Persistence Pays Off

I want to share a celebration in my success with you all.  The success of closing one of my short sales is credited mainly by my persistence and unwillingness to take NO for an answer.  
I had an offer negotiated with a seller's lender, awaiting a buyer to return from over seas to close.  We needed to close a few days before the end of the redemption period so that all paperwork could be filed and sent to the proper authorities in time. Unfortunately, this buyer backed out of the deal as he wasn't sure if he'd be home in our tight timelines to close and thus cancelled two weeks before closing.  During my typical attempts to obtain another buyer, in such a short period of time, I was able to find an agent that had a few buyers watching the property and able to purchase quickly.  All the pertinent pages were sent to my negotiator with Wells Fargo, with what seemed like plenty of time to get a supplemental approval letter as the new buyer was purchasing the property for the same amount as the old buyer.  My negotiator didn't respond for four days, only to tell me then that there wasn't enough time to get a new approval letter from the investor.  
In this line of the real estate business, it pays to be persistent.  I didn't take 'no time left' for an answer from my assigned negotiator and proceeded to call as many people as I could to explain the situation at hand.  I am lucky enough to know a branch manager with Wells Fargo that conveniently had a contact in the 'higher ups' departments of the company.  We spoke briefly about the what was needed to close so that the home didn't go back to Wells Fargo in the end.  After she took the reins on the situation, I was sent a new approval letter to close the very next morning!
I am still very proud that I was able to get the property closed, just in time for the sellers and will continue to ride this great feeling of success well into 2012.  Positive thinking and persistence will always get what you want in life and your business, so long as you believe in yourself.  If you know of anyone struggling to get an offer negotiated or is apprehensive at successfully selling their home, pass along my name and number as the chances of my being able to do what others can not is very great!

Requesting Repairs of a Short Sale Seller

I had an offer presented to one of my sellers, who's selling their home as a short sale, requesting the seller to do a lengthy list of repairs.  Most buyers do not request repairs of a short sale seller and rarely do they request repairs of a bank until after the appraisal.  I wanted to discuss the situation briefly, to help buyers out there understand how to approach repairs when it comes to short sale properties.


Because my seller's financial situation is where it's at, along with most short sale sellers, my seller does not have the means to correct or perform most of the repairs requested by the buyers.  Some of the repairs requested were to fill in holes and replace doors that had holes, due to damages over the last few years of occupying the home.  The rest of the repairs were items the buyer wanted to help update the home, i.e. new carpet and painting. 

In this situation, my seller countered the buyer's offer on most of the repairs requested and rejected performing many of the items.  We were fortunate to have a second offer presented at almost the same time and ended up rejecting the buyer's offer who requested the repairs and moved on with the second offer presented.  Yes, it's true that there are situations where a seller is trying to get away with strategic default.  


However, the percentage of those sellers coming on the market is much smaller than one would expect.  I choose only to work with sellers that are in stressful financial situations and want to sell their home as a short sale because it will help their credit in the long run.  Their reason for selling is based almost solely on the fact that they can not afford to pay their mortgage, therefore the sellers do not have the funds to update their property or increase curb appeal with fresh carpet and paint.  A buyer's agent should be coaching their buyers on making offers on short sale properties and what to ask for repairs.  Common sense isn't always a part of the equation, when it comes to real estate.  Especially in today's market, considering the realtors who are still working have either been around long enough to know better or have experienced at least one sale that was difficult to maneuver through. 


As a buyer, when it comes to requesting repairs on a home, be conscientious about the type of seller and look around at the home to see if you can figure out the background story of the home.  Using a little common sense about the situation will help you determine if it's worth taking the time to write out your requested repairs when you'll more than likely be rejected.  Then you'll need to decide if this is the home you want to write an offer on in the first place. 

Offer, Counter, Wait?

I've got an offer submitted to Wells Fargo on one of my short sale listings.  The buyer's offer was countered by Wells fairly quickly, with reasoning that the private mortgage insurance company had a net they must meet.  The buyer decided to try and counter with Wells, a few times even, to no avail.  When the buyer finally came up to the net desired by the private mortgage insurance company, almost two weeks had passed.  

See this buyer is an investor, who wanted to try their hand at negotiating a lower offer in a short sale situation.  This negotiating back and forth is very common when offering on a bank owned property, but short sales operate rather different in these situations.  A lender countering on a short sale will almost always give it's bare minimum if the buyer's offer doesn't meet their net.  This is usually because there's already a fair amount of time spent waiting on the decision of the offer in the first place and the short sale lender isn't set up to go back and forth on pricing.  Another reason is that the lender reviewing a short sale offer doesn't give much of a 'discount' on pricing. They have a minimum they must meet in this stage of foreclosure and give that minimum in the form of a counter to the buyer.  Banks are much more forgiving in their 'discounted' price, especially if the home has been on the market for a lengthy time or you're a cash buyer that can close in two weeks.  This is one of the reasons that investors don't typically purchase short sales, as they've had experience trying to negotiate a lower purchase price in exchange for a cash offer with a quick close. 

Now we are waiting, waiting on the lender to generate the approval letter on the accepted counter.  This process likely would have taken less time had the buyer accepted the lender's counter in the first place.  The lender had to re-open the file so the offer could be submitted to the investor and now that we're in the redemption period, there has to be a manual review of the package before the letter can be issued. We've been waiting almost two weeks now, when we may have only had to wait a few days had the buyer moved forward when the counter was first received. 

If you have questions about offering on a short sale or negotiating a purchase price with those lenders, feel free to give me a call or send me an email as I'd be happy to help shed some light on these situations!

Ready, Set, Show!

I showed a home the other day that was in by far the worst condition of an occupied home than any other home I've shown yet.  Yes, I've seen some pretty rough and dirty homes walking through the bank owned properties.  However, I've always been prepared for those showings due to inevitable condition some of the properties are in. 

 

Because of our current market, it's my opinion that some sellers feel they don't necessarily need to clean or de-clutter their home as often as they would have 5 years ago as they're clearly in competition of the bank owned homes.  A larger portion of the bank owned homes than you expect have been damaged by the former owners or tenants, but most banks will not list a home until it has been properly cleaned out.  Damage is easy to look past and when trying to identify the amount of work needed to bring a home up to move in condition.  But when you're looking at an occupied home, that's full of clutter and obviously hasn't been cleaned in weeks it is very tough for a buyer to look beyond the immediate picture to see if the home has good 'bones' to work with.

 

While it may not be necessary to deep clean ahead of every showing, picking up debris and trash along with pulling out the vacuum or broom can really go a long way.  Removing clutter or boxing the nick knacks and storing in the basement until the home sells will greatly improve your chances of selling quicker.  Being able to see a home's potential is so much easier when there is little in the way of each room and hallway you walk down. 

Buyers are certainly prepared to see some awful things when walking through a bank owned, vacant, home.  It's the occupied properties they always find surprising and are immediately turned off once they walk in the door and see what's ahead of them.

Extending the Redemption Period?

I recently had some clients that were nearing the end of their redemption period.  They had received an offer at the last minute and wanted to ask their lender to extend the redemption period. We were prepared for the unlikelihood that this could happen, but still submitted the offer on the off chance their bank would do something to make it work out for the sellers. 


Unfortunately, my sellers were unable to get their redemption period extended.  After speaking with the foreclosure attorney, I found that the lender could do nothing to extend the redemption period in order for this to work for the sellers.  However, if the sellers wanted to extend there is another trick that may have worked.  The trick would be that of the sellers filling bankruptcy.  If the sellers were to file bankruptcy, the redemption period could be extended another 60 days from the date they filled.  My sellers had no intentions of filling bankruptcy at the time and therefore this 'trick' wasn't truly an option. 


I just wanted to share this scenario, in the event you or someone you know might be in a situation where an offer comes late in the redemption period.  If you have questions on redemption periods, click here or feel free to give me a call or send an email. 

New rules for FHA Loss Mitigation Options

Recently, FHA announced some changes to their Loss Mitigation procedures when mortgagors participate in loan modifications and partial claims.  These new rules will take effect October 1st and require a servicer to comply with their new guidelines.

The most important detail of this change revolves around the trial payments.  FHA is going to require borrowers to participate in a trial payment plan, lasting at least 3 months, before they will modify the loan permanently.  This is typical of most modifications being offered to buyers, but setting guidelines for the servicers means the borrowers will know what to expect ahead of agreeing to the trial modification and in turn the permanent modification.  The permanent modification rate must be determined when a servicer approves the trial modification payments for the homeowners.

Another rule helpful for homeowners is that the servicers for FHA can not charge more on the final modification payment than that of the trial period payment.  The trial period is set to ensure a borrower is successful in making consistent, timely payments at a reduced rate.  Regulating the trial payment will help homeowners that can make their mortgage payments timely, in that there won't be a big surprise on what the permanent payment will be once the trial period is over.  Often, the modifications offered to mortgagors today end up having two different payments for a homeowner.  The homeowners rarely are given the amount of the permanent modification payment until the trial period is over.  For FHA's partial claim process, the trial modification payment must be the same as the future monthly payment.  To referesh your memory on FHA's partial claim process, see my previous blog on June 20th of this year.  

With FHA's new guidelines on their modifications, a homeowner knows upfront what the payments will look like and can decide with better knowledge on whether the modification will help them keep their home because they will be able to successfully make their payments on time.  Click here to learn more details about FHA's guidelines that will take effect October 1 and let me know if you have additional questions on this topic or any other real estate concern you might have.  

Buyers Backing out of Condo/Townhome Purchases

I recently had a buyer of my condo listing in St Louis Park cancel their offer on the property. My seller and I were both rather disappointed and left feeling glum about the news, however, I felt this would be a good opportunity to discuss the different times a buyer can back out of purchase agreement and still retain their earnest money.

There are several contingencies a buyer can add to their purchase agreement offer on a property and when those issues fall apart, they can cancel their offer with no penalty to a buyer. These contingencies include the ability to obtain financing, an inspection of the property, the sale of another property and even that of reviewing the Home Owner Association documents. Most of the contingencies are fairly self explanatory in that a buyer can cancel their purchase agreement with minimal details in regards to the reason and a seller will be appeased enough to hand the earnest money back to the buyer. For example, when a buyer's offer to purchase is contingent on the ability to finance the purchase and finds out along the road of closing that said buyer can no longer obtain financing; the seller isn't left speculating the exact reasons why. The buyer provides their loan denial letter to the seller, all sign off on the cancellation and the seller moves on to find another buyer. During inspection contingencies, a buyer can back out of the purchase agreement after their inspection has been completed, so long as it's within the timelines stated on their contingency form.  If subject to the sale of another property and the deal falls through, submitting applicable paperwork to the listing agent could be sufficient enough for a seller to release the earnest money funds.  

When a buyer cancels during the Home Owner Association document reviewing period, this can easily lead to speculation on the true reasons for the buyer to cancel. Buyers know there's an association on a property when they look at it, as they've already discussed each particular association for each complex prior to or at the showing of the home with their agent. They also have some knowledge on what the association charges per month and whether or not pets are allowed. Most buyers want to know this info before making an offer so they don't jump into a home if they don't these paticluar details on the home and complex. Every once in a while, a seller has a copy of the Rules & Regulations along with other pertinent info about the association to pass along to a buyer to review before making an offer.  If the association's financing is not in order or up to a buyer's lenders standards, a buyer can cancel their offer using this 10 day right of rescission period.  They can also cancel if they don't like the associations rules for renting out a unit/townhome. 

What seems to get the sellers concerned or left confused is when a buyer is well aware of an associations practices, rules and regulations and uses this contingency as an excuse for other reasons the buyer does not wish to disclose (often personal). As there's little a seller can do to change a buyer's mind, we are left with the feeling that it just wasn't the right buyer for the home. That can be tough to accept and move on, for any person during these tough economic times.

If you have questions about buyer cancellations, do not hesitate to give me a call at 651-203-1769 or write me a note at liz@liznovotny.com.