how to not get burned buying short sales

Educating and Empowering Homeowners to make more Informed Decisions

Time and Money Saving Facts about Buying Short Sales

Thank you for attending

We will begin in a moment

Presented by

Scott SchangHomeownership Educator

Broadview Mortgage Corporation1-866-667-6724


Making You Short Sale Savvy

The Purpose and Goals of this Class

• Purpose: Empower you to make Informed Decisions

• Goal: Update you on changes and new things we’ve learned about buying Short Sales

• Goal: Mange your Expectations and reduce stress

• Goal: Leave you more informed about the landscape of today’s real estate market


Making You Short Sale Savvy

Topics We Will Cover In This Class

• Just the Facts – Understanding Short Sales

• Why Short Sales Suck

• How Lender Greed Can Kill Your Offer

• More Short Sales Soon from HAFA Loan Mod

Fallout

• What is Shadow Inventory – What it means to you

• Why Home Prices May Be Dropping Again Soon

• Short Sale Opportunities and Tricks for Making More

Competitive Offers

• Wrap up and Take Aways


Let no Question go Unanswered

Questions and Answers

• You may type questions in at any time during the presentation – Questions Box on your screen

• Home Buying experts are available to answer questions throughout presentation

• This is an interactive learning environment. You will get the most value by having your specific questions answered

• The only dumb question is the one you don’t ask

Write number down now in case you get disconnected

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Understanding Short Sales

The Basics about Short Sales

• Current home owner is the Seller

• Seller is usually behind on payments or experiencing a financial hardship

• Seller owes more than home is worth

• Seller attempts to sell home to avoid foreclosure

• Foreclosure process can be suspended or postponed if an offer has been submitted

• Seller is not always motivated to sell

• Motivation may be loan modification or to stay in home as long as possible without payments


Why Short Sales Suck

I’m Just Sayin’

• Acceptance from the “owner” is not an accepted Short Sale – Lender has to approve

• Lenders can take 3 to 6 months to approve sale

• The Price Listed is not necessarily the actual price

• Short Sales do not mean Cheap Sales – An appraisal or BPO determines sales price

• Second Lien Holders are looking for a Pay Day


Lender Greed Can Kill Your Offer

Door Open to Sue Seller After Short Sale

• Short selling lenders are “accepting” offers with an agreement that allows later litigation– Lenders are using boiler plate acceptance letters– Letters leave the door open for them or others to

pursue later action to collect on forgiven amount– Mortgage Debt Relief Act of 2007 only offer post

foreclosure rights – not pre-foreclosure– Attorneys are speaking out and advising home

owners of their rights

• Sellers are choosing to allow foreclosure to avoid later problems with lenders

• Sellers are accepting loan modifications


Lender Greed Can Kill Your Offer

Second Lien Holders Muscle You for Cash

• No Equity Position for Subordinate Lien Holders

• Sign off by Subordinate Lien Holders Required

• First Lien Holder usually offers Compensation

• Second Lien Holders are holding your offer hostage

• Short Sale Negotiators caught on Tape Illegally Working over Agent for More Cash

• Pay Me or I’m Taking my Toys and Going Home

• “Bribe” Cannot be Paid through Escrow


Gov - HAFA Big Short Sale Push

Loan Modification Program Failed Miserably

• Over 3 Million requests for HAMP relief

• Over 1 Million “trial modifications” offered

• Over 750,000 active “trial modifications”

• One Year Later – 170,000 Permanent Modifications

• HomeAffordable Foreclosure Alternative Program

• 43 Page Document outlines streamlined Short Sale incentives to Lenders and Home Sellers

• Effective April 5, 2010 – Sunsets December 2012


The Great Unknown – The X Factor

What is Shadow Inventory?

• Banks are not foreclosing on delinquent homeowners without explanation

• Pre-foreclosures and delinquencies are at record highs – Bloomberg, WSJ predicting 7 Million foreclosures projected over next couple of years nationwide

• S&P Analysts Predicts Shadow Inventory will take nearly 3 Years to Clear

• Pre-foreclosures will result in loan modifications, short sale or foreclosure

• Loan modifications are a ticking time bomb


Pre-Foreclosures at Record Highs

Is this the Shadow Inventory?


Government Manipulation Ends

Why Home Prices May Be Dropping Soon

• Treasury not Buying MBS – Rates Increasing?

• Federal Tax Credit Expires – No Extension Expected

• HAFA May Increase Inventory

• Shadow Inventory Question

• Will the Government try to manipulate the housing market again or allow it to take it’s course?


When Short Sales Make Most Sense

Identifying Short Sale Opportunities

• Home is vacant or boxes are packed– Seller is not attempting to stay in the home

• Selling agent is experienced with short sales– Some agents that have very effective processes

for getting short sales processed and accepted– Your agent can determine experience of selling

agent

• Approved short sales can Close Fast– Previous buyer bailed before offer accepted– Faster closing times are advantage– BMC 21 Day Close of Escrow


Smart Buyer Competitive Advantage

Gaining an edge on Value

• Successful purchase offer strategy addresses Value– Many offers are being made above “Value” to gain

competitive advantage– Acknowledge to seller that value may be a

challenge– Offer to pay above and beyond appraised value

• Your lender will not lend more than the home is “worth” – aka appraised value– Lender will allow you pay the difference out of

pocket– Allowed with CalSTRS 80/17– Allowed with all loan programs


Understand Timelines to Close

Expectations for closing

• Short Sales require approval and final “sign off”– Fannie Mae, Banks, Asset mgrs & Lenders are

bureaucracies – Expect RED TAPE and delays

– DO NOT move out of your place until you have your keys in hand!• Many landlords are ok with being flexible. Give

notice and pay rent on time until you have your keys

– DO NOT hire moving companies or deliveries to new home until after you have your keys.

• Anything that can go wrong…shouldn’t – But it might

Don’t take any chances!


Education is Empowerment

Real Estate Market Landscape

• In a Seller’s Market – Supply and Demand – Affordable Prices bring

Many Buyers – Pending Shadow Inventory– This Drives up Prices through multiple offer

scenarios making larger down payments and “no concessions” more attractive

• In a Buyer’s Market– Buyer Demand may Drop after Tax Credit Expires– Home Prices may Drop to Attract Buyers– If Rates Go Up (Expected) Demand may Suffer

The timing is right if it’s the right time for you


Make More Informed Decisions

Wrap Up and Take Aways

• We are a direct Lender that specializes in CalSTRS, CalPERS, CalHFA, FHA, VA, USDA and Community based down payment assistance programs

• We want the opportunity to be your lender if you have not already chosen one

• We are more than happy to be your “second opinion” if you are already working with someone

• We can recommend a qualified Real Estate Agent in your area that shares our values and expertise

• We are committed to Educating and Empowering homeowners - Please join us for other classes


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