Rosemary Brooks -Mother & Daughter (866)-750-8282

Due to the mass foreclosures (bank owned homes) being sold and given the damages that are coming in on all the various reports and inspections, the banks are now starting to take a hard look at how to minimumize the vast amount of repair expenses they are encountering.  Right from the start the bank came out with they are selling these homes "as is" and they are exempt from having to disclose much about the property because they have never lived in or inspected the property.  They leave all that up to the buyer to do PRIOR to submitting an offer.

However, as mentioned in As is simply means "as is" or is it that simple?  and as we know the inspecting PRIOR has fallen by most buyers.  The buyers are making their offers and bidding over multiple offers only to get the acceptance and then try to break down the bank and have them go against the "sold as is" rule and end up getting all the damages repaired during the escrow process.

The first bank that I have heard is working on a process for the agents to help them figure out what damages fall under what FHA will require to be repaired in order to sell the property and what damages will not be called by the FHA appraiser as a condition to give the property a clear on the FHA appraisal - that bank is Saxon.

Saxon is now in the process of implementing a process of distinguishing FHA required repairs verses Repairs that are not FHA required.  This new process should help to reduce the numbers of issues that arise during the REO closing process.

I have ran into situations where the buyer is concerned about the termite report that they got from having a termite inspection (lets say came to $7500) and the seller is more concerned about the FHA appraisal conditions (that are exposed wiring, turn hot water on to have it checked, loose steps or stairway....etc).

So what are some repairs that you have noticed that would not fit into the FHA required repairs.  The FHA repairs usually show up on the FHA appraisal as an addendum to the appraisal and those conditions is required to be repaired in order to get the appraisal cleared.

Questions: 

1. What are some of the FHA required damages that will need to be repaired in order to pass the appraisal?
2. And have FHA lightened up on their FHA appraisal requirements?  
3. What about Conventional lender requirements how will the seller deal with those requests? 
4. And finally will the conventional loans looses their requirements as well?

 What are some of the repair requests that you have had buyers ask that you did not feel fell within the FHA required repairs?

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Agents, I just wonder if  you are explaining to your buyers what "as is" really mean or are  you letting them tell you how they are going to get it?

Offerrs come in with written notice on it that the buyer understands what "as is" is and they are buying this property in as is condition.  They sometimes bid high and then come up with a laundry list of "repairs" and ask for a credit for the repairs!  And as we know most buyer inspectors do not miss reporting anything... and sometimes will over state the damages because they are working for the buyer.

This is a very important part of the purchasing foreclosed or short sale home that every buyer should know.  Investors usually know more about this than owner occupied purchasers.  Some buyers know the work arounds and will try to use them on each and every purchase they make an offer on.  Sometimes it works.... sometimes it does not.

The banks are not liking this and if the company is Wilshire you may find that they reject the request and seem to not want to do business with that buyer.  Although this technique does work with some banks, it is becoming wide known this is what the buyer is intending on doing and so the bank will simply not approve the request for the credit or to do the repairs as requested.

Some will flat out reject, some will cut the number down to only the items that will fall under FHA inspection guidelines and not pay for the rest.

As is means simply "as is"

So yes, there are several games that you can play which trying to buy a property for dirt(y) cheap and No not all banks are equal approving your requests just because you are escrow.

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Yes! This can and has happened.  A property is short sale listed (listed over 1 month) and the homeowner ask about the new plan for loan modification.  My suggestion was to go back to the lender and try to get the modification.  When agents call about the property I now have to disclose that the owner is trying to get a loan modification.  Most will not submit an offer after you tell them that, but you do have to disclose this kind of information. 

I beleive it is wise for the homeowner to continue to list the property until they are told in writing that they have the modification.... otherwise, they may find themselves in a very stressful and lost of time situation.  Not that we do not believe the new program of loan modification will work.... but what if it does not?  

As agent, it is my responsiblity to tell the homeowner to try.  And in all sincerity I pray that it does work for them.  I'd rather lose the listing if it means the homeowner get to stay in their home.

For those that thought they did not have any opinions left - when the President announced his new program that is set up to help as many people that are facing mortgage problems and of losing their property -- this is really a good thing.  Although some will not get the help because they either will not ask for it, have already lost their home, the property is not their primary property, or they just don't qualify under the new plan.

Everyone have the right to try.  So if the property is already listed, or going to be listed as a short sale -- i believe it is wise for that homeowner to go on and list the home in parelle to trying to get a modification.  Because we have seen it in the past that the homeowner still did not get help from the lender.  Having the property listed is just being one step ahead if it should come down to still needing to sell their property - short sale.

The big question is:  Should it be disclosed that the homeowner is trying to get a loan modification?  And I believe the answer is YES! After all... the name of the game is... DISCLOSE, DISCLOSE, DISCLOSE!

Rosemary Brooks, Family Realty Group - the Mother and Daughter Team (866-543-0461)

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Let me just throw out some key bullets on how bidding/making an offer for a property can be complicated:

Time - (better known as patient) it will take the bank just as long as they need to decide. An agent, or a few agents cannot tell you how long it will take them to decide to approve, counter or reject your offer.

Price - (better known as the offered amount) this is up to you and what you want to pay for the property and of course how much you qualify for. Remember a property is only worth as much as you want to pay for it. But keep in mind that it may be worth more to some other buyer.

Offer - keep in mind it is not that easy to get a property for much less than what it is listed for (especially with the REOs). The bank pretty much stands firm on their price unless the property has been on the market for over a long period of time. The short sale is even harder to get it for less than listed price because the bank usually feel that the agent is listing it too low in the first place.

** but it never hurts to offer a little lower and hope for at least a counter if not accepted.

Multple offers - lets not forget this one. This means that more than you might put in an offer on the property at the same time that you do. With all the foreclosures on the market and the short sales out there, you probably will not be the only one that is interested in the property you are falling in love with. This is why you should really offer your highest and best in order to have a better chance at getting the property.

Concessions - this can include your request for help from the seller for closing costs, credit for repairs (say... credit for damaged carpet and always give an amount instead of just asking for "credit").

Repairs - this can be the same as credit for repairs but it seem to work better if you ask for a certain item to be repaired rather than asking for money to you for you to repair later. An example is Termite repairs. i.e. Section 1 repairs. This would or may involve the seller paying for the inspection, but not necessarily. Some of the time the buyer will get the inspection and then come back and ask for termite repairs.

Inspection time - in these days and times, there is no standard amount of days to inspect but to the bank it commonly will not exceed 10 days and most would rather you take 0 days to inspect. They recommend the interested buyers to inspect prior to submitting the offer. Not many buyers seem to do that!

Home Warranty - if there are appliances (Stove, oven, refrigerator, dishwasher, hot water heater, furnace, air conditioner, heater, microwave.... you name it) -- get a Home Warranty Policy. You can ask the bank, but don't be surprised if they reject paying for it. Either way, you should get a home warranty for your own protection.

Time - yes I know I already mentioned this but .... Time is so important. It will take the bank time to decide (either with a REO or Short Sale). More with a short sale (can be 1 week to several weeks which could turn into several months). Just be informed and prepared for the wait.

In summary... if you want the property -- Make an offer that is solid and strong. If you want a property that will take a while for you to find out if the lender is going to accept your offer .. be patient. Remember.. good things come to those that can wait!

Need an agent - call me!

Being "underwater" is no fun!  So what does it mean to be under water, "trying to" swimming and not having fun?

Being "underwater" is a term to means that you are over your head in mortgage debt.  It means that you owe to the lender more money than the property you call home is worth. It means your payments are so high --- you are sinking, you cannot afford it.  It means that with the way the market is going you will be "underwater" for a long time to come.  It means that some will have to find somewhere else "sweet" to call home because the stress and discomfort that comes being "under water" is certainly not "SWEET" and it won't be home for long!

Being "over your head" in mortgage debt also, more than likely, means that you are in "knee deep" or "deep in debt" in other areas of your life ---such as but not limited to:

• credit card - over the limit
• credit card - just barely paying the minimum and going under with the penalties that they are charging you
• auto loan is over due and adding up on payment lates
• late or in default with student loans
• Can't afford Health Insurance?
• Can no longer afford that motorhome, or second home?
• Living less than paycheck to paycheck
• Can't get credit from your "preferred bank"
• Can't trust your used to be favorite loan officer
• afraid to even think about buyer stocks - even at $1 a share!
• Can't understand why the Wall Street Gang is always clapping!
• haven't been able to go shopping in at least 2 / 3 years
• afraid to pull your credit report - eventhoug it is free

If you any of these going on in your life..... or something close to these....you are certainly "underwater" and in some cases it is "deep muddy water" that leaves a bad taste in our mouths and lives.

There is help out there for you in most cases:  Check out Obama's plan to help that are not yet in foreclosure, those that are and those that need credit to help them get from "under water".  Here are few links/resources to check out and see what options you have:

• makinghomeaffordable.com
• http://www.hud.gov/offices/hsg/sfh/nsc/faqlm.cfm
• The HOPE for Homeowners (H4H) program (http://fha-refinance-program.com/hope-for-homeowners.html)
• SEARCH THE WEBSITE FOR HELP!

Hope is a belief in a positive outcome related to events and circumstances in one's life. Hope is the feeling that what is wanted can be had or that events will turn out for the best.

 Don't "stick your head in the sand", get out and see if there are some options that will help you --- if you are in this situation or if you know someone that is.

Thank you,

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