own.

I can't guarantee success but I am happy to send you comparable sales to help you support your claim to the tax assessor. Just call me at (562) 673-7348 or email me at shariposey@hotmail.com.

The LA County deadline is November 31!

Make sure to tell your friends & family to apply, too!

Help! Listing Agent is not submitting offers

Shari Posey (Prudential California Realty) — Sun, 29 Jun 2008 12:39:39 -0500

I suspect that the listing agent of a REO property is not submitting offers to the bank in hopes of double ending the deal. I have no proof however, I have submitted various offers 3 times on this property over the past month and have never gotten a counter offer. The listing agent and his assistant just say they haven't heard from the bank yet. During this 30 days the price dropped significantly. We submitted an offer only a few thousand off the list price and still nothing. I had a friend call to pretend to be a buyer and the LA said the proprty was available and the bank was very negotiable.

I actually tried calling the bank directly but that was a dead end. In fact, one bank representative actually said that it sounded like the only way my buyers would be able to get the property is if they decided to drop me and submit an offer through the LA!

Any ideas?

Which investment is better--real estate or stocks?

Shari Posey (Prudential California Realty) — Wed, 21 May 2008 11:39:30 -0500

Which investment is better...real estate or stocks? If you ask a Realtor, you know which answer you will get and the same goes for a stock broker. Of course, common sense says you should have a little of both but if I had to choose only one, I would pick real estate.

In early April, it was time to fund my IRA account. I hate to admit this but I really only look at my brokerage account once a year compared to my daily contact with the real estate market. However, I subscribe to Money and Forbes, so I try to know what's going on in non-real estate markets as well.

This year I took the microscope to my brokerage accounts. I calculated my rate of return over the past 10 years for each mutual fund and for my stocks. Even after all the turmoil in the stock market, I gained an average of 3.7%. At least I didn't lose any money and stayed at least in line with the inflation rate. I feel even better because I read in this month's issue of Money magazine that since the end of 1998, the Standard & Poor's 500 index of blue-chip stocks only returned 3.5%. Without knowing hardly anything about the stock market, I beat the Standard & Poors...by a little at least.

However, when I look at my real estate investments over the same period of time, I'm way ahead! Overall, I'm up approximately 33% taking into account today's values. Obviously, the properties that I've held the longest are up the most.

One huge advantage of stocks and mutual funds over real estate is liquidity. And that is something real estate investors have learned the hard way in the past two years. If you have to sell a stock at a loss you can do it with the click of your mouse. If you have to sell real estate at a loss, it's a long, painful process.

Neither stocks or real estate are a sure thing. In both cases, experts advise looking at your investment in the long term. This year I contributed the maximum to my IRA to reduce my taxes but I will also look to buy a piece of property that makes sense as a long-term cash flow vehicle.

Ways Prices Drop

Shari Posey (Prudential California Realty) — Thu, 10 Apr 2008 15:23:10 -0500

It seems common sense that the reason real estate prices drop is because there is too much supply and limited demand. BUT WAIT!! There are other factors at work behind the scenes.

The housing market is not like your average retail store that puts products on the shelf and offers advertised specials.

One way prices drop is when property is sold privately off the market. Believe it or not, some sellers would rather have either a private party buy it under market. This private party could be a family member or a friend, or maybe they have a friend in real estate who has a buyer "in their pocket" who wants a great deal. When a home sells off the market it is a comparable sale for the entire neighborhood.

Desperate sellers also bring prices down. These days many desperate sellers are banks that want to cut their loses by selling properties below other listings. Not all banks are doing this type of fire sale of property, Ironically, as long as the property is listed on the market often times buyers bid up the price. I showed a few bank-owned new listings this past weekend that had multiple offers by Monday.

Short sales prices are even lower than foreclosures in many cases. Some banks don't want to gamble with prices or the condition of the property in the future if they take the home back through foreclosure. Some banks cut their loses before the owner has even moved out of the property. Short sales are not for every buyer. Generally there are months of waiting while the banks go through their approval process.

The housing market is very volatile right now. For sellers, the best chance of getting the highest price is to price your property below other competing listings but make sure it is marketed heavily so buyers and other agents have the opportunity to see it.

Any secrets for getting Countrywide to approve short sale faster?

Shari Posey (Prudential California Realty) — Fri, 04 Apr 2008 10:56:55 -0500

I've got a short sale with HSBC as the first lienholder and Countrywide as the second. HSBC approved the offer on the table in only 10 days (they are taking a $30k hit) but Countrywide has had the file 60 days and still no answer. They finally did the BPO 7 business ago but don't have the report yet. Does anyone know how to move through their process faster? A negotiator was assigned about 3 weeks ago but I have not been able to communicate with her. The representative says it takes 30-90 days so I should expect to wait another 30 days. In the meantime, HSBC is hanging in there with their approval.

BPO Quality Control Failed 3 Times. Help!

Shari Posey (Prudential California Realty) — Tue, 04 Mar 2008 10:28:16 -0600

I'm doing a BPO that has failed quality control three times. I seem to have a problem with 30-day quick sell value vs. normal sale. I did the BPO as always but this one has me stumped on this issue. In my opinion you have the best chance for a HIGH price if you price it to sell in 30 days. You will probably sell for LESS after 30 days. But the bank doesn't want to hear this so I have been pricing the quick sell value a little under the normal sell value. It has always passed QC except for some reason in this case the bank is rejecting that even though I've explained it in lengthy comments. What are they looking for? Obviously it's not my opinion of value so I'd like to be able to just feed them what they want to hear and get this BPO over with. Any suggestions?

They also flagged my land value price as failed even though it is taken directly from the tax records based on a very similar value that I am proposing. Basically this home was purchased in 2004 and we are currently back down to 2004 prices so the land value was an easy one to calculate but it failed QC.

I've spent way too much time on this BPO tweaking it for them. All for $45.

What is "Green" Building?

Shari Posey (Prudential California Realty) — Tue, 19 Feb 2008 11:21:55 -0600

Several months ago I read an article in our local newspaper, The Grunion Gazette, about two homeowners in Long Beach who were planning to tear down their 1920s bungalow and replace it with a very environmentally sound home. They were looking for volunteers to help them build it because the costs of building green is so much higher than traditional materials.

When I read the article I was trilled that someone in Long Beach was bucking the trend. A friend of mine also saw the article and he thought about volunteering to help build because he's a believer in green building, too. My ultimate dream is to build a strawbale house here in Long Beach. People tease me about it but straw is an incredible green building material plus it costs less than manufactured green products. ("Manufactured" green products seems like an oxymoron to me.)

Yesterday I was driving around the area where this green house was being built and I decided to check out the progress. To my horror this 1920s bungalow was added to a landfill in order to be replaced by a monstrous 2-story square box that takes up almost the entire lot! I'm not an expert on green products but I can't see how this new gigantic structure that will be filled with environmentally sound finishes like bamboo floors and dozens of fluorescent lights could have less of an impact than a little bungalow.

"Green" seems to be a trendy excuse for replacing something that is perfectly functional or for charging more for a product that has minimal benefit.

Will Roger Must Have Been a Landlord--He Sure Wasn't a Flipper!

Shari Posey (Prudential California Realty) — Tue, 15 Jan 2008 22:39:17 -0600

I love this quote from Will Rogers...

"You don't wait and buy real estate. You buy real estate and wait."

Every day I get calls from investors ready to get back into the market to flip and grow rich. Ironically most of the homes that are currently bank owned are flips that flopped. My philosophy in general is to buy real estate to hold unless the market has increased to make at least 10% profit after rehab, holding and real estate fees.

Our current market is a perfect market to get into a home that needs some cosmetic repair and live in the property while you do the work (sweat equity!). Down the line, you can turn that property into a rental and start with a new project.

Buyer Tests the Market with Multiple Offers to See Who Really Wants to Sell

Shari Posey (Prudential California Realty) — Tue, 15 Jan 2008 10:57:26 -0600

One of my buyer clients found several properties he liked equally and made offers on multiple properties at the same time. All the sellers knew they were in a multiple offer situation. Yes, the offers were low but not what I would consider offending.

Out of 5 offers, 3 sellers came back with full-price or nearly full-price counter offers. One of those full-price counter offers was also loaded with so many special terms they would strangle a buyer. Two sellers came back with fairly generous price reductions and the buyer chose to continue to negotiate with one of those offers.

A week later, two of the sellers who my buyer did not choose wanted to come back to the table and negotiate more but it was too late.

The moral of the story is not all sellers are motivated to sell just because their house is on the market. However, if you are a seller who is motivated, you need to realize there are many properties competing for a limited number of buyers. No seller wants to "give" their house away but the negotiating process will determine the value of your property in today's market so be prepared to cooperate if you want to sell. And for buyers, the more flexible you are in your needs, the better deal you can strike. Some sellers are very motivated; it just takes working with an agent who is willing to provide the expertise and invest the time to help you get the best deal.

Banks' biggest loss on a short sale?? Contest!

Shari Posey (Prudential California Realty) — Sun, 13 Jan 2008 19:06:38 -0600

I'm curious to know from those of you who have closed successful short sales, what is the biggest loss a bank (or banks in the case of both first and second lenders) has approved? Please provide both the dollar and percentage of loan amount. THANKS!!

UPDATE!! Williams & Williams auction of my old listing...

Shari Posey (Prudential California Realty) — Fri, 11 Jan 2008 22:33:41 -0600

The bank cancelled my listing to send to auction in 2 weeks. I have a couple of people who were on the fence ready to make an offer, plus I'm still getting calls about it so it would be great if I could end up as a buyer's agent. (I've gotten a couple of calls from people wanting information about the property who say that they got my contact info from the auction website, although I can't find any info about me). Does Williams & Williams pay a co-op fee? Has anyone ever had this happen and ended up making a commission?

NRBA, REOMAC, etc. Which to join??

Shari Posey (Prudential California Realty) — Tue, 18 Dec 2007 18:55:41 -0600

I'm allocating budget dollars left over from this year. Which organizations do you feel have offered you the best in education and contacts? I have been considering NRBA and REOMAC. Other suggestions welcome!

Know the Difference--"Short Sale," "REO" & "Default"

Shari Posey (Prudential California Realty) — Tue, 11 Dec 2007 14:35:58 -0600

Most buyers and many real estate agents are unaware of the enormous difference between a listing that is a "short sale" and one that is an "REO." Also, many people are not aware what it means when a home is in default/foreclosure.

Short Sale Listings

The homeowners of these properties owe more in loans than what the property is worth. For example, a home may be listed at $399,000 but the owner owes a first loan of $399,000 and a second loan or a line of credit for $100,000. On the surface it looks like a great deal for the buyer to get the house for $100,000 less. But in fact, the second lender has to agree to accept the deal, which in the case is $0. In addition, there are real estate fees to sell a property so the first lender would also have to accept less than $399,000. Most lenders require the borrower to have a true financial hardship to prove they can not pay the difference between the sales price and their loan amounts. A hardship is a serious financial setback like a death of a spouse, loss of a job, huge medical bills, etc. Even with a hardship, many banks are not approving short sales. These homes may or may not be in default, meaning the owner may or may not be behind in payments.

Default Homes in Foreclosure

These borrowers have missed enough payments to force the bank to take action to start the foreclosure process and file a Notice of Default, and then go to auction if the borrower can't bring their loan current. Buyers are excited about finding killer deals before homes goes to auction or get listed with agents. Many buyers think that you can offer the owner $10,000 and convince them to walk away from their homes. The reality in today's market is that not very many of these default borrowers have any equity, and they may also have unpaid property taxes and other liens against the property. The few borrowers who have equity are bombarded with people knocking on their door offering them deals to walk away. If you have a lot of diligence you can land one of these deals but I would advise you to do a lot of homework. Additionally, when the property goes to the foreclosure auction you must have all cash/cashiers checks to purchase.

REO Listings

These are properties that have already been through the foreclosure process and are currently owned by the bank or a servicing company. These properties are listed with local agents but any agent can sell them. The properties are sold as is and the bank knows nothing about the condition of the property and offers no warranties. Some banks have special requirements for the buyer, for example the buyer must qualify with a specific bank. These vacant properties are a depreciating asset for the banks and most banks are eager to make deals. Many of these properties have investors that must approve the price of the sale but I have seen some killer deals go to the buyers who have the guts to submit an offer.

Buyers! Should You Wait for the Market to Hit Bottom?

Shari Posey (Prudential California Realty) — Tue, 11 Dec 2007 10:24:09 -0600

On Sunday I held one of my listings open, as I usually do on the weekends. And as usual, I had 5-6 buyers who love the house but are waiting to buy when the market hits bottom. A few buyers are making their move now but most are waiting. However, it occurred to me recently that each and every house offers a completely unique negotiating experience. Here's what I mean...

This is a true example of a buyer couple I worked with recently: They found 5 houses they liked equally and all of them were priced nearly the same...around $500,000. The buyers were highly qualified with a large down-payment and great credit. We submitted 5 offers simultaneously. One seller didn't even want to respond to the offer. Two sellers came back with a counter offer a few hundred dollars off of full price. Howver, two sellers came back with wonderful counter offers. We continued to negotiate with the two most-motivated sellers and the buyers struck a deal.

This experience shows that for some homes, the market will most likely go lower as their homes remains on the market. But for other homes, you can get an awesome deal now if the seller is ready to strike a great deal. We ended up negotiating a home far below the list price. The buyers felt like they were able to buy now and enjoy a home at a price that gives them equity as the market goes down. These buyers decided that they would rather be among a handful of buyers making offers with motivated sellers now; than waiting for the absolute bottom when everyone jumps into the market.

Some Sellers Won't Negotiate a Penny!

Shari Posey (Prudential California Realty) — Fri, 30 Nov 2007 13:35:17 -0600

It is interesting to see how the sellers of newer listings, meaning those on the market less than 30 days, haven't quite caught on to the fact that it's not a seller's market anymore. I have presented several offers to "newbie" sellers and the counters came back at full price. These are not multiple counter situations. However, sellers who have been waiting for an offer or who passed up earlier offers and have now been on the market 60 days or longer are eagar to negotiate and are working for win-win outcomes.

ATTENTION SELLERS! This is not a seller's market anymore. Inventories are at an all time high and sales are at an all time low. These are real statistics; Realtors are not making this up to get you to price your homes to sell or steal money from your "equity."

The reality of Econ 101 is as true today as it was in a hot market...something is only worth what someone else is willing to pay for it. If you only have one offer, you only have one buyer willing to pay for it.

Is ReoNetwork.com worth a premium listing?

Shari Posey (Prudential California Realty) — Mon, 26 Nov 2007 23:00:18 -0600

Is a premium listing on ReoNetwork.com worth $600 for 6 months? Has anyone had any luck getting listings from that website?

Take Media Forecasts with a Grain of Salt

Shari Posey (Prudential California Realty) — Thu, 22 Nov 2007 11:38:11 -0600

My first job out of college many years ago was as a fact checker so I'm always on guard for discrepancies. But, as a Realtor I was actually delighted to discover in the most recent issue of Money Magazine there are two completely opposite statistics and forecasts regarding the housing market--I'm going to use these examples in my open houses to show buyers that deciding when to buy should be based on personal need not on media forecasts...

Page 34--Housing prices increased only 3.2% nationally in the year ended June 2007; and Grand Junction, Colorado experienced a 14.3% 1-year price increase and "still sizzles."

Page 89--Home prices nationwide are down 4.2% from a year ago; and there is "no rescue" for Grand Junction, Colorado, which is projected to decline -9/0% next year.

With wildly conflicting published reports like these, it is no wonder that buyers are confused when and where to buy! The best time to buy is when it is right for your financial situation and personal needs.

Zillow.com is a BIG FAT Zero.com

Shari Posey (Prudential California Realty) — Sun, 11 Nov 2007 14:10:16 -0600

Zero accuracy that is. Let me explain...

Three times this week I got calls from clients or prospective clients asking me why Zillow.com gave a particular home value and that it seems out of line. That's because it represents almost nothing!

Zillow.com does base their "Zestimates" on data but it's like going to the doctor and you get a full diagnosis of your health based on only your blood pressure. You can't base a home's value on limited data because very few homes are exactly alike and very few homes have been sold over and over without modifications.

For example, Zillow.com doesn't know that you put in granite counter tops, landscaped the entire backyard into a tropical paradise. They don't even know if you have completed a major home addition if it hasn't caught up with the property assessor's office which can lag behind the building department by months or years. Zillow.com doesn't know that the homeowner's across the street from you painted their house purple and park their cars on their front lawn...mainly Zillow.com isn't a buyer and a property is only worth what a buyer is willing to pay no matter what Zillow.com may say.

One thing I will give Zillow.com tremendous credit for is having a fabulous PR campaign. However, if you want an accurate estimate of what a home is worth ask a real estate agent who will provide a detailed analysis. But only a buyer will provide the actual value.

Does the Sales Price Seem too Low?? It's Probably a Short Sale and that Means "NO" Sale!

Shari Posey (Prudential California Realty) — Sun, 11 Nov 2007 12:58:31 -0600

A client emailed two MLS numbers of properties she would like to see. They were priced way under market and she thought it would be an opportunity to get a great buy.

Again I am reminded of the old saying, if something looks too good to be true it usually is.

In this case the listings were both short sales. That means that the homes are listed at a price that is less than what is owed on the property. In these cases, the properties were listed $100,000 less what was owed. In a short sale the bank must agree to accept less than what the borrower owes. Will they agree to a loss? Sometimes yes but usually no. I have seen a handful of short sale listings actually close escrow and usually it is at a value only slightly under what is owed on the property, so the bank isn't losing that much money. In all cases, the seller must have a true hardship as the reason they can't make the mortgage payment (loss of job, death of a spouse, hospitalization, etc. ). Additionally, buyer and seller will have to wait weeks to get an answer from the bank as to whether or not it will allow the short sale to go through and it might change its mind at the last minute prior to close of escrow.

You might think banks would prefer a short sale to foreclosure because the borrowers are probably going to end up in foreclosure anyway. However, many short sales are due to owners taking out equity lines of credit on their homes for remodeling, purchasing a car, paying off credit cards, going on vacation, etc. Other short sales are investors that hoped to flip the property but it flopped. And a few others are fraud where a home's value was inflated so the new owner could get cash back at closing with no intension of making the payments. It's not easy for banks to make decisions when every single pre-foreclosure story is different.

If I were a buyer, I wouldn't waste my time with a short sale unless I didn't care whether or not I got the property. As a seller, unless you have a true hardship you should look at other ways to make the mortgage payment like taking on a second job because getting a short sale approved is unlikely.

WOW! Any Detroit agents out there?? Help me understand.

Shari Posey (Prudential California Realty) — Sat, 27 Oct 2007 19:48:15 -0500

Wow!! For curiosity sake, I did a search on Realtor.com in Detroit. There are more than 500 homes on the market for less than $40,000. Tons of them are priced around $3000!!! Am I missing something?? Are these minimum bid prices for an auction? How in the world did this happen? How much did these homes cost the previous owners? It's incredible!! And I thought it was bad in California.

Solutions to Recovery!

Shari Posey (Prudential California Realty) — Sat, 27 Oct 2007 17:21:38 -0500

An old college friend of mine is a leading economist and sent me a bunch of scholarly reports on the housing crisis. None of them offered any solutions and since most members of Congress are pretty detached from what's really happening, I doubt they will come up with any brilliant ideas. However, I bet those of us in the trenches could come up with some good ideas!

Solutions are complicated by the fact that the banks who made the loans have sold them off to investors but it seems to me that the investors have a ton more to lose through foreclosure. If I managed a portfolio of loans, I would change all the adjustable loans in default into fixed rates or let the homeowner go back to the teaser rate for another year or two until they can manage their finances better with the knowledge now of what will happen. The number of loan mods I see is dismal. It's like they don't understand the concept that some money is better than no money.