Matt Peters (New Mexico Broker)

I've long been a firm believer that "who the seller is" is much less important than the property and the listing price. But, things have changed. With an increase in short sales, a supply of REOs, plenty of non-motivated Sellers, and "the clueless", foraging for a home or a bargain has gotten much more ccomplicated.

Of course, the property has to be right. But what kind of Seller, and possibly some underlying details, needs to be determined and well considered to determine approach.

The Conventional Owner may or may not have the motivation needed to sell, but hopefully, has the ability to sell. Negotiations are influenced more by perception and motivation of the Owner and circumstances which, more often than not, are unknown or difficult to determine. But, response to an offer should be fairly quick.

The Short Seller lacks equity and needs one or more lenders to agree to settle for less than due. In this case the Seller is willing to accept ANY offer that is considered "reasonable". The ultimate decision maker is the Loan Servicer or Investor. In a perfect world, the Bank would be quick to accept any offer that would provide a better net that an ultimate sale after foreclosure. Aside from the difficulties to determinewhat that might entail, there will probably be "secret rules" under which they must operate. The complexities, the work load of the Servicer and the possible need for review by a higher authority all contribute to the biggest probable issues with this type of sale, -- time and uncertainty.

The Bank Seller (REO) needs to liquidate, pure and simple. They may have misinformation on the value of the property or the market, but they will be selling. Over time, they will become more motivated and both reduce list price and their attitude on offers. Generally they will respond to offers within a reasonable time. Exceptions to quick response may occur at busy times, at the beginning of the listing period and/or if offers are low or ccomplicated.

When a bank is involved, either Short Sale or REO, "national conventions" will generally apply to the sale. That is, there will be limited costs that they will be willing to pay, regardless of local custom. Proper and carefulpreparation of an offer to purchase by a knowledgeable agent can greatly increase success. Concessions that the Bank either can not or will not make will only delay the process and can loose the deal. Often detailed instructions from the Bank or the Listing Agent are completely ignored by inexperienced Buyers Agents to the peril of the transaction.

The biggest advantages of dealing with the Conventional Seller are flexibility in terms and quick response to offers. There may be low motivation and reluctance to make concessions, but every case is different.

With aShort Sale the advantage is the possibility of a below market deal. Limitations on how terms can be structured and the waiting and indefinite status of the transaction for extended periods are definitely disadvantages. The ability and attention of the listing agent is a very important factor in the potential success of a Short Sale. It is only after a Borrower approved offer is submitted to the Loan Servicer that an evaluation of the property and the market is started. There is often a backlog of cases adding to the delay in processing.

REOs have limitations similar to the Short Sale on the structure of terms, but the response time on offers is only a little longer than expected from the Conventional Seller. Part of the reason for a faster pace than the Short Sale is preparation. With an REO, the Bank is an owner, motivated to sell, who has already determined market conditions and values.

Once you find the right property, develop an approach in negotiation that fits the type of sale.

Matt Peters, Albuquerque-Rio Rancho, NM Matt@REALTOR.com
(505) 269-4791 . . . . Your Direct Line to RESULTS
www.IdealNM.com www.Relocation2Albuquerque.com

Various forms of Stress can create opportunities to purchase real estate at bargain prices. A promotion or new job requiring relocation for the Seller is a rare positive event. Most opportunity causing events, however, would be considered negative from the Seller's point of view. Job loss, health issues, medical bills, divorce and even death can all create stress which will eventually force a sale.

When a property's mortgage is moving towards default, there are possibilities to negotiate a deal, but many of those transactions can get quite complicated. Making a deal with an owner under pressure can be tough. If the mortgage holder needs to accept less than the full amount owed, a Short Sale would be needed. Final review and approval by the lender can add to complexity and take a lot of time. Prior to completion of foreclosure, considerable skill, effort. patience and persistence are required to have a chance of completing a transaction.

Once the foreclosure process is completed, the Lender is the new owner. The property is Real Estate Owned (REO). REOs, sometimes called Bank Owned Properties, are listed for sale like any of the other properties, but there are some differences to keep in mind when attempting to buy an REO.

Although there are some differences in terms acceptable to different Bank Owners, there are common elements in nearly all situations. Properties are offered in AS IS condition and are usually "less than perfect". Buyers need to demonstrate their ability to perform by submitting Proof of Funds (POF) or a pre-approval letter a lender. And, the Seller will usually pay limited closing costs, and only at closing. Any inspections, including appraisal and survey, and most loan costs are often the Buyer's responsibility.

REOs can be a terrific opportunity. Make sure you work with a Broker who is experienced with REOs. Writing an offer with multiple requests for items the owner cannot accept delays seller response, complicates the negotiation process, and can result in a lost deal. You don't want that!

Deciding on an offer price can also be challenging. Current asking price, price history, length of time on the market and opinion of actual value all should be considered. Knowing the rules of the game can improve the odds of making the deal.

Matt Peters, Albuquerque-Rio Rancho, NM Matt@REALTOR.com
(505) 269-4791 . . . . Your Direct Line to RESULTS
http://www.IdealNM.com http://www.Relocation2Albuquerque.com

There are a lot of reasons to buy real estate right now -- especially if you don't already own your home.

Interest rates are really low, prices have come down in nearly all markets, FHA offers buyers with credit scores down to 580 a variety of products, the USDA has a great zero-down program for rural areas, and there is a great tax credit/rebate that works like a zero-interest loan (or better) with payments of only $500 per year or maybe even less.

There is a lot of information on the Tax Rebate for first-time buyers directly from the IRS at http://www.irs.gov/newsroom/article/0,,id=187935,00.html and it is well worth review by both porential Buyers, Real Estate Professionals, and even Sellers looking to "marketing ideas" that may help get their property SOLD.

I have a couple of questions, that need answers!

If a frist-time buyer uses the FHA "kiddie condo" program to secure financing, does the tax credit apply? If it does apply, how do the figures work? If it does not apply, is there a way to make it apply?

We all should know about the FHA allowance of non-resident co-borrower(s). As long as there is a close relationship, a more established individual or individuals, can use their credit and income to help a more "dependant" individual purchase their primary residence. the primary borrower cannot have bad credit, but can have little or no credit and their income or lack of income is not an issue. One of the most common uses has a parent or parents as co-borrower(s) and co-owner(s) helping out their child in getting started -- hence the nickname "kiddie condo program". It is a great means toward college housing, in fact my daughter loves her townhome and I would rather make payments on it than her pay rent while she attends the University of New Mexico.

I consider myself pretty knowledgable on general tax matters, and a relatively good researcher. But I have not been able to find a definitive answer to these questions. Is there anyone out there with some answers?

Matt Peters, Albuquerque-Rio Rancho, New Mexico http://IdealNM.com

Various forms of Stress can create opportunities to purchase real estate at bargain prices. A promotion or new job requiring relocation for the Seller is a rare positive event. Most opportunity causing events, however, would be considered negative from the Seller's point of view. Job loss, health issues, medical bills, divorce and even death can all create stress which will eventually force a sale.

When a property's mortgage is moving towards default, there are possibilities to negotiate a deal, but those transactions can get quite complicated. Making a deal with an owner under pressure can be tough. If the mortgage holder needs to accept less than the full amount owed, a Short Sale would be needed. Final review and approval by the lender can add complexity and take a lot of time. Prior to completion of foreclosure, considerable skill, effort. patience and persistence are required to have a chance of completing a transaction.

Once the foreclosure process is completed, the Lender is the new owner. The property is Real Estate Owned (REO). REOs, sometimes called Bank Owned Properties, are listed for sale like any of the other properties, but there are some differences to keep in mind when attempting to buy an REO.

Although there are some differences in terms acceptable to different Bank Owners, there are common elements in nearly all situations. Properties are offered in AS IS condition and are usually "less than perfect". Buyers need to demonstrate their ability to perform by submitting Proof of Funds or a pre-approval letter a lender. And, the Seller will usually pay limited closing costs, and only at closing. Any inspections, including appraisal and survey, and most loan costs are often the Buyer's responsibility.

REOs can be a tterrific opportunity. Make sure you work with a Broker who is experienced with REOs. Writing an offer with multiple requests for items the owner cannot accept delays seller response, complicates the negotiation process, and can result in a lost deal. You don't want that!

Deciding on an offer price can also be challenging. Current asking price, price history, length of time on the market and opinion of actual value all should be considered. Knowing the rules of the game can improve the odds of making the deal.