If you're reading this post on http://www.LoudounForeclosures.com rather than your feed reader or via email update, you may be saying something like, "WTH happened to the site?" and/or "Why does it look like such crap?!"
Here's what happened… During the process of moving my other blog, Loudoun Scene, from Typepad to Wodpress.org, something in the back end of Loudoun Foreclosures was changed. The result is this ugly looking thing you're looking at right now. I didn't see this happening nor do I have any idea why it happened.
Not to worry! I'm in the process of moving Loudoun Foreclosures to Wordpress.org as well and the issue will be resolved within the next few days. Once the move is completed, I'll publish a post here alerting you of the move so that you can go check out the new (and hopefully improved) version of Loudoun Foreclosures.
Thanks for your patience.
Yes, there is actually good news when it comes to short-sales - more and more short-sales are being approved!
I've had 4 out of my last 6 offers on short-sale listings get approved. Is a 66% approval rate on short-sales a fluke? Perhaps. But it still is what it is and my clients and I will take it!
In speaking with other agents, they're also seeing short-sales going through at a higher percentage than before. Considering that the national average for short-sales being approved is said to be around 20%, anything more than 20% is great.
What's leading to more short-sales being approved? Here are some of the reasons…
- Banks are finally realizing that accepting a short-sale is a way to avoid the inevitable (foreclosure)
- Not having real estate inventory (foreclosures) on their books allows banks to lend and make more money
- Short-sales are typically less expensive than foreclosures because they don't have to go through the foreclosure proceedings, incur carrying costs, etc
- Short-sale properties typically have people still living in them which means that they will generally be in better condition than if they sat vacant as a foreclosure for 3, 6, 12+ months. This means that the bank will get more money for the property if sold as a short-sale than as a foreclosure
- Public sentiment is helping push banks to "work with borrowers" as much as they can to avoid foreclosure, part of which includes negotiating and accepting short-sales
- More sellers, real estate agents and title companies are using short-sale negotiators to help negotiate the short-sale. Many of these negotiators once worked as bank loss mitigation officers (the folks who work for the bank who approve/reject short-sales) themselves so they know exactly how the process works
Note: Though the chances of a short-sale being approved have increased, it doesn't mean that yours will or that they're any easier to maneuver through. Whether you're a seller trying to negotiate a short-sale or a buyer trying to buy a short-sale, you still have to know what you're getting yourself into and what you're doing (as does your agent).
If your offer on a bank-owned or short-sale property is "accepted", you will receive the bank's addendum to sign. Many buyers (and their agents) just skim through it, sign on the dotted line and send it back to the listing agent. But they don't truly understand what the addendum says nor how it could affect them.
Some say, "It's just an addendum. The original sales contract has been accepted and those terms are what count."
The bank's addendum always has language in it that says something similar to, "This addendum supersedes the terms of the contract of sale and all other addendum." or "In the event any provision of this addendum conflicts in whole or in part with the terms of the contract of sale, the provisions of this addendum shall control."
In layman's terms…the bank's addendum trumps any and all terms of your original offer which you thought the bank "accepted" and "agreed to".
Some of the most commons things in the sales contract that are trumped by the bank's addendum are
- contingency time frames
- inspections (or lack thereof)
- termite inspection/remediation
- closing cost assistance/concessions
- transfer taxes/tax stamps
- HOA assessments
- real estate broker commissions
All of these could potentially have a big financial and legal impact on a buyer. Every buyer should fully understand what the terms of the bank's addendum really say and mean.
Let's look at an example…
Let's say you put "10 days" for the financing contingency, but the bank addendum says "buyer's time frame for financing contingency is 5 days". You don't notice and your agent doesn't notice. You, your agent and, more importantly, your lender doesn't notice. Your lender thinks he has 10 days to get final approval on your loan and is working on your loan accordingly.
On day 7, your lender comes back and says, "Sorry, the underwriter found some things they weren't happy with and wouldn't approve you for a loan." You immediately call your buyer's agent and say, "I couldn't get final approval so get me out of the contract using the financing contingency."
Your agent calls the listing agent to get you out of the contract only to find out that you are S.O.L. because the financing contingency is only 5 days per the bank addendum (which you signed 7 days ago). You've gone from getting out of the contract to forfeiting your earnest money deposit.
(This actually happened to a buyer who had a ratified contract on one of my friend's/fellow Realtor's listings)
Btw…If you're wondering whether you can change or counter and of the terms of the bank addendum, the answer is "no". If you want to buy the property, you have to agree to the terms as they are.
If you don't like the terms, feel free to back-out and look for another property. But all bank-owned and short-sale properties have bank addendums that all pretty much say the same thing using different fancy words.
So next time you go to buy a bank-owned or short-sale property, make sure you have a buyer's agent that knows what they're doing and that you read the bank addendum carefully and in its entirety. If you don't, you could get burned badly.
Yesterday, I spoke with with someone who works at a company that specializes in negotiating short-sales - they told me that the time it takes to negotiate a short-sale has increased dramatically over the past 60 days.
The company she works for has about 100 full-time negotiators on staff. All of them have seen their case files go from 30 or 40 to over 100. This is in part to the rise in short-sales, but it's also due to the banks taking longer to process the short-sales on their end. This holds up the entire process and is a vicious cycle. (It's like trying to get your inbox to zero, but receiving new emails faster than you can hit "delete")
In addition, and more importantly, the loss mitigation officers at the banks are getting overwhelmed. In an effort to keep up with the rise in short-sales, many banks, such as Countrywide, are re-hiring people that they previously laid off from other divisions and putting them in loss mitigation (to negotiate short-sales). Not only are these hires new to loss mitigation, they're getting thrown into the job without any real training. That's not a good combination.
The person I spoke with also said they've been seeing this trend - increased short-sales and not enough (good) help - really picking up over the past two months They also said that it's getting worse by the day.
One could argue that this is an isolated incident - it's only this one person, this one company and only Countrywide. But I've seen short-sales taking longer as well and other agents who work with short-sales are seeing it too.
For example, an offer I submitted on behalf of my buyer was accepted by the seller (borrower) mid-February. A negotiator wasn't assigned to the case until just yesterday and the bank told the negotiator to "take a number" and that they "would get to it when they got to it". That translates to "it'll take longer than it usually does". Most likely, that means that it will take well over the 90 day average.
Yes, short-sales can be great deals and, with real estate inventory way down, they may be some of your only choices. Just remember that you must have lots of time on your hands and plenty of patience when dealing with short-sales - especially as of late.
If you're facing foreclosure or trying to negotiate a short-sale, this video clip is a "must-see".
(If you don't see the video below, click here)
Many home buyers start seriously looking for a new home about three to six months before their preferred move date. Some give it even less time. But is two, three, even six months enough time? And does it affect what type of property you can try to buy?
Six, three, even two months may give you enough time to search for a new home, write and offer, go through the negotiation process, come to an agreement (ratify the contract) and then proceed to settlement - IF the property is a traditional resale or bank-owned (foreclosure). But it may not be enough time for a short-sale.
Though the time from which the offer is ratified to when settlement occurs is similar regardless of what type of sale it is, the negotiation process varies drastically especially when it comes to short-sales.
Here's the breakdown…
A traditional resale is a sale in which the property is not bank-owned nor is the seller attempting to do a short-sale (definition of a short-sale later in this post). The owners are selling it directly to a buyer without needing final approval from a bank or other creditors.
Traditional resales typically take anywhere from a day to a week from the time you present an offer to when the negotiation process is complete.
If you've given yourself between 3 and 6 months, you'll be fine even if you don't get the first or even second or third house you've made an offer on.
Bank-owned properties (aka "foreclosures")
Bank-owned properties have been foreclosed on and are now being sold by the bank on the open market.
Bank-owned properties typically take a few days to two weeks to negotiate. The reason for them taking longer than a traditional resale is that you're dealing with the bank's asset manager - they have hundreds of files on their desks at one time and they don't work nights, weekends or holidays.
If you've given yourself between 3 and 6 months, you'll be fine even if you don't get the first or even second or third house you've made an offer on.
Short-sales are situations in which the seller/borrower is attempting to sell the property for less than what is owed on it (they're "short") and the seller/borrower is trying to get the bank/creditor to agree to take the loss. The bank/creditor must give final approval on the offer in order for the deal to take place. (For a more detailed explanation of what a short-sale is, click here)
The average response time from the bank on a short-sale is 3 months though I've seen responses take as long as 6 months. And here's the kicker…only about 20 percent of short-sales are approved.
If you've only given yourself 2 to 3 months before having to move, you're outta luck - short-sales are not for you. Even if you've given yourself 6 months, you may be cutting it close because it may take the full 6 months to hear a response. But…if the bank doesn't approve the short-sale, you're back to square 1 and you've lost an average of 3 months (if not more) of house-hunting time.
If you'd like to look at short-sale properties, you should give yourself enough time to find a home PLUS another 4 to 7 months (average response time plus time to close).
The home buying process is stressful for many - especially first time home buyers. The last thing you want to do is feel rushed or, even worse, find yourself having to double-move or living out of a hotel. That's why knowing the timing involved with each type of property and planning accordingly is so important.
Bank-owned and short-sale properties currently make up 25 percent of the active real estate inventory in Loudoun County (including new homes/new construction lots for sale).
Is this is a good or bad thing or neither?
Back in October of 2008, the percentage of bank-owned and short-sale properties as compared to the total inventory was 39%. But that percentage has since dropped and has been holding steady around 25 percent for some time now.
That's a good thing in one way because we've seen the percentage drop and we're not seeing an increase (which would mean further downward price pressure). It's not a good thing in another way because we're not seeing that percentage continue to drop below 25 percent (which is key to a real recovery).
Another good thing is that the overall real estate inventory is Loudoun is dropping and is at its lowest level in years. I'm just curious as to if/when the next wave of foreclosures will come and how big it will be if it does. That depends on a lot of things including interest rates, the stimulus bill's effectiveness, loan modifications, the overall economy, etc.
So basically, we're better off than we were last year and we're doing ok for now. But cross your fingers.
You may have noticed that there are some issues with the Category section of the blog, as well as some of the widgets on the very right hand column. I am currently working with Typepad and the makers of the widgets to resolve the problem.
Sorry for any inconvenience this may have caused you and I hope to resolve the issues shortly.
On a related note…look for some changes coming to LoudounForeclosures.com and LoudounScene.com in the near future. The changes are being made in order to make your experience on the blogs more efficient, rewarding and pleasurable.
Here's how you use the site (4 easy steps)…
- Go to FranklyMLS.com/Danilo
- Enter "Loudoun bank active" next to "Search for" (located at the top of the page)
- Choose your price range (or choose "no min" and "no max" for a list of all of them)
- Click "Go"
Voila! A list of foreclosure/bank-owned properties within your price range in Loudoun will appear on the page. You can sort them from max price to min price or vice versa.
Now, let's say you're only looking for bank-owned properties in the 20164 zip code… Just insert "Loudoun bank active 20164" into the search field and you'll get filtered results that are only bank-owned properties in that price range in the 20164 zip code.
You can do the same with any keyword based on your search criteria - "Ashburn", "20148", "detached", etc. It's that simple.
Would you rather just get email alerts than go back to FranklkMLS.com all the time?
No problem. After you've entered your search criteria at the top of the page and clicked "Go", just go to the bottom of the page, enter your email address and click "Sign Up/Retrieve" - you'll get updates on new properties that come on the market as well as properties that had recent price changes. (No, your email address will not be used to spam you or be sold or rented to third parties)
For more information on how to use FranklyMLS.com and its various features, you can also check out this video tutorial.
If you have any questions about how to use the site or about a property you come across, just contact me and I'd be glad to help.
There are plenty of horror stories being told amongst agents that work with foreclosed properties and local law enforcement officials that help with foreclosure evictions. But this story tops the list…
A New Mexico couple decided that they didn't want to be leave their home, which was being foreclosed on. They loaded up with guns, ammunition and homemade bombs and fought off Otero County Sheriff Deputies that initially tried to serve the foreclosure notice.
Then they got into a gun battle with nearly 100 members of the New Mexico State Police SWAT team. The story ends with the husband dying and the wife being dragged out of the home by the bomb robot.
If you can't see the video, click here.
Hat tip to The Real Estate Bloggers