Alameda, CA

MY DEAR SELLERS

During a short sale, our mutual goal is to get an offer accepted as quickly as possible by your lender to prevent a foreclosure.

And as you already know, the effects of a short sale are far less damaging than a foreclosure or a bankruptcy.

REMEMBER YOUR GOAL: SELL THE PROPERTY!

Please understand that maintaining the home is still your primary responsibility during this selling process, whether you choose to stay or not at the property, remember what it takes to sell.

MAKE IT EASY TO SHOW YOUR PROPERTY

Keep the house looking nice inside and out. You literally only have minutes to make a good impression. Make that first impression count!

If it's messy and smelly, it won't sell. And if it doesn't sell, consider the alternative: foreclosure!

Allow the realtor to put a lockbox that other realtors can use to access the property.

How can we sell it if we can't show it?

Don't insist on unreasonable windows of time to show the property, such as showing only between 12 noon - 1 pm, or requiring 24 hours notice.

If you're serious about selling, you'll do your best to accommodate all interested buyers and their agents.

Keep the utilities on. Buyers, inspectors and appraisers need the utilities on to complete their respective activities.

A dark home is gloomy and uninviting. No power on will also make the home smell musty. Bathrooms and kitchens may show mildew. These are all unappealing and are turn-offs. Why take a chance? You'll only have to turn them back on for inspections later anyway. So just keep them on.

COMMUNICATE

Be accessible. Provide a number to best reach you, and return calls promptly

When you're going out of town, make sure you can still be reached by phone, email, fax.

Complete all required documents, especially your financial information, in a timely manner.

Keep your records current and handy. Don't pack away important information like your most recent tax returns, bank statements, pay stubs.

Keep the lines of communications open. Although doing a short sale transaction will take weeks from the time an offer is submitted, by the time the offer is ratified by the short sale lender, it becomes a race for time especially if the lender insists on a specific date to complete the transaction.

Your role as a seller doesn't end until the transaction closes escrow. What if the buyer backs out? We'll need to regroup quickly.

BE REALISTIC

Accept the possibility that your property may be worth less today than what you owe, or what you paid for.

What your house sells for should not be your primary concern. Protecting your credit and your future ability to buy a home in the near future, is.

Remember that as a condition of a short sale, you as the seller will not receive any funds from escrow.

So does it really matter to you how much it finally sells for? Just aim to get it sold!

You may have to spend a bit of money to spruce up your property , but consider that an investment to accomplish your goal

TAX RELIEF

Yes, these are challenging times. Nonetheless, remember the provisions of the Mortgage Forgiveness Debt Relief Act "to amend the Internal Revenue Code of 1986 to exclude discharges of indebtedness on principal residences from gross income, and for other purposes."

Key point in a short sale: the difference between what you owe and what it finally sells for was normally considered income, and would have been taxed as such....until the Mortgage Forgiveness Debt Relief Act was passed in December 2007, and applies to debt forgiven in calendar years 2007 through 2012.

As such, because this is not considered income, you may not have to pay taxes on it --- please consult with your CPA to get the complete and right answer.

As much as I bemoan the length of time and the hoops I go through to do short sales transactions, I am taking this opportunity to say, "THANK GOODNESS FOR SHORT SALES!"

Why?

...Because it's a way to guide our sellers who have found themselves in dire situations and may not know their options.

...Because it's a way for distressed property owners to avoid foreclosure or bankruptcy, and thus salvage their credit

...Because more homes are within reach for home buyers who have little money but have a lot of time and patience to wait out the lengthy short sale process

...Because while there is a frenzy for buying foreclosure where people compete in multiple offer situations for AS IS purchases, there is less competition for short sales where there is room for negotiation

...Because short sales offer opportunities not just for the buyers looking for a good deal, or sellers hoping for debt forgiveness, but also for realtors who truly want to help their clients and who are in it for the long haul. When the going gets tough, the tough gets going. Right?

...Because we've learned how to do another type of sale. And every key learning is a new marketable skill.

What do we have to lose? It takes time, sure....but eventually, it will bear fruit. The more we sow, the more we reap.

Perhaps this is a good time to add that ALL of my current escrows are with short sale buyers and sellers!

RELATED POSTS:

SHORT SALE PACKAGE: Make sure it's complete before submitting to the lender

OPEN LETTER to Short Sale Sellers. If you really want to sell your property....

BEST AND WORST SHORT SALE LENDERS - a Short Sale Report from ForeclosureRadar.com

RED FLAGS: Are short sale sellers selling, just or stalling?

We can't tell people enough times the value we bring to the table. Buyers and Sellers alike don't really know what we do for them. And if they don't know, how can they appreciate us or refer us?

In advertising, there is a saying, "REPETITION, REPETITION, REPETITION"

Here's a question to all: How much is your time worth? Can you afford not to get paid for service you provide?

We, realtors, don't just provide transportation and open doors. I can only speak for myself, but this is a sampling of the service I provide for my Sellers:

BEFORE MEETING THE CLIENT

• I prepare a comparative market analysis and put together a marketing presentation (not a cookie-cutter presentation. There's a lot of thought, research and effort in this presentation.
• REALTORS will know that putting together a comparative market analysis is not just about looking at what sold, are active or pending. One has to determine other factors to qualify specific properties to be in the comps.

DURING THE MEETING

Because of the mountain of paperwork involved, it is critically important to review and explain the various documents and disclosures requiring the Seller's signature. This is also when we discuss a calendar of action items on what the seller and I should do to prepare the property for sale

ACTION ITEMS. These are the various activities I undertake:

• Services
  • Scheduling inspections (home inspections, pest inspections, etc)
  • Helping and guiding sellers on staging their house.
  • If they don't have the right stuff, or don't have enough, I augment the staging by using a few of my things. Or, I will recommend a professional stager to consult with the client.
  • Providing resources for sellers, and letting in the service personnel in the house (e.g. Wood floor refinishers, painters, plumbers, electricians, housecleaners, landscapers, inspectors)
• Marketing Materials Preparation
  • Taking pictures (a lot of pictures!) - Selecting, editing, cropping, re-sizing, compressing, photo-stitching
  • Creating visual tours
  • Writing and designing flyers
  • Advertising in print (newspapers, postcards, flyers)
  • Putting together a Property Binder to include information about the property, copies of inspections, demographics, permit history, etc. that I provide at the house so that agents and prospective buyers can consult this information while they are at the property. Nothing like having info at your fingertips when you want it.
• Marketing Activities
  • Holding brokers' tours (during which I serve refreshments to entice more agents to come see the property)
  • Holding open houses as needed
  • Showing the property to prospective buyers

• Online and target marketing to reach the biggest audience: THE WORLD!
  • Uploading the posting on the MLS.
  • Showcasing the listing on REALTOR.com, uploading as many as 25 pictures, customizing the descriptions and scrolling headline for the showcase. This is critically important since this serves as the primary source of information that other realty websites pick up. So by the time I activate a listing, it is complete with pictures and visual tour.
  • Creating electronic flyers using Postlets, Vflyers
  • Customizing uploads on Zillow, ActiveRain, Trulia
  • Posting regularly on Craigslist
  • Uploading and creating website information about the property (this is posted on my website on Point2 which is networked with other Point2 members.
  • Uploading the information on our company website
  • Uploading disclosures online.

INFORMATION

• Following up with agents and prospective buyers who saw the property -- I send notes, email, and make phone calls
• Updating my sellers frequently on the activity on their house. I do this by sending them copies of the reports on REALTOR.com and Trulia on how many times it's been viewed. I include other reports that are available (how many times it's been viewed on Zillow, my website, et). I include a list of all the realtors who have shown the property, provide numbers of people who came to the open house, etc.
• Having continuous conversations with my Seller on the market, and if we should make some adjustments

OFFER NEGOTIATION

• Negotiate offers--- my first question to the other agent is if the offer is the BEST and HIGHEST offer from the buyer. That may give them pause, and then they ask me to counter rather than reject the offer.
• If there is more than one offer, I prepare an Excel spreadsheet comparing the terms and the estimated seller proceeds
• Upon presenting the offer to the Seller, we go through an intensive discussion. Sometimes, we go back and forth, and may even have more than one counteroffer.
• I call the buyer's lender and the buyer's agent to get a more complete sense of the financial wherewithal and motivation of the prospective buyers to close escrow
• During the escrow period, there is continuing negotiation that may involve request for repairs, credits for closing costs, etc.
• Coordinate with the buyer's agent the inspections and appraisal appointments

TRANSACTION COORDINATION

• When we go into contract, I remain the point of contact among all parties
• I engage, and pay for a transaction coordinator to make sure our paperwork is in order
• Through it all, it's follow up, follow up, follow up!

These action items take hours, days, and weeks. I don't get paid until or unless I close escrow.

OUT OF POCKET EXPENSES
Remember, that I pay for all the advertising and marketing expenses that include membership in the Multiple Listing Service (MLS), REALTOR.com, website and visual tour hosting, newspaper advertising, color flyers and postcards, signage, etc.

If the property doesn't sell, I am not reimbursed for any of my out-of-pocket expenses

PUTTING THINGS INTO PERSPECTIVE: How much is your time worth? Can you afford not to get paid for service you provide?

ALAMEDA

A picture says a thousand words.

These charts compare the market activities for a two-year period from September 2007 to end of September 2009.

• One of the key indicators we look at to determine whether it's a buyer's or a seller's market is the inventory of homes for sale. If there are few properties on the market (low inventory), it signals a potential seller's market. As of September 2009, it appears we have just a little over a month's worth of inventory before the properties are sold.

• Number of homes sold (unit sales) appears to pick up. For example, there were only 18 homes sold in September 2007, same number in September 2008, but it increased to 32 sales in September 2009. This report says that's an increase of 78% comparing Sept 07 to Sept 09.

• But median prices are still comparatively low, from the low $700k in Sept 2007, to the high $500K in Sept 2009 for a decrease of 20%.
  

• Supply and demand chart seems to support the oft-repeated phrase that Alameda is "holding its own" since there doesn't seem to be a drastic change in the market activity although the median price did go through quite a transition.

Could it be that the market is getting back to "normal" as opposed to the "irrational exuberance" and frenzy of the early 2000s?

Short Sale packages may be different from bank to bank, negotiator to negotiator. Having completed short sale seminars, listed and sold short sales, worked with two separate short sale negotiation companies, it appeared evident that

HARDSHIP conditions include, but are not limited to:

• Unemployment
• Reduced income
• Divorce
• Separation
• Medical bills
• Too much debt
• Death of spouse
• Mortgage payment increases
• Business failure
• Job relocation
• Illness
• Damage to property
• Military service
• Incarceration

BANK OF AMERICA --- difficult if not impossible

Bank of America is getting, or probably already has the reputation of being one of the slowest and most difficult banks to deal with when it comes to short sales. On Active Rain alone, there have been enough angst and anguish documented about this challenge. Realty Times says:

Bank of America had been among the least cooperative of all banks in agreeing to short sale payoff terms, according to industry critics....

Now the bank has adopted what spokesman Terry Francisco told Realty Times is "a less arbitrary, more rational" policy. "What we're saying (to short sale proposals) is -- give us an opportunity to participate and gain at least some of the savings" that will go to the first lien holder -- the primary lender on the property -- by avoiding the high expenses and losses of a foreclosure, according to Francisco...

But not all short sale market experts are convinced that's the case. Raffi Tal, CEO of Los Angeles-based I-Short Sale, Inc., one of the largest players in the field, says Bank of America's new policy "will still jeopardize" many short sales that involve its second liens.

In spite of constant follow ups that included an email to the CEO, we didn't get a response for two months. But they can't wait a few days for us gather the new information they requested without threatening that they will close the file?

It is incredulous that after having submitted a package in June, they didn't open the file until September, and then they requeted new documentation since the seller's financials (bank statements, pay stubs) are now outdated information. Then the negotiator gives unreasonable deadlines. Two or three times, the negotiator writes or calls Friday morning, and then expects a response by 3 pm that same day or they will close the file.

My seller is in severe financial straits. She bought a condo for members of her family, who, by a series of extremely bad luck, died one after the other within the two years immediately after she bought it.

DEATH AND FUNERALS --- not a hardship

We explained in a hardship letter that not only can't the seller rent out the condo (HOA rules), but she also had to pay for four funerals in a row.

To which the BOA negotiator named Delaney said "the funeral expense isn't a long term hardship and shouldn't be the reason why the customer can no longer afford to pay the mortgage." Geez! The funeral expenses which average to $6,000 each, or $24,000 total, were charged on a credit card that the seller is still paying for.

Too stunned to think. Looking for compassion and understanding from this loan negotiator. No wonder the sculpture in front of the former Bank of America headquarters in San Francisco is known as the banker's heart --- it's black, cold and hard as stone!