Sunday reading about real estate from the Los Angeles Times

Two interesting articles about real estate appeared in today's L.A. Times.  The first is "Helping your appraiser do the best job" and the link is here. The article begins, "Your home is on the market. You found buyers, a nice young couple just starting out, and they're sold on the home. But wait — there's one more person you have to sell: the appraiser." I'll say.  Elsewhere, the article discusses the need to give the appraiser good comparables.  The listing agent should supply these -- I always do for my listings.

The second article is "4 million homeowners climb out of negative equity" and the link is here.  Just as I been tellin' ya, eh? One of the more interesting points: "[With] 12.6% of mortgaged homes underwater, California has a lower overall negative rate than the national average (13.3%)." I would bet that L.A. County's rate is even lower.  No more short sales! Yay! 

How can we miss you when you won't go away? Or the story of the Studio City condo

This is the story of the Studio City condo that my buyer closed on last month.  The names have been changed to protect the guilty.  Yes, this was one of the bad ones.

My buyer had made several offers already when this condo came on the market in early February.  Our offer on it was immediately accepted. Yay!  It was a short sale, but the short sale was approved in record time – also “yay” and “it’s a miracle” -- and we prepared to close 30 days later in mid-April.

A week before closing, the seller’s dad announced that they had no idea the condo was closing and they not only would not be leaving, they also would not sign the necessary paperwork to close it.  We were incredulous. How could that be? Well, turns out that they just hadn’t found a suitable place to move to yet.  At that point, not only had my buyer made moving plans that were difficult to alter, but his loan documents were ready, and the condo itself was about to go to foreclosure if it didn’t close shortly.

Through the coming days/weeks, the seller’s dad refused to give us a closing date or a move-out date.  Contract? Ha! It meant nothing to the sellers.  Nobody could budge them.  The communications were extensive – I have over 400 emails about this in my file and that’s just me (so much for you guys that think we Realtors just open doors and say, “Here’s the kitchen.”)  The sellers stopped communicating with those of us who they believed to be “against” them.  I pretty much assumed that this was a lost cause.

Where was the listing agent? Missing in action. Why didn’t my buyer client cancel the sale? Because the condo was perfect for him and, sadly, by late April he was already priced out of the Studio City housing market.

Although it is typically discouraged, my buyer reached out to the seller dad.  And seller dad began to communicate directly with the buyer.  They actually got somewhere (by this time the seller dad had pretty much alienated everybody else on the team, and my buyer has the magic touch.) Of course, my buyer had to do the accommodating. The foreclosure was postponed again. Whew!  And a month after it was supposed to close, the seller dad gave my buyer a date for both closing and for possession.  My buyer was able to move his plans around to accommodate the new date.

And the closing finally, finally occurred. The sellers moved out.  As much agony as we went through, my buyer client’s efforts made this happen.  We were thrilled to celebrate on his new patio last week, and toast the buyer’s persistence.

4484 Stansbury, Sherman Oaks has had a price reduction already!

Since you guys didn't jump on it at the old price of $780,000, we've reduced the Stansbury price to $680,000.  Yup, $100,000 off the price.  But wait, there's more.  It's now a short sale.  Come and get it while it's hot!

Sunday reading on the mortgage interest tax deduction and the housing market

Here are two articles from today's Los Angeles Times.  The first details the mortage interest tax deduction and efforts to -- maybe -- eliminate it.  Here's the title and link: A look at proposals to limit the mortgage interest tax deduction.  Of course, if the deduction is eliminated, California homeowners will be hit harder than homeowners in other states.

The second article is Short-sale purchases can easily fall apart.  Here's the link.  Of course, if you've been trying to buy a home in the greater L.A. area for any amount of time, you probably could have written this.

Marilyn Monruff-ruff-ruff

Update: Panda's short sale offer was accepted today! At least by the title holder.  Stay tuned; BofA (our favorite bank) has the loans and we'll see how long it takes them to approve this. 
This is my client, Panda, sitting on her butler's lap.  I call her Marilyn Monruff-ruff-ruff because she is so beautiful.  Panda has just made a great offer on a short sale -- cross your fingers that she gets it!

Beware of the evil clowns of Los Angeles short sales

Of course I couldn't go a month without saying something about short sales, right? Lately, I've been made aware of new and different scams perpetrated on short sale sellers in Los Angeles and the San Fernando Valley.  If you or anybody you know is thinking about selling short, there are a few things you should know to protect yourself. 

First and foremost, you shouldn't pay any money to anybody upfront to handle a short sale for you.  They get paid through the commission when the sale closes.  This is California law.

Second, you need to sign all legally binding contracts, starting with the listing paperwork.  No matter how dire your straits are, please take the time to review the paperwork your Realtor gives you.

Third, you'll need to disclose everything you know about your property in standard forms.  Your Realtor can help you fill these out, but don't let him/her do it for you.  You're liable for non-disclosure long after escrow closes.

Fourth, yes, you do have a say in who buys your place, and the terms and conditions of the sale.  You'll sign off on this paperwork, too.  You're probably thinking, "But I'm walking away with nothing in a short sale; why should I care?" Well, there are many contractual terms that still concern you besides money, such as when possession will be given to the new buyer (negotiable), what appliances stay, whether leases are still in force, etc.  One thing to know: you can't short sale your property to a relative.  The bank will insist that the transaction be "arms length."

Five, and this is important, you can take your property off the market (just in case, say, you get a windfall and no longer have to short sale it).

Remember, sellers, your short sale negotiator/Realtor is working for you, first and foremost.  Don't be afraid to ask questions.  If you'd like to educate yourself more about the process, the California Department of Real Estate has lots of info on its website, as does the California Association of Realtors.

Now BofA wants to know if they can help me

For those who don't think social media has an effect: BofA Help has tweeted me several times since I posted the item below.  I've tweeted back that they can help me by telling me what is going on with my short sale.  Now, they've promised to call me tomorrow.  I wish they'd spend more time clearing their backlogs of short sales and less time managing their online reputations.

Who pays the difference in a short sale? - A quiz

Let's quiz your short sale knowledge! As we all know, a short sale is when the owner/seller needs to sell the property and it is worth much less than what's owed on the mortgage.  The lender/bank/lien holder okays (or doesn't) a short sale, whereby they get less money.  But who pays the difference?
a.  Nobody.  The bank(s) just eat the difference.
b. The seller pays.
c.  The buyer pays.
d. Casey Anthony.
e. Harry Potter.
f. a., b., and c.
g. a. or b. pays some of the difference.
h. a. and c. pays some of the difference
i. Both g. and h.
Blind and/or bored yet? Give up?
The answer is i.  Either the banks eat the whole difference or come after the seller for "debt settlement" which is a portion of the difference.  Increasingly, sellers are saying no, they won't pay anything and they refuse to be on the hook for the difference in the future. Instead, they'll let the house go to foreclosure.  So who steps up, or doesn't? That's right, the buyer. And no, dear buyer, you usually can't tack on that contribution to your loan.

Not to make this too complicated, but some short sale negotiators anticipate such a thing and get closing costs for the buyer negotiated up front.  That way, if the secondary lender/lien holder comes back and wants to be paid off, there's already an amount of money sitting there that can be used for this purpose.  Got it? I know it's confusing.

If you're a buyer, and you're considering making an offer on a short sale, it's useful for you to know some details going in.  These include how much is owed to the banks and other lien holders (such as county taxes or home owners' associations).  It's also good to know how many other lien holders there are -- the less, the better.  It is also helpful to know if the seller has assets, as the more assets the seller has, the more likely the bank is to come after them.  And the more likely they are to turn to you, dear buyer.

Shadow inventory of solds?

We’ve all heard about the “shadow inventory” of foreclosures that is supposed to hit the real estate market. But could there be a “shadow inventory” of sold properties? Last week, L.A. Times published an article which states that real estate sales and home prices are not so hot for the Southland. Here’s the link if the title won’t link. As always, I’m not going to argue with statistics, but I don’t know that they tell the whole story. Yes, the early part of 2011 was slow, but I think there could be another reason for low numbers.

IMO, the sales numbers may be skewed by the sheer number of short sales out there. Here’s how it works. A regular home lists, attracts offers, and the buyer and seller enter a contract. The house usually closes escrow 30 to 90 days later and the sale is reported in both the multiple listing service and to the county tax assessor. That’s where all the data comes from. But with short sales, the buyer and seller can be in contract for four to eight months before the bank even approves the sale. During the time period, regardless of the agreement between buyer and seller, the house must be listed as “active” on the mls (the banks in their wisdom mandate this.) And then it can take a month or so to close. (For example, I had one last year that went eight months before it closed, and another one cancel after four months before the bank even got around to approving it.) Not to be Pollyanna-ish, but considering that a high percentage of homes on the market are distressed sales, I think we may be experiencing more of a time delay in reporting actual sale transactions, than in actual sales. What do you think?

Cute short sale for aviation buffs

(Disclosure: my client made an offer on this property. So have about a dozen other buyers. Currently, no more offers are being accepted. No, we don't know yet if our offer prevailed.) This cutie is 11558 Cantlay in North Hollywood. It's a 3+2, 1545 sf. short sale for $249,000. It's as nice inside as it is outside -- yes, hipsters, the style IS a little suburban. But...it has a spacious galley kitchen with new Corian counter tops and lots of storage, all the windows are new, new paint inside and outside, decent bedrooms, well maintained, attached two-car garage, nice backyard and side yard, etc. etc.

All around, this is a very nice home. If you like planes. It's just north of the Bob Hope airport. I mean just about 1000 feet from the runway. A plane landed while we viewed the home and I could count its rivets.

In spite of the location, this home sold for $507,000 at the height of the market.

L.A. Times "message" from C.A.R. re short sales

I was surprised and pleased to find a full-page "message" from the California Association of Realtors in the first section of today's (3/10) L.A. Times.  (Since it's a paid announcement, there is no link.) It is an impassioned plea to streamline and speed up the short sale process.

'Bout time.  CAR claims to have advocated for improvements to short sale guidelines with major banks, U.S. Treasury officials, government-sponsored entities and others to standardize the process, comply with federal guidelines, increase staffing, etc.

CAR is also "calling on regulators, elected officials, nonprofits, business organizations, companies, and individuals ...to resolve this issue and others that get in the way of a recovery."

Here in So. Cal., you know that short sales can be up to 50% of a particular local market.  I also believe short sales -- or the way they are NOT conducted by the banks -- are partially responsible for the current market slowdown in many areas.  They are a large part of the market inventory, and nobody wants to go through the long, agonizing process of trying to buy one. (Seriously, I'd take 10 court confirmation-required probate sales over one short sale.) Hopefully, the C.A.R. message will be heard by our major mortgage servicers.

Blood sucking vampire realtor and short sales

Short sales, Fannie Mae and HAFA

Fannie Mae's New HAFA Program

As you may have heard, by August 1, 2010 Fannie Mae and Freddie Mac, the formerly Home Affordable Foreclosure Alternatives Program (HAFA) exempt mortgage giants, are set to implement their own HAFA programs. For borrowers who are eligible for the Home Affordable Modification Program (HAMP) but were unable to secure a Loan Modification on their Fannie or Freddie loan, this is potentially promising news.
Today we’ll examine Fannie’s recently released HAFA Program Summary. Their stated goal with joining the program is to provide financial incentives for and simplify the process of short sales and deed-in-lieu (DIL) options in the face of foreclosure. For the most part, the Fannie version is in line with the wider HAFA program which includes the following:

• Any borrower who wishes to utilize the new program must have already been evaluated for HAMP, which gives them more options in the event of an unsuccessful evaluation and also removes the need for further eligibility investigation as the HAFA program will use the HAMP documentation. In addition, the program standardizes the steps, documents, and timeframes of short sale or DIL approval;
• Before the property is even listed, the borrower will be able to get pre-approved short sale terms;
• The servicer cannot condition their approval of a short sale on a reduction of the real estate commission outlined in the listing agreement;
• Fannie will release those who are successful in a HAFA short sale from future liability for the debt, and;
• Servicer and borrower will be entitled to certain incentives:
• Servicers will receive a $2,200 fee for a short sale, or a $1,500 fee for DIL
• Borrowers will receive $3,000 to assist with relocation expenses

Fannie’s documents and a full Program outline can be found at their website. Given the amount of foreclosures Fannie has been aggressively pursuing across the country (even being known to refuse to postpone a trustee’s sale with a viable short sale offer before them), one might be forgiven for questioning the sincerity of their commitment to providing foreclosure alternatives.

What does all this mean? I will be obtaining a HAFA certification through California Association of Realtors soon and I'll let you know then.  Thanks, Activerain, for providing this blog post.

How is a short sale like a Beyonce song?

You find the perfect one. The perfect one toys with your affections, strings you along, and then rejects you for another. But they haven't totally forgotten you. The perfect one's love interest rejects them, and they circle back around to see if you're still interested. In the meantime, however, you've licked your wounds and MOVED ON.

Sound like your love life or the latest Beyonce song? I'm talking about short sales. The process takes so long that buyers just plain lose interest in the property. Short sale properties that had multiple offers often keep the second and third offers as backups in case the first buyer drops out. By the time the second buyers are notified that their offer would be accepted by the seller and then sent onto the bank for approval, the second buyers have developed doubts, lost interest, and just plain gotten over the house. C'est l'amour, I guess. Banks have to figure out a way to speed up this process.

If you think there's nothing to buy out there...you're right

Yesterday, I searched the mls for all "active" single family homes in North Hollywood under $300,000. I found 34 homes. Virtually every one, every single one, was a short sale, foreclosure or probate -- and they all had offers on them already.

The way it works is this: for a short sale, the property can't be listed as "pending" until the bank signs off on an offer. But before that happens, the seller has to sign off -- and the seller may have several acceptable offers that they've already sent to the bank. They may not actually look at other offers if they've already done that, even if the property is still listed as active. The bank may just be taking their sweet time -- it usually takes them two months or more to approve a short sale. To recap, even though the property is listed as active, it's really "pending."

For foreclosures, the process is similar but faster. And recall that if the property is listed by a mega-lister foreclosure agent, they've been putting feelers out to investors -- and maybe even getting offers -- before the property even comes on the market.

Easier loan modifications and short sales. Are you listening, banks?

Regardless of what the banks would like you to believe, loan modifications and short sales should be getting easier to accomplish, thanks to the U.S. government. Here's a link to an article from today's L.A. Times.