The Truth About Short Sales

With the rise in the foreclosure rate, short sales are becoming much more attractive to mortgage lien holders than they have been in the past. I have outlined what a short sale is in my article “Foreclosures are up – What to Do” so I won’t be repetitive in this article. In a nutshell, a short sale is when the lender agrees to take less than what is owed on the home as “payment in full.” A short sale is a win/win situation for everyone involved, here’s why:

To You the Seller – You will be able to avoid foreclosure and sell your home at no cost to you.

To the Mortgage Company – They are not in the real estate business, they are there to lend money, so they really don’t want your house. They are minimizing their losses therefore they want to help bridge the gap.

To the Buyer – They get a good investment on a home. These are not typically good deals for investors because of the loan and property ownership limits imposed by regulatory agencies such as FHLMC/FNMA.

With that being said, just because someone is a real estate agent does not mean they know how to successfully handle a short sale transaction, and this can be disastrous. A Realtor is required by the lender in handling a short sale, but the knowledge of the Realtor regarding short sales is critical and few actually know how to take it all the way through. You do not want someone “feeling” their way through. Make sure you retain a professional.

Following are 5 keys to a successful short sale:

Know the process involved in shorting a loan, not just part of it. Anything that is out of place can cause long delays and ultimately cause the deal to fall through, leaving you back where you started, only in worse shape and frustrated.

Know what the lenders require for different types of loans such as FHA or Conventional and put it in a format that will get their attention. Lenders receive thousands of requests for short sales, and if the packet is in any way incomplete, it goes into the big stack of files to be dealt with if there is enough time. Whereas, if the packet is complete and in their format, it goes into the small stack that gets dealt with quickly.

Know what the banks have to “net” on the sale. There is a way to know exactly what they will take or not take on the loss, not just sending them an offer and hope they take it. This may work on actual foreclosures, but not on short sales. There is a formula, and if your Realtor does not know it, your house will not be priced right and again, there will be much frustration.

Know what the banks will approve in the purchase offer. Will they pay closing costs, repairs, etc.? Again, if you submit something to them they will not allow, it goes back into the big stack. Have an established alliance with the loss/mitigation representatives. Knowing which representatives will get the deal done and not drag it out can be invaluable. These agents are often paid per file, so they obviously like the files that are a “slam-dunk” for them and will get them out faster.

One last thing you should know would be the three stages of the Pre-Foreclosure period. Default: this can be as little as a month, but typically 3 to 5 months. You will be getting letters saying “you are late, please pay.” Acceleration: this is usually a 20 -30 day stage, and you will get a letter called an intent to accelerate. This basically says to pay all your late pays or we will accelerate. Foreclosure: this is the final stage. It is 21 days long. The foreclosure can be stopped with a short sale, but the longer it goes, the less likely it is to happen.

In summary here are the things to know: Timing is critical; don’t procrastinate hoping things will change. You are not alone. Get someone with short sale training to help you. If you find yourself in this situation and have more questions, I will be glad to consult with you. If you abide by these rules, you stand a much better chance at a safe landing.

5 Tips on Presenting your Home

In today’s competitive real estate market, impressions are crucial. You have listed your home for sale and you want everyone who visits to see your home as special as it is. You have freshened up the paint, cleaned the carpets, had the home professionally staged and you are ready for buyers. There are lots of new homes that you will be competing against, so let’s take a lesson from their playbook. Here are some tips that will enhance your hard work and should pay dividends, namely a quick sale for the best price.

1. Light
   Show your home in its best light, literally! Entering a home that is dark with no lights on and the blinds drawn is depressing. You goal in all this is for the prospective buyer to feel like they have truly found “home”. With somewhat high energy bills, you may not want to spend the extra dollars for leaving the lights on while you are out, but it makes all the difference.
2. Clean House
   Always keep the beds made and everything picked up and neat. A prospective buyer entering a messy house will get the impression that the house has not been well maintained besides the obvious turn-off.
3. Music
   Have some music playing softly in the background. A radio station, CD, or a television music station is the easiest way. You want something like smooth jazz or an oldies station to set the tone. It may seem very subtle, but when shopping new homes, they always have music going in their models. You should too.
4. Candles
   This should be done only when you will be out of the house for a short time! Scented candles such as cookies baking or apple pie appeal to the senses. Obviously, you do not want to be gone for a long while and leave a candle burning, but it is the icing on the cake.
5. Privacy
   Get out of the house. Buyers need to look in closets and cabinets, and they do not feel comfortable doing the things they need to do or making comments with the current home owner present. Often times if they have concerns, their real estate agent is able to address them.

In doing these simple things, you will appeal to the senses and help get your home at the top of the buyer’s list.

3 Reasons for Moving Up in a Down Market

We have all seen the news and heard all the bleak reports, but the local market is not as bad as what is projected. See my article “The Sky is Not Falling in Rockwall, Texas.” The fact is, if you have considered moving up, there may not be a better time.

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What is the value of my house?

What is your house worth? If you would like to find out just click here and we would be glad to serve you.

To Sell or Not to Sell

A question that gets asked of me quite often is “when is the best time of year to sell?”. Traditionally, it is thought that the spring and summer months are the best due to the shear volume of buyers. But, before you make a decision, consider these facts. Read more

10 Ways to Make Sure Your Home Doesn’t Sell

OK, not getting your home sold after going to all the trouble of getting it on the market and having numbers of strangers strolling through your home is not the goal. But, there are some real mistakes that can be made that will definitely impede the sale of your pride and joy. Today’s market is quite unique in that interest rates are still at all time lows and houses are still selling at a good pace. The thing that we also have to consider is that there is also a record number of homes available for the prospective buyer to choose from. So what do you need to do to help assure that your home is the one selected? Here are some fatal flaws that I have observed that if not heeded will almost assure that your home will be passed up and another selected.

1) Not serious about selling - There was a time when it was ok to say “I think we’ll just put our house on the market, put a price on it that will net us a nice profit and then we can move in to that dream home. If it sells fine, if not we’ll just stay put.” Honestly in today’s market, the later would probably be the best option. For this type seller, a less saturated market would yield much better results.

2) Improper Pricing - It has been said that “a house properly priced is already half sold.” No amount of full color ads, glossy photos, open houses, magic potions or realtor bonuses will compensate for over pricing. When a home is over priced, you will miss your market. People looking at homes in your price range are going to also see other homes that are priced correctly and offer much more and the buyer will opt for the better deal almost every time. For the buyer that could afford your home and would be your target market, they be discouraged by the asking price and not even see it. So, you will be getting the wrong people looking at your home.

3) Not listening to your agent - If you hire an attorney to represent you and do not listen to what he tells you, you will most likely lose your case. You hire a real estate professional to take you through the selling process because of their expertise in this area. It takes the efforts of both the realtor and the seller to get the job done. If you do not have confidence in what your realtor is saying or doing, you may want to consider changing agents. They may be a truly nice person, but not have a real plan in place for completing the job successfully. You will both be happier if you are on the same page.

4) Micromanage the marketing - Again, you hired this person to do a job, but we all have ideas on how it should be done. Just because Aunt June sold real estate 10 years ago or your neighbors are telling you what they would do, does not make them qualified to sell your house today. A true real estate professional is up on what is going on in the local market and how to get the job done.

5) Don’t stage the property - You know at one time, blue carpet, floral wallpaper and vinyl floors were very popular. Today, it is the kiss of death! I have a friend that uses the analogy of going to the beach at spring break. There are a lot of girls out there for the guys to look at, but the one that gets noticed is the best looking of the bunch and not the one who has the most potential. There are a lot of homes to look at. I also find it very helpful to bring in a home staging consultant to help get it just right. The new home builders spend a lot money to get this right, so it must have some merit.

6) Give the pets the run of the house - You probably love your pets and consider them to be one of the family. I do, but not everyone sees it that way. It may be true that you would not want to be friends with this person, but that is not the objective here. The truth is, pets make some people uncomfortable or they may be allergic, not to mention that if these pets are present they are almost always going to notice pet odors whether they be real or imagined.

7) Talk to the buyers - Nobody knows your home like you do. But, it usually makes the prospective buyers uncomfortable looking at the things they need to see such as closets and cabinet space with the current owner present. It also makes them uneasy about making comments to their agent about concerns (which they may be able to address) with the seller around. What if a comment is made by the seller that accidental offends the buyer? Not likely this will be the house selected.

Selling personal items - This is not the time for that. It may seem this would be the perfect time to sell that lawn mower or ping pong table that has been taking up space for the last 5 years, but after the sell would be a much better time for that sale. It is better to keep the objective clear as to what you are trying to get sold and not distract from that.

9) What is that smell? - There is nothing like pet odors, smoke odors, baby diapers or the like to make a prospective buyer want to exit the home as quickly as possible! There are companies that specialize in removing odors and it would definitely be to your advantage to do something about it.

10) Avoid feedback - After a person has lived in a home for the last several years, they tend to learn to live with certain little things that don’t bother them anymore. I provide my clients with on-line feedback after a showing. If there is something that prevents a person from buying, it may not seem like a big deal to the seller but it is keeping the home from selling, but, it is keeping the prospective buyer from falling in love with the home. Most of the time these are easy fixes that will expedite the sale and help bring the price the seller is looking for.

Why Traditional Marketing is Obsolete

What is wrong with the way it has always been done when it comes to marketing? Traditionally, in the past, it was thought that if you got your name out in front of the public, telling them of how great a person you are or how great your product is, people would begin to believe it. Today, that is just not the case. Tooting your own horn not only is not well received, but destroys credibility along with it. Read more

Which Home Improvements Have the Best Return

If your thinking about remodeling your kitchen or bath even thinking of a pool, you probably want to get your investment back when you sell your home. But when it comes to payback value on home improvements, some are more profitable than others. Typically, kitchen and bathroom projects payback pretty nicely with installing a pool coming in last.

These numbers are given as guideline only, but will hopefully help you decide where you will spend your money. Some things to consider are, current market conditions and how well the improvements fit the neighborhood. If most of the homes have three baths and your has two, it would definitely help to add that bath when it comes time to sell. You can over do things as well. Adding too much to a home in a neighborhood where the homes have less will make it very difficult to get your money out of the project. And finally the popularity of the project will affect the return. Making it too individualized can be a detriment. Some things you just have to say “I’m doing for my own enjoyment” and not expect a return on investment but rather just the cost of enjoying the update.

Here are some percentage guidelines to follow:

Kitchen remodel - 90%

Bathroom addition - 90%

Add a room - 55%

Add a deck - 70%

Add a pool - 45%

What Service Looks Like

Service is all about what you, the customer expects and possibly some things that you may not expect. Obviously you would expect the person providing the service to be attentive to your needs even to the point of anticipating your answer before you voice it. But service is much more than that! It is being knowledgeable about your point of expertise and being able to share that in way that makes a memorable experience for you the buyer. In every transaction there are possibilities for bumps in the road, but having someone with the knowledge and experience to help smooth out the rough spots can be invaluable. Don’t consider possibly the largest purchase you will ever make to someone with out the expertise and caring it takes.