CJ Brasiel

Every short sale deal proposes a unique surprise to deal with between offer and closing. But, there are several items that seem to come up over and over again, that even the best of us can be surprised when managing a short sale contract for a home buying client. These are items specific to California and each state has variations on how short sales are managed and the foreclosure procedure unfolds. Always consult with a local professional.

#1 - The listing agent is working for the seller to help them avoid foreclosure not the buyer. Desperate times, desperate measures. When an agent needs to stop a TRUSTEE SALE, they will lower the price under market, creating a bidding frenzy so they can submit an offer to the short sale negotiator as soon as possible to stop the trustee sale. This tactic also applies when an agent has an unreasonable negotiator or a BPO (Broker Price Opinion - mini appraisal) that is too high. The agent will price the home slightly under the BPO and try to demonstrate to the negotiator what the buyers are willing to pay. As a buyer, your agent should be able to demonstrate what is fair value through their assessment of the home and the comparable sales in the area. Don't be teased into a multiple offer crazy price war over a short sale. Whatever home you are placing an offer on, have a good feeling for the market value before writing the offer. Always know your highest bid before you write the offer and you will not have to worry about buyer's remorse or second guessing yourself when you didn't get the home because someone paid more.

#2 - Always request to see the preliminary title report before writing an offer on a short sale. Any good short sale agent has a copy of the prelim before they place the house on the market. The prelim indicates the current liens on the property. I can't tell you how many times, an agent has told me there is only one loan and I find out there are three. With that said, don't ever believe the preliminary title report to be accurate. The preliminary report is only good for the date it was issued and if it is over 30 days old, request an updated one. Not that this guarantees anything either. Why? As you probably already know, not all notes transferred (sold) within the MERS system, are recorded at the county. Therefore, if Bank of America sells its note to GreenPoint Financial, the original Bank of America loan may be on the preliminary title report but not the GreenPoint. This also means that the amount owed for Bank of America may not be the exact amount of the loan balance. Sometimes the only way to know the liens is by the seller providing mortgage coupons and utility bills. Home Owner Association delinquencies are another surprise that come in late in the game. There is no standard for what an HOA will charge in late fees and penalties.

#3 - Request to see the seller's current HUD when the short sale approval letter is received. You and your agent can double check to make sure the approved amount matches the bottom line. With the approval letter comes a closing date. Make sure the pro-rations for taxes and HOA fees are dated in accordance with the short sale approval letter. This can be very tricky as the many times the escrow officer will only request a demand at the beginning, when the offer is accepted by the seller, and if the short sale approval took longer than that pay off date, there may be significantly more late fees and penalties added. This is a hard one to manage as I have found very few HOA groups that are easy to work with. Sometimes delinquent HOA fees are passed on to collection agencies and they are even more difficult to work with when it comes to settling on a short sale.

#4 - Make sure you do everything you can not to become a landlord on the day your agent hands over the keys. It is not uncommon for short sale sellers to think selling their home is never going to happen and they can become complacent about the moving date. Write into the contract that the seller vacate the property 3 days prior to close of escrow ( 5 days even better). This way, your final walk through can confirm they have found another place to live. My rule for my clients, if the beds are gone, get ready to close. If the beds are still there, your only option is to hold up the funding and not close escrow. No agent wants to get this close and not have their sellers out of the house. I have personally hired movers to make sure sellers are out before close. Realize many short sale sellers have bad credit and can find it hard to find another place to live. My comments are not to be cruel but realistic as the moment the buyer takes ownership, if the sellers are not gone, they are now tenants. Read more about the California Eviction Process here. The fact is any seller staying over close of escrow becomes a tenant. However, in a short sale, there are no proceeds to hold until the seller vacates. During the buyer's walk through, it should be very clear the seller is moving.

#5 - Don't be surprised if the buyer, is asked to pay for something that is commonly paid for by the seller. Don't be surprised if this happens within five days or less of closing. Taxes, garbage liens, title fees, and HOA document preparation fees have all been examples of nasty surprises in the final hour of closing on a short sale. Generally speaking, it is less than $1000. However, the patience of buyers, sellers, negotiators, and agents has been exhausted and the buyer should be prepared for the fact that the seller and the short sale negotiator will not pony up. However, the gap must be covered and it either gets paid or the deal doesn't close. Most agents and buyers want the deal to close and so we chip in to make it happen.

In my humble opinion, the only reason anyone should buy a short sale is if it is the home they really, really want. Don't write an offer just because you think it is a deal (the feeling you got a deal can slip away quickly with unknown repairs and surprise closing costs). Make the offer because you think it is the best home for you. Only then will it be worth "hanging in there" and only then will you be willing to do what it takes to make the deal happen. Buying a home in a short sale takes patience, more patience, and a little bit more patience to make it happen. If it is not your personality type (or your agent's) to keep working the deal and not let the speed bumps derail your desire for the home, then don't write an offer on a short sale. It is not my intent to make you an anti-short-sale buyer but to give you just a wee bit more insight on what to prepare for when buying a short sale home. As someone once told me, "Prepare for everything and nothing will happen.".

If you have specific questions about short sales email me or call me at 408-406-6035.

CJ Brasiel, Broker Associate
REALTOR® SRES® GREEN® CDPE CHS
DRE #01509579
Fireside Realty & Mortgage

Follow me on twitter @CJBrasiel

The new Multiple Listing System (MLS) software provides a quick glance of information pertinent to real estate professionals about the daily real estate world. This "hot" list includes New Listings, Pending Sales, Reduced List Price, Sold, and Increased List Price. Increased list price? It caught my eye when I realized in the last week, 32 homes in the San Jose area have increased the list price of the home. I had to know why. In this market, what kind of seller believes, after sitting on the market for a while, they should increase the list price? Yep, you guessed it. Lenders.

Out of 32 homes that increased the list price, many were simply clerical errors and the fact that the agent forgot to include an "8" in the list price. But 19 of these homes were short sale listings where the list price had been increased. Many times after it had been a "pending" sale. This means that the list price was published on the MLS, an offer was received, accepted by the seller, and then submitted to the lender for short sale approval. Something happened and the deal did not go through and now the home went back on the market with a new, higher list price.

I dug into the history a bit more and found that in many cases, there were multiple offers, the highest offer was submitted but before the lender could approve the short sale, the buyer walked. Therefore the listing agent decided to bring the home back active with the highest price offer to find another buyer. Why? Mainly because if the agent did not list at the higher offer previously received, the lender will almost certainly question it and at minimum counter to the last highest offer price. Short sale listing agents do not like wasting time on offers they do not think will work with the lender. Many times, we do not have time to waste as a foreclosure trustee sale is looming on the horizon and our selling client's lives are in limbo until we get the job done.

The second possible scenario is that the offer was submitted to the lender and the lender counters with a higher offer, the buyer says "no way" and cancels. Now, some agents will re-activate this listing on the MLS as an "approved" short sale at "X" dollars. I don't agree with this practice as there is no approval yet, simply a counter. Even if the lender did give an actual approval letter and the buyer walked after receiving the approval letter, any new offer will have to be reviewed all over again. Lenders look for "straw buyers" as an indication of fraud and do not allow for buyer names to simply be switched on approval letters. Also, if the deal fell out and it took a month before another buyer submits an offer, the lender will want to re-run the numbers as there is now one more month of late mortgage, taxes, and the like associated with the bottom line. In my opinion, there is no such thing as "already approved short sale" if the listing is active.

I didn't want to be to quick to jump to conclusions on why exactly there were such a high percentage of price increases on short sales but after I looked at the data, another trend appeared. Most new list price were almost exactly 10% higher. The average of the 19 homes actually came out to 10.5% higher. Yep. There were some as low as a 3% increase and some as high as 23% but most fell between 10-12%. Hmm.

Did you know in San Jose, the average sales price in 2010 compared to 2009 increased 11.8%?

I also looked at the comparables for the neighborhoods where these 19 homes were listed. I have not seen the inside of each of these homes and am only comparing online photos but in general looking at the comps for the very local area and similar square footage, number of bedrooms and baths, the original short sale list prices were within 2-5% of comparable list prices. Only one showed a 20% lower price than the area and it had also been a short sale for over a year with multiple offers and canceled contracts.

Assuming the home is comparable to other properties in size, location, and condition pricing within 2-5% is completely logical for a short sale. Some agents will price the home 10-20% below market when the trustee sale is too close for comfort so as to create a frenzy and drive the price with a quick market demand response. But as a part of the short sale package an agent must (should) submit photos, a repair list, and comparable properties in the neighborhood. If the list price is not close to the comps, there better be a written, justifiable reason to why it is not listed at market value. Not to mention, more and more lenders are completing full blown appraisals on short sales and they will absolutely compare the numbers against the offer in hand.

In the end, the real real estate question comes to me. Why would a buyer want to wait 3-18 months for a short sale if there is no discount advantage? ( I kid you not, I have personally witnessed a short sale with WAMU, then owned by CHASE, with PMI and an investor take 14 months to be approved.) Did I mention short sales are AS IS purchases? Meaning, the lender will not normally approve credits for repairs found during inspections. If the buyer does ask for repairs or credits for repair the short sale approval is void and the approval process starts all over.

There are at least two assumptions we can make from the information:
1.) Lenders will continue to expect short sales to be bought at market value by buyers willing to wait for however long it takes for an AS IS home.
2.) Buyers will realize that buying a short sale under market is probably not likely and move on to real deals.

Which will lead to short sales being sold at or above market value (assuming there are some repairs) or short sales not being sold and becoming foreclosures. Foreclosures cost the bank money and will certainly be more than any market discount of 2-5% a short sale could collect in the market place. But that would require logic. So far, I am not seeing lots of examples of logic in this market.

If you are a buyer looking for a deal, I am so here for you. I will let you know the pros and cons of short sales, foreclosures, relocation properties, and good 'ole fashioned (few and far between) equity sellers. There are deals, but they don't necessarily have a blue light hanging over the doorway or a particular title like "short sale" or "REO". Finding a deal depends on a buyer who knows what they have to have, would like to have, who is working with a real estate professional who knows the market, the value range, and is an excellent negotiator. I am available to anyone who wants to hear my opinion on a particular home, neighborhood, or market trend. Contact me if you would like to talk about your next move.

CJ Brasiel is a REALTOR®, Broker Associate with Fireside Realty located in the great neighborhood of Willow Glen in San Jose. Committed to exceeding clients' expectations through market knowledge, strong negotiation skills, prompt communication, and a passion for making each transaction a win-win.

Recently, I attended a presentation at the Santa Clara Association of Realtors® office on to learn about Envision San Jose 2040. This is a project created by the City of San Jose' planning group and the overview was presented well by Laurel Prevetti and Kim Walls. If you are not familiar with the project, you can visit the web site and download various drafts and supplemental information. I was excited to hear the plan, but came away feeling it lacked substance. This may be unfair as it is only in the planning stages, but I will be following this closely to see how it makes it way to real.

The first part of the process has great merit. Bringing people together from the various San Jose communities to allow for a community based input of ideas. The plan is to "complete 8 community workshops, 42 task force meetings, meetings with 23 community organizations, a bus tour, and an on-line engagement with 4,500 participants". (Bus tour?) If you would like to see the results of surveys completed by the 2000 and some odd residence of San Jose, click here. One of the questions asked in the survey was which areas were "Most in Need" of a Neighborhood Plan to guide growth. It is interesting to me that Bascom Avenue/Southwest Expressway came up as one of the higher ranked areas needing a plan as there is a pretty good implementation of new housing both for sale and for rent, as well as a new light rail station at Fruitdale and Southwest Expressway. The East Santa Clara / 5 Wounds area had only began to add in new strip malls and housing when the housing crash happened. This end of town definitely needs attention to build a stronger neighborhood connection to down town proper. Stevens Creek was intended to connect Santana Row and downtown via the San Carlos Corridor renovation project. Lots of battles to be fought on that point, due to surrounding neighborhoods like the Shasta/Hester community and Willow Glen residents not wanting growth to impact their neighborhoods.

The other graph in the report clearly indicates that new housing needs to work with new mass transit systems. The future BART station and extended light rail stations need to be surround by housing. The priorities highlighted in the brochure indicates that "economic development" and "fiscal stability" along with "environmental leadership" are most important to the residents of San Jose. Next "Urban Villages" and "Transit Ridership" showed as key issues as well. There was much discussion about the demographic prediction for the next 25 years being more of a mix of "childless" urban dwellers. Both from the baby boomer crowd and the younger 25-35 professional group. These groups want places to walk for coffee, jump on a train to San Francisco, and are less likely to want to use their cars even if they are Prius owners.

The simple definition of envision is "to conceive of as a possibility, especially in the future; foresee". The possibilities presented last week are great. I felt excited for for the direction in which the project is heading. With a $116 million budget deficit for San Jose (read proposals to fix here in PDF) it simply is not clear on how to bring this plan to reality.

Even though I understand the changes in demographics related to more "childless" residents, most clients I meet with are very interested in good school districts. The graph above indicating which neighborhoods need a plan for growth are the same areas that need a plan for better schools. The following screen capture is from the web site School Performance Maps.com and it indicates by color the API ranking of schools. In this image you can see the high performing schools (light to dark blue) and the poorest performing schools (yellow to red) and how geographically they align with the need for planned neighborhood growth.

I can't sell downtown or the East Side without better schools and better transit options to Silicon Valley. An urban village needs to be connected, safe, and supported by performing schools. This is a critical component of San Jose' future not only as a city but as a participant in our country's future.

We could be the environmental leaders through technology, transit, and urban planning. We could be a beacon to other urban areas where communities thrive on all levels and not just on the flat surface of a microchip. But that's my vision for San Jose 2040, when my son will be 40 and I will be... well, older.

There was one definite take away from this presentation for me was that I need to get more involved. How can I help grow the City of San Jose into the community that I can happily brag about to anyone in the world? How can I bring my expertise as a real estate professional to make sure not only smart planning for housing occurs but also ways where housing affordability and resale can commingle. Where value, if tied to a school district, encompasses all of San Jose school districts. If our future is tied to the success of our children then we should set out to be successful in making this verb envision actionable in our daily decisions as members of this growing urban village.

Of course, there is a Facebook page that you can keep up with all the details. Of all the things we click when on Facebook, this might be one we should

CJ Brasiel is a REALTOR®, Broker Associate with Fireside Realty located in the great neighborhood of Willow Glen in San Jose. Committed to exceeding clients' expectations through market knowledge, strong negotiation skills, prompt communication, and a passion for making each transaction a win-win.

After living in San Francisco for a few years, moving back to San Jose and its suburban nature took some getting used to. I missed the ability to walk to a variety of restaurants at any time of the day or night. I missed the ability to stop in at a library without getting in the car. I missed the urban architecture offered by the many new developments along the Embarcadero and Potrero Hill. However, lately, I am taking notice of San Jose's new downtown developments, and in particular have created a warm and fuzzy feeling for The 88 high rise homes.

There are several new high rise developments around downtown San Jose but few can tout a Walk-able score of 100 like The 88. With the new Safeway Market in the same building, and within a block or two, multiple restaurants, movie theaters, and the Martin Luther King Library there is really no reason you would have to leave your neighborhood. Not to mention San Jose State University two blocks away, the San Jose Opera house another three blocks away, and the North First light rail station across the street, which also connects to the Diridon Cal Train Station. This is what is meant by urban living. Proximity, convenience, and culture.

The 88 is everything an urban dweller could want. Designed by the SB Architects and developed by Wilson, Meany, Sullivan ,who also developed the San Francisco Ferry Building and The Beacon residential development across from the San Francisco Giant's ballpark. This team knows what they are doing. Elegance, functionality, wrapped into workable floor plans, make The 88 come together as homes any home buyer would enjoy.

But living at The 88 is not contained to your individual condominium. Living at The 88 expands to many other areas. The Media Lounge allows owners a big screen TV and complete kitchen to entertain a group of friends for movie night or sporting events. The lounge area around the heated lap pool offers comfy couches, lounges, complete with pillows and an incredible view of the mountains. This area also offers an outdoor grill and tables for your next get together with friends. To make sure you are able to work off all the food, a complete work out facility with the latest exercise equipment is available on site, complete with views.

Amazingly, it doesn't stop there. With a complete concierge service included in the home owners' association dues, the busiest home owner can make sure time off from work is fun instead of filled with running errands. Here's a partial list: event planning, dog walking, errand running, personal shopping, shoe polishing, key holding, package services, plant care, private yoga, drop off postal items, and fresh flower delivery. This is easy living!

If you are interested in buying a home in downtown San Jose, The 88 wants to make sure you get the best deal for the best home. In August they are offering 2.875% Mortgage*, Plus Treats! What does that mean in terms of monthly payments? Under this program, buyers could purchase a 2-bedroom home at The 88 for a monthly mortgage payment of just $1500!

What is the treat? The 88 is playing host to the latest food-phenomenon to sweep the nation, and is bringing a series of food carts to the corner of 3rd and E. San Fernando Streets every Thursday from noon-2pm. The Carts of August showcase local food innovators who’ve taken their gustatory skills on the road, in pop-up carts such as Mogo Barbecue and Treatbot Karaoke Ice Cream, both of San Jose and Southern Sandwich Co. of Redwood City. For a few dollars, lunch-goers can try something new before these café-carts roll back to their usual Silicon Valley locations. The pulled pork sandwich from Mogo was incredible. Good size, fresh, lean, and potato salad that rivaled my Mom's. All good.

San Francisco isn't the only urban option for the Bay Area. San Jose downtown is newer, cleaner, safer urban option for the Bay Area. Take a walk, take a tour and let me know what you think of the changes. Stop in at The 88 and see all this high rise has to offer. Make it a Thursday event, ask for Joyce, and enjoy some good BBQ after your home tour!

*Conventional conforming 5/1 ARM @ 2.875% note rate. APR 3.22%. Fico score of 740. 25% down payment required. Loan amounts not to exceed $417,000. Programs, pricing, details and specifications are subject to change without prior notice. Certain restrictions and guidelines apply. Taxes and HOA are not included in the payment as shown above. Valid on qualified homes put into contract between 8/1/10 through 8/30/10.