Break In Before Offer Execution

When I was meeting my buyer last week, to pick up their Earnest Money for their accepted offer on an investment property, we found the home had been recently broken into.   A peek through the window showed standing water in the kitchen.  We were fortunate the police weren't far from the property and only had to wait a few minutes for the officers to accompany our walk through the home to ensure the 'thieves' were no longer present and assess the damage.
Copper was still in tact, surprisingly, though the appliances had clearly been moved.  Turns out the standing water was coming from the fridge being pulled from the wall and opening up the water line.  The dishwasher may have also been leaking, though it wouldn't be until someone tries to disconnect the line and pull it out to check it's status.  There was standing water in the basement, where it is only partially finished with some sheet rock and insulation formed a few rooms.
We returned to the property with a contractor yesterday to assess the damages.  Turns out the burglar(s) attempts at stealing the appliances will cost just over $4000 to bring the home back to the condition it was before the break in.  I was a bit surprised it would cost that much, but then went through the list of items needing correcting again:  Replacing screens that were cut, replacing one broken window, replacing torn and scraped vinyl flooring, pulling out molding sheet rock in the basement and remediation to the area to hinder future growth.
To my buyer, this was a cost they weren't expecting to take on when they went into multiple offers on the property and will in turn request a reduction of purchase price to cure the damage from the break in.   Whether you're an investor or an owner planning to occupy the home, this break in could mean the difference of canceling the offer completely or reducing the offer price to offset the additional repair costs.  Either way, both the buyer and the real estate agent have now spent extra time working on this transaction thanks to those in the business of destroying homes for a quick buck.

LOU Hearing: What Does It All Mean?

I had an investor purchase his first rental last month, where he bought a bank owned property.  Because he was paying cash for the home, it seemed as though it would be a fairly 'easy' process. Buyer chose to use the seller's title company, for ease of the situation and hopefully save some money on the closing fees. Within one week of closing, we found it wasn't going to be as easy of a process as we thought.

We had an initial delay due to a mortgage needing to be cleared on the title before moving on.  After that was complete, we were all set to close a few days later (or so we thought!).  On the day of closing, my buyer was notified that a hearing had been previously scheduled that transfers the property from an Abstract property to Torrens, had not been completed yet.  In order to proceed with the sale, the buyer needed to agree to let this hearing take place after the closing and await the final results of said hearing.   We were somewhat surprised to hear of this, as we were not notified this condition needed to take place prior to this moment.  The buyer was ok with signing off on the Letter of Undertaking, but felt angry that we didn't get notice this needed to be completed prior to the day of closing.

This Letter of Undertaking from the foreclosing attorney, in regards to these hearings, is very common amoungst purchases of bank owned properties. This hearing is one of very few that a buyer can close on a home purchase when it is scheduled after the closing.  With this Letter of Undertaking, we are assured the process will be completed as soon as possible taking into account the length of time it takes to finalize within the court system.  There is little to be concerned of from the buyer's perspective, when the letter from the attorney is issued, as this is part of the job of the foreclosure attorneys and must be completed thoroughly in order for their code of ethics to be followed.  After the hearing takes place and all items on title are cleared and adjusted to Torrens, the new owner will receive notification from the foreclosing attorney verifying the finalization of this process.  In the event the notice isn't received several months after a closing, a buyer can then contact the foreclosing attorney to get verification or an update on the scheduled status.

This process can be cumbersome to a buyer, if they do not get the follow up they are entitled to.  Unfortunately, this is just another aspect of our real estate market that is unavoidable considering the amount of bank owned homes that are being sold these days.

If you have any questions about this or any other real estate issues you may encounter, do not hesitate to give me a call or send me an email.  I look forward to helping ease your concerns and answering the tough questions buyers are afraid to ask.

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.