Archive for the ‘Short Sales and Foreclosures’ Category

Short Sales: Communication is Key

Tuesday, December 6th, 2011

It has been estimated that 40% of all current real estate sold nationwide is distressed (REO or Short Sale).  Given that there are so many of these properties in our own markets, it is important that we stay informed, specifically on the ever-changing short sale process.

Working as a team

The good news about having dealt with so many short sales in the past few years is that Realtors, title companies, and lenders are working better together as a team to expedite the process.

The process has improved slightly, but has not gotten a whole lot quicker.  As lenders continuously put new procedures in place and the volume of these sales continues to increase, short sales are still running on average 3 to 6 months.

It is important to consider the advantages of working with a title company when negotiating a short sale. By utilizing the resources that our title company partners provide, you can recover some of your own time and reduce the liability risks for both yourself and your clients. Remember that you do not have to stand alone in this process.

Protecting everyone’s interests

Short sales can be a great opportunity for your client, if they are handled carefully. Here are some reminders and a recent change in the process:

Deed restrictions Agents need to communicate to their buyers that if there are deed restrictions on the property being purchased in a short sale, that many lenders are now requiring a 30 to 90 waiting period to re-sell the property. Freddie Mac specifically requires a 120 day waiting period.

Arms-length transactions Realtors need to require their sellers to be up front about selling their distressed property to relatives, friends or anyone they have known prior to the sale. The Realtor also has to disclose any relationship he may have to the buyer or seller. Failure to fully disclose these relationships can result in a fraudulent transaction. A short sale amongst parties that know each other can be approved in some cases, with full disclosure.

Short sale affidavit changes:

Finally, in response to requests form NAR and the American Land Title Association, Freddie Mac recently revised its mandatory short sale affidavit policy on November 18th, 2011. These changes were made in response to concerns over vague language in the previous affidavits which possibly put those signing at risk for liability.

(From the NAR website):  “The purpose of the affidavit is to prevent fraud by requiring the buyer, the seller, the real estate brokers, the escrow/closing agent, and any transaction facilitator to make various certifications (including that the short sale is an arm’s length transaction and the buyer will not resell within 120 days unless there are substantial improvements). Servicers are required to implement the changes by Jan. 1, 2012, but are encouraged to do so immediately. Each servicer covered by the policy must update its forms to comply with the revised policy.”

To view more information on the changes, go to: Realtor.org.

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Posted in Coldwell Banker Weir Manuel, Michigan Real Estate Market, Short Sales and Foreclosures, buy a home, coldwell banker, homes for sale, housing, real estate, real estate market, sell a home | Comments Off

State’s economy will continue to rebound, Comerica economist says

Monday, June 14th, 2010

Business owners in Michigan needn’t worry about the state’s recovery being affected by financial troubles in Greece or Europe, Dana Johnson, the chief economist for Comerica Bank, told a breakfast gathering of bank executives and clients at Oakland Hills Country Club Thursday.

He said the impact on the state and U.S. “will be little more than a rounding error,” and said at worst it likely wouldn’t do more than reduce by two-tenths of a percent his forecast for national economic growth this year of at least four percent and for 3.5 percent for 2011.

Johnson said Michigan’s economy, although it had a mild step backward in April, will continue to rebound, perhaps at a rate exceeding the national average.

The state, he said, will see net job growth this year and next, driven by increasing demand for cars made by the Detroit Three.

“It looks like the long, persistent slide in market share has been arrested,” Johnson said. “You’ll see double digit sales increases by the Detroit Three, which are the first increases by the Detroit-based automakers in 10 years.”

Market share by the Detroit Three fell every year — from 63.2 percent in 2001 to 44.2 percent in 2009 — before rebounding this year to 45.3 percent.

Source: Tom Henderson, Crain’s Detroit Business

Posted in Short Sales and Foreclosures | Comments Off

Bankruptcy-Affected Foreclosure Sales

Monday, March 29th, 2010

A recent closed transaction in which we were involved revealed an interesting twist on a foreclosure sale involving a bankruptcy. The facts are these.

A homeowner filed personal bankruptcy. Because the debtor owed substantially more on his personal residence than its value, the trustee released the property from the bankruptcy proceeding. This is a common practice when an asset has no equity available to satisfy creditors.

Subsequent to the release, the property was the subject of an underbid at the sheriff’s sale. Why the lender made an underbid under these circumstances is unknown. Because of the personal bankruptcy the lender had no ability to later collect on the shortfall.

Due to the acumen of a Coldwell Banker Weir Manuel professional, the homeowner quickly put the property on the market and sold it for substantially more than the underbid, retaining the difference.

This technique is normally used to create the best financial situation possible for the seller with the understanding that the lender may pursue the homeowner at some future point in time for the shortfall. In this case, however, the lender would not be able to do so due to the bankruptcy proceeding.

It is important to point out that the seller was advised to seek outside legal advice in this case as we are neither attorneys nor experts in bankruptcy. Understanding all options available to sellers is critical to creating a selling scenario that is in their best interest.

There is a toll-free hotline that will provide critical information about individual bankruptcy cases. By calling 877-422-3066 one can find out if a person has filed bankruptcy, the names of the attorneys involved, and the name of the judge. This information can be accessed by name or social security number, and is free of charge.

Posted in Short Sales and Foreclosures | 1 Comment »

SUCCESSFULLY RESPRESENTING REO BUYERS

Friday, February 26th, 2010

Sales associates working with buyers interested in a bank-owned property are well advised to leave some of their traditional thinking behind.

To avoid unmet expectations it is extremely important that the selling agent educates both himself and his clients about the realities of REO brokerage. REO listing brokerages are required to conform to each of their clients’ (banks or third party asset managers) needs and regulations. Each client’s requirements can vary from one extreme to another. And they can be far different from the traditional practices with which selling agents have become comfortable in their markets.

Traditional expectations about gathering information on a property, communicating, negotiating strategies and processing paperwork must be replaced with new thinking.

Some basic questions to which selling agents should seek answers before proceeding:
• How and when are offers presented?
• Can a counteroffer ever be expected or will the highest offer simply be accepted?
• Are offers sent to a special e-mail or fax address?
• What are the specific qualification requirements?
• Are there special forms that need to be included?
• Can communications take place by phone or must everything be done via e-mail?
• Will a single package e-mail submission over 4 MB be accepted?
• What are the office hours of the REO department or listing agent/team?
• If you are the successful selling agent, what time frames
and procedures are expected of the agent and client to return documents, checks, addenda and other documentation?

Understanding that selling bank owned properties is a vastly different process than many agents are used to can help avoid the frustrations involved in the REO process. Knowing these ins and outs is yet another unique skill required today to continue to provide outstanding customer experiences.

Posted in Short Sales and Foreclosures, buy a home, real estate, sell a home | 2 Comments »