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. 

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.

Minimum Down Payment Change - Take ACTION Now!

Currently there is a rule being discussed by congress that will affect the amount a buyer is required to put down on a home purchase.  This down payment rule being discussed would require a lower loan to value of the buyer's home purchase to 80%, thus requiring one to put 20% down.  Today, a typical buyer using conventional financing would only need to bring 5% of the purchase price to closing. 
If this new rule gets put into law, this will not only affect a first time buyer but up all buyers financing home purchases.  Another example of a group of buyers soon to be effected would be that of the move up buyer.  This change could be crucial in today's market where home values have declined so much that the sellers that still have equity in their homes have become a small portion of the population.  These sellers who would normally turn into move up buyers after so long would need to wait much longer to move up than is typical due to the need to save more for the down payment. 
Since this change could affect our housing market considerably in a time where we are still trying get the numbers from slumping, I ask that you take a minute to contact your legislatures about your thoughts on the proposed change. 
Click here to start the process of fighting for home ownership and ensuring this 20% down rule does not get passed into law.  Thank you for your time today on this as we'll all see the benefits of keeping the down payments of home purchases to a minimum by ensuring the continued growth of the housing market. 

FHA Pre-foreclosure Options

I recently attended a breakfast meeting that brought in a Housing and Urban Development (HUD) counselor to discuss pre-foreclosure options for homeowners that are struggling to make their payments or have already missed a payment with an FHA loan.  I was aware of a few of their options but was surprised at how much HUD wants to keep homeowners in their homes with the other options available. 
The Federal Housing Administration (FHA) insured loans offers homeowners four options if you want to keep your home and two options if can't keep your home.  Both FHA and your lender will want to know the reason(s) you have or will be unable to make your mortgage payment and whether or not the situation is temporary.  Once you've had the discussion with your lender or HUD-approved housing counseling agency, you'll need to submit your financial information to the lender along with supplemental paperwork, depending on the type of request, to your lender for review. 

The options to stay in your home include a special forbearance, a mortgage modification, a partial claim or even a FHA-Home Affordable Modification Program option.  The partial claim option of FHA insured mortgages is what struck me as the most important and beneficial option for the financially distressed homeowners.  This partial claim is a 'one-time' loan from the insurance fund to bring your account current.  The loan is interest free and does not need to be repaid until you either pay off the first mortgage or sell your home.  The other three options are somewhat common of those offered by conventional lenders.

If your situation is permanent and you're unable to make any payments anymore, you can sell your home as a short sale or sign over the Deed in Lieu of foreclosure to your lender.   It's important to remember that any of the options mentioned above could have tax consequences involved once all is settled on your loan.  Your own situation of payment or not being able to repay will truly dictate which of the options are available to those that have an FHA insured mortgage.

As with any of the information I share, you are welcome to call or email additional questions as I'd be glad to share the knowledge so that you can choose the best path for your situation.

Mortgage delinquencies still in play

I just read an article on DSNews, the leading magazine that discusses the latest on the default servicing industry, that mortgage delinquency rates rose from the March. April's data shows that there are 6,388,000 mortgages that are at least 30 days late or in the foreclosure process. The article did not go into detail about the reasoning behind the increase in delinquent mortgages, but we can certainly speculate some reasons for this while looking around at our communities. 
While the unemployment rates seem to be on the slow track showing slight improvements in the job sector, there are many other indicators showing that our country is begining to dig it's way out of the rescession.  However, that does not mean that mortgage delinquencies immediately dissappear because there are small sign of improvement around the economy.  Take a look at your own community and neighborhood conversations to find what people are stresssed about.  People are still in distressed financial situations, still looking for jobs and trying to play catch up on their bills. 
Loan modifications are still playing a big roll for mortgagors and lenders alike.  I have taken some time out of my days to help a few clients with loan modifications as they've been given the run around by other non-profit and profit agencies alike.  These companies are dropping the ball somewhere, somehow on the mortgagors and their files sit at a stand still with the lenders because the follow up and persistence just isn't a priority while working the cases.  While helping these clients, I've discovered that most lenders require a homeowner to be behind on their payments by at least 30 days before they can even submit a modification request.  This is one contributor to the 6,388,000 delinquent home loans.
If you'd like to see more of the article, click here.  If you know of anyone that is in a distressed financial situation, please have them give me a call.  I've successfully negotiated loan modifications for Bank of America, GMAC and Wells Fargo, so if you know someone that is struggling to get this completed I can help in this areana as well.
Your friend in the business,
Liz Novotny
651-203-1769 or liz@liznovotny.com 

Who's negotiating my short sale?

I was speaking with a newer friend recently about his experience selling his home as a short sale.  I was not the listing agent on this situation as this friend had already signed on to another realtor about the time that we were getting to know each other.  I wanted to hear about his experience, first to ensure that the process went smoothly and secondly to see how this agent negotiated with the bank in the event there was something I could learn. 
I found out rather quickly this agent ended up taking money out of my friend's pocket.  His agent hired an attorney to negotiate the short sale in lieu of taking the time to do this themselves.  Agents do this so they can continue focusing their time on the rest of their business instead of getting bogged down to a phone and computer while working with the bank.  While this is becoming more common place in the distressed market, I've yet to see an attorney get an offer negotiated faster or smoother than when the agent negotiates themselves.   The price of hiring an attorney to negotiate a short sale could get expensive, depending on the attorney doing the negotiating.  The attorney will either charge a flat fee or a percentage of the commission on the sale.  Most agents will deduct this fee out of their own commission, as they feel this is their price to pay.  However, this was unfortunately not the case in my friend's situation.  
My friend ended up paying the attorney's fees out of their own pocket!  As part of the listing agreement, they had agreed to pay the attorney's fees themselves instead of the agent deducting this from their commission.The sellers were to receive a small amount of relocation assistance at the closing table because they had an FHA loan and FHA allows for $1000 to the seller at closing.  Most loans do not allow funds to go to the seller, due to the fact that the lender is writing off the remaining balance.  While the sellers didn't have to come up with the money out of their own pocket before closing, they did lose out on money that was rightfully theirs at the closing table. 
I share this story with you to illustrate that how they were taken advantage of.  In this housing market, there are many realtors out there that will do what they can to keep as much commission in their pocket as possible.  If that means charging a seller a fee that should have come from themselves, they apparently see nothing wrong with this situation.  People in distressed situations should never have to pay to sell their house, even as a short sale.  I ask you to please keep this in mind when you hear about folks discussing short sales with you in the future.  Remind them that a realtor with INTEGRITY will never charge a distressed seller uncustomary fees to sell their home.   
Feel free to call or write with questions or comments on this situation, I'm always happy to help. 

Have we closed yet?

A situation that's becoming more common at the closing table is when a buyer signs closing paperwork but does not take possession of the home immediately after wards.  This is almost always due to the seller not signing off on the settlement pages by the time the buyer has.  While this particular situation happens more than often happens with bank owned properties, it can also happen with short sale properties from time to time.

For a buyer purchasing a bank owned property, generally the seller is residing in the state the property is located.  Reasons behind the seller delay in signing the documents in time can vary from property and in turn their situations. The results of the delay can be caused by: a title company not providing documents to the seller in a timely fashion, an investor taking longer than usual to review and sign off an adjustments of the costs listed on the HUD as well as needing supplemental parties to agree to the figures.  Very often in these situations a bank deliver the signed settlement pages by the end of business on the scheduled closing date or even the day after, thus leaving the buyer(s) without possession no more than 24 hours. 

For those buyers purchasing a short sale property, possession issues can also happen despite there being a live seller who does in fact reside in the state.  The source of the delay can be that of a seller's lender(s) having not approved the final settlement pages prior to the scheduled closing date.  Per the terms of a short sale approval letter; the title company, real estate agent and/or seller must obtain final approval on the HUD statement prior to delivering possession and allowing the funds to disperse to the lender that has been shorted.  A delay in the final sign off on the settlement pages can be a result of many things.  One being that the loss mitigation departments are truly understaffed due to the many short sale requests happening today and in turn those managing the files are sincerely unable to get to all requests they've received in any given day.  Another being that of needing additional party approvals, such as the mortgage insurance company, investor approval of the HUD statement.  Involving additional parties to the process always ends up time delays.  

For any of the reasons listed above the delay of passing on of the keys to the home after signing the closing paperwork can and usually is frustrating.  It's difficult to spend the time moving through a lengthy process, such as a home purchase, to then be cut short where the contract has not been completed as agreed upon at the closing table.  The most frustrating piece of this situation is how little a buyer and their agent can do to remedy the situation.  Phone calls and follow up notes are typically the best tools accessible to a buyer or their agent to ensure the final step has been completed.

To know if there are other efforts that can be effective in transferring possession of the property, please send me a note or give me call to discuss your situation.  Your friend in the business, Liz

Winterizations - Inconvenience or Necessary Evil?

Because our lovely state is at or below freezing temperatures for such a large portion of the year, banks and sellers with vacant homes will hire a plumber to winterize the property in an effort to preserve the plumbing during the cold temperatures.  Winterizing a property will include, but is not limited to; turning the main water valve off inside the home, blowing out all water pipes to clear them of any remaining water, pouring anti-freeze (or comparable solution) down all drains and toilets, disconnecting the water meter, draining the water heater, draining the boiler and last but not least, blowing out the sprinkler system lines when there is one in place.  Buyers will encounter more and more properties in this condition now through mid-Spring even.  

This can easily pose a delay in the inspection and/or appraisal process for both the buyer and seller.  The effects of the winterization almost always outweigh the hassle of getting the home prepped for these steps.  One of the best ways to keep the process moving smoothly through the specified time frames is to ensure the winterization/de-winterization is discussed in the purchase contract.  Be sure to let the listing agent know as soon as possible what day and time you'd like to inspect the home, giving at least two days notice or longer when possible.  Often times the seller and/or bank will hire a separate company take care of all preservation work and orders like this must be called in to the preservation company before a vendor can perform the work.  If there is a sprinkler system on the property, do check to ensure that part of the home was winterized at the same time as the rest of the plumbing.  If it was winterized properly, check with your inspector and appraiser on whether it's necessary to de-winterize the system in order for them to do their jobs properly.  

Once both the inspection and appraisal have been completed, the seller will more than likely require that the home be re-winterized after wards.  Again, this may seem like another 'hassle' to deal with once you've closed and are ready to move in or begin repairs.  However, the flip side to not having the property winterized after inspection can very easily lead to plumbing damages in the future and in turn make the home more costly to the buyer and seller in the long run. 

Let me know if you have questions on winterized homes and how best to proceed, feel free to drop me a line or give me a call.

Ready, Set, Close! Part 2

Many emotions surround closing day.  To ensure some of the anxious and stressful feelings are kept to a minimum, here are some things a seller will have on their list to ensure the last few weeks before the big day go over smoothly. 

Packing and cleaning the home are obvious items on a sellers checklist.  They will also need to close out the utilities with each of the city and area service providers as well as telephone, cable and internet.  A change of address form will need to be submitted to the post office.  It's best to turn it in about a week before closing so there's no delay in receiving your mail at your new address. 

The title company hired to complete the transaction will set up the payoff of a seller's mortgage(s).  The title company will also close out the escrow account where the insurance and property taxes may have been set aside each month.  Recording the paperwork signed is one of the most important jobs the title closer has.  If you sell your home as a short sale, make sure to read over the approval letter(s) ahead of time with your lawyer to ensure accuracy.  Checking in with these processes is a good way for a seller to help ease their mind on the progress of closing.    

Closing day will include a moment to hand keys over to the buyer and a good time to inform them of any special features of the property.  Bring your license and any questions you might have before the closing is finalized.  Leave any/all paperwork and pamphlets for the appliances, mechanicals, etc. at the property so the buyer can read through at their leisure.  This will shrink the list of things needed to bring to closing significantly.  Keep copies of your closing documents in a safe, dry place in the event they're needed for future reference. 

If you have any questions on closing or other real estate topics, please give me a call or send me an email.

Ready, set, Close!

Closing day can be an exciting, yet anxious day for both buyers and sellers.  Besides all the packing and moving, there are many things that need to be handled in order for the process to go smoothly at the closing table.  

Let's start by taking a look at what a buyer needs to do in order to be prepared to close the transaction properly. 

How you as a buyer will pay for the home at closing plays a big role in what is needed for completing this transaction.  For example, if you pay for the home by securing a mortgage lien on the property you will have some lender paperwork to sign at closing as well as provide financial paperwork ahead of time to a loan officer representing the lender.  This pre-paperwork includes, but is not limited to, pay stubs, bank statements, previous years taxes and even letters explaining certain situations of your financial history.  The lender more than likely requires that little to none of your financial history can change in between the time that they approve the financing and when you sign the closing documents.  This would mean waiting to order new furniture, buying a new car, etc. until after the closing has occurred.  If you are paying for the home with cash, then you will need to bring the cash in the form of certified funds to the title closer.  

Say you are moving from an apartment to the house, then you will need to finalize all utilities that are being serviced to that apartment for the day that you plan to move out.  You will have to give your landlord notice of vacating per the terms of your lease.  A buyer will also need to start utility service in your name as of the date of closing.  If you've sold or are selling your previous home you will also need to finalize the utilities servicing that property according to the city and utility company requirements (i.e. final water, gas or electric meter readings).

For the closing, a buyer will need to bring a valid form of government identification (driver's license, passport, etc.), a cashier's check for the amount of money that will be out of your pocket as part of the loan requirements, 10 years of address history, an insurance binder for the required hazard insurance determined by your lender, proof of sale on your previous residence (if selling that home and moving to the new home) and of course any other paperwork your lender would require to see at closing.  

Walking through a list will help you remember to do all that is necessary to close out one residence and open up another.  Most buyers tend to give themselves some time in between moving from one living situation to the new home so that they can paint, clean or replace carpet or other flooring, do repairs or clean the home.  The amount of time you should allow yourself to complete the things you want to do before moving in will depend on the amount of work you want to put  into the property ahead of time.  In my experience, buyers tend to be less stressed if they don't plan closing one day and moving that day or even the next day.  You will feel less anxious and stressed when you all for transition time.  If you have any questions about what is needed to close from a buyer's perspective, do not hesitate to contact me. 

Properties with Mold - To buy or not to buy?

I recently showed a property that had water damage in the basement with evidence of mold beginnings. I've noticed that most buyers tend to shy away from these properties; however the clients that I accompanied were open to the idea of purchasing this home despite this typically negative feature. These particular clients were not as leery as a 'typical buyer' out shopping for homes when it comes to mold. This visit with said clients has compelled me to write a little 'tid bit' on mold in an effort to help people understand how much work could or could not be needed to remediate.

The State of Minnesota's Seller's Disclosure form dedicates an entire page to discussing evidence of mold spores and water presence throughout the home. While the visible mold is certainly cause for concern, most of the time it can be treated and with minimal disruption to the area infected. Remediation to the infected areas can usually mean cutting out the affected sheetrock in order to get into the walls and correcting what could be the cause of this moisture intrusion at such a rapid pace. Mold is inevitable in every home, most of the time you may not be able to see it!  Finding the cause of the moisture issue is what ends up taking the most time and effort to assess. It's entirely possible that you may not even correct the issue the first time you 'repair' the affected area.  Mold very often originates in basements and most of the time it is caused by the landscaping (or lack thereof) surrounding the exterior of the home. Other causes can be poor construction of the homes walls, leaking windows or a lack of airflow through a bathroom that does not have a fan to keep the moisture from condensing on the walls.


There are indeed homes that are so greatly affected by mold where it is best to redo the entire walls, rooms and even demolishing the home completely. When mold is left untreated for any length of time, it continues to grow and fester throughout the level that it originated in and once there's no more room to grow it quickly moves up/down the different levels of a home. This is why it's always best to get to the bottom of the mold origination sooner rather than later. Mold is one repair that a homeowner cannot procrastinate on fixing.


So, before you make any harsh judgments on a home that has mold, bring a mold remediation contractor out to look at the affected areas and give you a professional bid on what it would take to remove and correct the cause for the moisture leakage.


Please contact me for a referral of a mold contractor if you're having trouble with your current home or are interested in purchasing a home that has evidence of moisture issues.

Realtors - Which ones know what they're talking about?

I was recently at a networking event where a veteran realtor gave a short, ten minute talk on the market to come and included some tips on selling a property in our current market. This particular realtor stated she had 25+ years of experience before jumping into her speech. I will gladly admit the realtor had some great tips for sellers and was surprisingly blunt when talking about seller’s expectations and the difficulties they are having with adjusting their frame of mind on the value of their home.

On the flip side, I was rather disappointed that this realtor was so eager to report that 2011 would be the start of the market's turning point for the better. It is very difficult for economists to predict the economy ahead and am surprised this agent was so quick to claim 2011 would be the year the housing market will begin turning for the better. I find myself curious as to what sources this realtor researched to come to this conclusion and most importantly, which of the top 5 REO Realtors did she interview? (An REO Realtor is one who markets and sells bank owned properties.) Citing your sources or quoting specific professionals for a 10 minute speech is not truly necessary for such an event. However, I found myself asking many questions while she was speaking. I instantly wondered if the majority of buyers or sellers have the background knowledge to tell that this agent’s statements were in fact accurate or if she was just misinformed? Was she merely projecting her personal optimism that most of us keep secret in our minds? How would the ‘average Joe’ know if her interpretation of the market was skewed due to her lack of research?

 As an agent that works side by side with an REO Realtor, I've learned so much more than I would have had I started real estate solo in the 'traditional' real estate office. Not only have I learned firsthand how to approach a bank with an offer, but I’ve also seen what happens ‘behind the scenes’ in order to get a home ready for marketing. During my time spent working with this REO agent, I've seen the rise and fall of property assignments over the years sync up with the federally required foreclosure moratoriums and initiatives set up to try and keep homeowners in their homes.

Working closely with an REO Realtor has also given me insight on what is to come to our particular market, as well as around the US, and the potential issues that could and most likely will harm the real estate upswing. I've personally seen their inventories begin to rise in the last few months and find myself questioning this 'veteran' realtor's statement that 2011 is the year the market will begin it's slow, yet steady upswing.

I bring this to your attention for one reason and one reason only. In this day and age where information is readily available at your fingertips at any time of the day, it's imperative that you cross reference the information you've learned with multiple sources before making speeches or significant statements like this to any sized group of people. We all must do our own due diligent research on the information we read, see or hear before repeating it others at the time that we’re claiming our expertise in a particular subject area.

If you have any questions about this particular topic or any others I've not discussed, feel free to give me a call or send me a note!

HAMP Trial Program Disappoints

A recent article in DS News reports that the government’s HAMP foreclosure prevention initiative stated that 616,839 HAMP trials were cancelled out of the 1,307,489 trials that were started when the program began.

This is definitely disappointing news considering the big push over the last year to keep homeowners in their homes in lieu of the foreclosure process. The article goes on to discuss some of the reasons for the cancellation of the trial programs and the different numbers in each group of reasons. The article can take you to the report that goes into great depth on the details of the program and what it has accomplished thus far. Some of the main reasons for falling out of a HAMP trial modification program can include insufficient documentation, trial plan payment default and borrowers who are ineligible as their income to debt ratio is well above the 31% guideline.


While there is no doubt that this is disappointing news, however the flip side of this is that short sales are becoming easier to process with the lenders. They are taking less time to review the offers, less time to obtain investor approval of the offers and in turn less time to approve the short sale offers.

Do not forget about my Foreclosure Prevention Seminar being held on August 31, 2010 at the Maplewood Community Center at 7:00pm. This is a great opportunity for one to come and learn about the different options available to homeowners that are currently struggling with their payments and want to plan ahead.