Benny Chavez (Prudential California Realty)

When a homes value is less that the amount owed on a mortgage, and the home owner is late making

payments on the mortgage, the bank will begin a forclosure process. If the home owner wishes to save

his credit rating and avoid the forclosure, a real estate agent is hired to market the home for sale. Since

the homes market value is less than the amount due on the mortgage, the agent begins a short sale

process. Most often we need to stop the forclosure process so we price the home below market value to

attract attention which in turn leads to offers on the property. Once an offer is accepted by the home

owner the bank reviews the offer and either accepts the offer or sends a new approved price which is

higher. In the event the approved price is higher the agent relists the home at the new approved price

and sells the home at this price. Sometimes the approved price set by the bank is higher than the real

market value this sometimes causes the home to not sell and the bank ends up forclosing on the home.

This short sale process takes anywhere from 2-6 months. In other words short sales are very uncertain

and can waste a lot of your time. In my experience you are better off looking for a home that is a

regular sale, or a bank owned sale. Unless this home is absolutely the one you really love then I would

say you should spend the time in the short sale so you can aquire this home.

I would like to share with you a quick exerpt from a book my broker Bruce Mulhearn wrote called :

the exerpt is called Eradio and it goes like this:

How do you make your mark? I was teaching a three-day seminar for 150 realtors taking their Certified Residential Broker designation course. I noticed Eradio Diaz in the front row, a blind Cuban refugee who had passed his real estate examination orally.

At the first break, I learned he was managing an office of 20 salespeople. Eradio was there to gain additional management expertise.

Working as a real estate salesperson, his father was his assistant chauffeuring his son's specially designed limousine. Eradio's typewriter was positioned at the back of the car; he typed contracts by touch, knowing exactly where to place a specific line of information. In addition, he owned a Braille calculator for completing his backup numbers.

When with buyers, they "showed" Eradio property. During the process he asked the buyers to describe each room as they inspected the home together and always requested they let him be aware of the amenities that appealed to them most. The seller's net sheets and buyer's closing costs were calculated by the prospects participating as Eradio guided them through the process.

Returning to Los Angeles, I called Eradio to receive permission to write his story in the California Association of Realtors magazine. His mother answered the phone and said Eradio was not home. She'd explained he'd had a problem with his car and the mechanic was unable to repair it. Eradio traveled to the garage and by touch he'd shown the mechanic there was a short in the electrical circuits. The mechanic then fixed the problem.

* * * * *

I was reminded of the old tale,

"I was saddened and defeated because I

had no shoes----- until I met a man who had no feet"

ERADIO WAS AN INSPIRATION.

I was begining to think that the local BANK OWNED market was dying down. Silently thinking to myself a

market without REOs would be GREAT!!! Looking in my local market area I began to notice Downey: 32

Bellflower :21 Cerritos: 36 etc etc etc. The numbers of REOs were dropping by the minute. UNTIL I spoke

to a southern california asset manager who said, "We've got another wave coming! I am receiving an

account with 248 REO's in the following weeks! Just when I thought we were out of the water again were

going for another dive! What this means for my local market is LOWER PRICES!! We went from $575,000

for a 3 Bedroom 2 Bath to a whopping $328 for the same home within a year and a half. INCREDIBLE is

what I think, when will it end??? I wish I knew...... If I can predict I am going to say that the end of 2009

sounds like a evening out in the market. Many recent clients are speculating that the time is now. Sales in

my local area went up last month as prices dropped! We expect the same for the months to come as we

cruise in to the end of the year. As with all investments, you will never know where the bottom is. As a

buyer you may want to know the amount of homes listed on the market in the past 2 months prior to

purchasing and the amount of those homes sold and then how those homes stack up to the home your

thinking of purchasing. Also if you are thinking of buying a Forclosure=REO=BankOwned=Repo you may

want to submit your offers stating they will close before the end of the month. Your offer may be accepted

easier if you can close before the end of the month, banks are more inclined towards offers that can

close before the end of the month. For sellers the most important factor will be pricing! There are still a lot

of Buyers looking for turn key homes, homes that been foreclosed are beat up and need lots of repairs.

Even when the cost of repairs is $5000 I have had clients speculate the cost is more. Sellers also need to

consider offering incentives as it continues to be a buyers market, such as down payment assistance,

closing costs, home warranty and termite inspection.