The Market Shift Is Here. Are You Paying Attention?

Good morning folks.

If you handle Short Sales as a negotiator then you are aware of all the recent difficulties with Short Sale Property Values coming from Fannie Mae. Here are some articles and discussions about what’s going on.

Fannie Mae Short Sale Property Evaluation Issues

Fannie Mae Short Sale Value Issues

Is Fannie Mae Trying To Control Property Values?

From the Fannie Mae Short Sale Servicer Guidelines.

• Fannie Mae will now provide the servicer with list price guidance as well as a “good-through” date for the guidance. Servicers will have access to these values through eFannieMae.com. Servicers should provide the written (including email) list price guidance to the borrower and/or the borrower’s real estate broker with the following information: the suggested list price is provided only as guidance, and not as the required list price (the borrower and/or the borrower’s real estate broker are responsible for determining the list price); an offer at or above Fannie Mae’s suggested list price may not automatically result in an acceptable offer if the transaction costs are excessive;

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Since the new Short Sale Guidelines from Fannie Mae and Freddie Mac went into effect 11/1/2012 Short Sales have become much more difficult. Kind of ironic since the Standard Short Sale was supposed to make Short Sales easier.

From Fannie Mae:

• These new requirements implement and are consistent with the aligned policies described in Federal Housing Finance Agency's July 3, 2012 Directive to Fannie Mae and Freddie Mac to help simplify and streamline the short sale and deed-in-lieu of foreclosure processes

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And just yesterday Fannie Mae and Freddie Mac sent out this:

1/18/2013

Fannie Mae and Freddie Mac announced changes to their servicing requirements for short sales. Please see below for some key changes that all parties involved in a short sale should be aware of. These changes apply to all Fannie Mae and Freddie Mac short sales; with an offer and without an offer.

• Title Transfer requirement change:

• The buyer is prohibited from selling the property for any sales price for a period of 30 days from the date of the deed.

• After a 30 day period, and until 90 days from the date of the deed the buyer is further prohibited from selling the property for a sales price greater than 120% of the short sale price.

Note: The above restrictions will run with the land and are not personal to the grantee.

So what we now have are the 2 largest holders of mortgage loans in the US purposely inflating property values AND placing restrictions on property sales AFTER the property has already been sold. And just so you know the restrictions on selling are Deed Restrictions.

Team all of this with the lowest interest rates in history and, dare I say it, we are poised for another artificial increase in property values. Does all of this sound familiar?

Here’s what one analysis had to say in 2008.

• Congress and the president have enacted legislation to put a potential bailout of those two organizations in statutory language, allowing the now-saved Fannie Mae and Freddie Mac to act as “saviors,” a strange position for two essentially bankrupt organizations that wholeheartedly helped engineer the financial calamity they are now supposed to fix. READ THE COMPLETE ANALYSIS

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Folks, if you deal mostly in Short Sales as I do, then it is time to start shifting your business. Equity sellers and new construction are both on the upswing. In fact equity sellers have just recently claimed more than 50% of sales in the hardest hit markets.

There were also more construction starts than in any period since 2008 in December 2012.

• January 17, 2013 - Solid gains in both single-family and multifamily housing production resulted in nationwide housing starts rising 12.1 percent to a seasonally adjusted annual rate of 954,000 units in December, according to newly released data from the U.S. Commerce Department. This is the highest level of new home production since June of 2008. READ THE FULL REPORT

Based on what’s happening in the market my plan for 2013 is to:

1. Focus more on equity Sellers.

2. Create additional income streams.

1. Add agents

2. Property Management

3. Increase commission percentage

4. Reduce expenses

3. Market for more Buyers.

4. Get more involved in the “Active Adult” Communities.

What are you going to do to start shifting your business?