Mike Kelly

The below quote is from DSN NEWS. Click on the highlighted lettering to be taken to the story. Could this mean a huge bonanza of Short-Sales coming down the pike? Remember, one of the key players in the settlement was BofA which BOUGHT COUNTRYWIDE HOME MORTGAGE. You may recall that Countrywide was a HUGE player in the California marketplace. California got a big portion of the overall settlement.

Here in Sonoma County, California the "Short-Sale" is HUGE in the "under-contracts" section of our local MLS. With over 3100 properties in escrow as "Continue to Shows" or not yet firmed up real estate deals, approximately 1900 of those are Short-Sales. Check out the chart below:

This is the "Bank Portion" of our MLS "under-contract" properties which includes not ONLY Short-Sales but REO or Real Estate Owned--bank foreclosed upon homes. Note that this market segment is UP 36% over last year at this time. If this settlement rings true then this number could go through the roof! Reducing the average days on the market would be very welcomed as this is approaching 6+ months currently for a short-sale esrow--that's IF IT CLOSES.

As the article states below some $12 Billion will go to principal reductions and short-sales. We all thought HAFA was going to be the big game changer in regards to Short-Sales but THIS just might be THe game changer.

The full amount will be broken into several categories to assist various groups of struggling homeowners. According to the agreement, banks will offer $12 billion in principal reductions and short sales for about 250,000 homeowners. The banks are obligated to complete the principal reductions for homeowners in California’s hardest hit communities within one year of the settlement date.

Have that great property which just cries out for International Marketing and Exposure? An estate in the Wine Country of Napa or Sonoma County? Perhaps a stunning estate in Santa Barbara or Knob Hill location in San Francisco? You spend a ton of money on the brochure, Virtual Tour, Video, Syndication, email to all your CIPS connections but you make ONE CRITICAL MISTAKE!!

You do NOT convert Square feet to Square Meters or Acres to Hectares! So BEFORE you make this faux pas make sure you convert these two common references when describing property and acreage.

I place the converted numbers next to each other. If you measure each room then do so for EACH room. It could mean the difference between someone calling you directly rather than having the Realtor who HAS converted call YOU on showing instructions!

Sqft to Sq. Meters Multiply your Square feet by (.09290) to arrive at Square Meters. Example: 2,000 square feet x .09290 = 185.8 square meters.

1 acres = 0.404685642 hectares

Example: 20 Acres x 0.404685642 = 8.09 Hectares

Taking the extra time will win clients and impress those International Realtors seeking a solid referring Realtor for their clients!

Also--DON’T forget about Currency Conversions! Here I’d convert to Euro’s, Yen and Yuan!

Example: Today’s quote on the Yaun is 1 Chinese yuan = 0.1586 US dollars. $1,500,000 would be $237,900 Yuan.

Remember—Convert our standard measurements to your market’s measurements and CONVERT leads to escrows!

Sonoma County, California-How can you have a "move-up" market when 48.6% of ALL Sellers are selling Short or the seller is a bank? Total Sales for September in Sonoma county (SFD+Condos) 432 (down 18% from August!) with close to half NOT buying. And the "price point" for those Shorts and REO properties all fall into the "Sweet-spot" of the market in the $230-$275,000 price point--classic sell and buy a bigger home as the next step of home purchasing. The answer obviously is we HAVE No move up market. Hence, if you're priced in $400,000 to $700,000 market the audience for YOUR home has shrunk to a precious few buyers.

How to make them buyers? What to do about this? Some have postulated a "mark to market" pricing structure for those folks "under-water"--owing more on their home than its current value. "Mark to Market" would be to "forgive" debt to the point that a homeowner owes NO more than current market value. Therefore, if they wish to sell they can come out of pocket for costs of sale. We would NOT need bank approval for selling at that point. Those wishing to move up could perhaps get credit for the costs they had to bear on the sale end of their relinquished home from the move up seller.

When you hear of the "Shadow Inventory" its NOT those REO's not yet released to the market--it is all of those homeowners who would be NORMALLY selling at this time to move up, to take advantage of these historic low interest rates and also to take advantage of pricing not seen in over 8 to 10 years. How to "release" these folks? We need to either come up with a product which would allow someone selling "Short" to buy immediately after a short-sale or give the millions of underwater homeowners a pricing structure to eliminate having to sell short as a means to leave their home.

The number of Short-Sellers in Sonoma County selling each month is averaging around 90. These are the ones who have actually successfully navigated the daunting process of a short-sale. IF we could accomplish a "Mark to Market" reevaluation we could perhaps allow more folks to STAY in their homes, give them much lower monthly payments and free up disposal income to be infused into our economy!! A stimulus package! Then the other portion of our "distressed market" those 114 REO sales would become NORMAL sellers who move up instead of shipping the money out of state.

I'm looking forward to having Nicholas Carroll on my local Bay Area radio show (northern california bay area!), the "Real Estate Hour", 1350AM, KSRO, Sundays 9 to 10am or at www.KSRO.com streaming. Mr. Carroll self-published a book we ALL KNEW would eventually be written--how to walk away from your debt while saving $1,000's of dollars, getting your financial ship righted and eventually buying another home at TODAY's bottom basement sale prices.

His book, entitled, "Walk Away from Debt for a better Future" begins with these two basic premises which I've taken from his web site: http://www.walkawayfromdebt.com/

This book prepares you for either of these two goals:

1. Walking away from some of your debt, and hanging on to a passable credit rating. This can make sense for people who depend on a credit rating to hold on to a good job, or need one to get business loans – or are hoping to buy a house at today's more affordable prices.

2. Carrying out a total walkaway with as much cash in pocket as possible (and no lawsuits chasing you).

In goal #1 – since creditors nowadays are a lot more realistic – it can make sense to negotiate the creditors to settlements over a few months. This might be a cram down on the value of a home, or a short payoff on credit cards (20 cents on the dollar is routine these days). You effectively walk away from a significant chunk of your debt with only minor-to-medium credit blemishes – and your credit rating starts rebounding in a few months. (That's correct: months.)

In goal #2 – if credit score is less important than being financially solid – a total walkaway might make more sense: stop paying all creditors, live rent-free for up to two years in your home, if you have one, and then walk away with cash in pocket (people who do this usually regain good credit ratings faster than those who struggle along for years with repayment plans).

This book attempts to show struggling homeowners those options perhaps NOT discussed by attorneys or CPA's. It further explains the reality of the banking system and the default process currently in the U.S. Currently homeowner "retention" seems to be the chant of the big peer banks (BofA, Wells, Chase). To this end many homeowner are attempting loan modifications (something the book explores) but were also told to "quit making payments" to effect a modification! They then find out that the banks just let them STAY there with NO payments! QE3?!? Not a bad "stimulus package"!

But what of the folks who CAN make their payment but just don't see their home pricing coming back anytime soon? Why keep making $3500 monthly home payments on a home which is $200 to 400K underwater? Is it "prudent" to just walk-away, let it go into default (eventually!), sock away the savings with the idea of building a new nest egg for a future home purchase say two years down the road?

I know MANY of you can recite stories of clients who have been in their homes in excess of two years with STILL no notice of default filed (here in California,the NOD or notice of default, begins a 122 day process eventually resulting in the property being sold at the County Court-steps to the highest bidder--redemption runs WITHIN this 122 days). These folks, we hope, are saving their money, paying down debt and giving themselves a nest egg to re-establish themselves in a nice rental. Of course the flip-side--they are NOT saving the money but spending it like drunken sailors, not caring one iota when the NOD happens and awaiting a fat "cash for keys" check to get out. They also are NOT keeping the property up and are creating an eyesore driving prices down in the neighborhood.

So what say you to this new book? I know you have clients who are up against tough financial times and are straining and clinging to their "HOME". Walk away? Restructure?