John Occhi. ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

It is true that the Active Listings in the MLS are dominated by Short Sales listings these days and on the surface they appear to be some really great deals. However, just like your Highs School Prom Queen, looks can be deceiving (my apologies to all the H.S. Prom Queens who read this...and their Kings...and the rest of the Court, as well).

Short Sale homes are typically are a better buying decision for an investor looking for investment property than for a first time homebuyer. It still continues to amaze me when a first time homebuyer that is in a rush to move will ask me if I know "How to Buy a Short Sale House for Sale in San Jacinto?"

Short Sale homes typically will be occupied by the owner - but not always. Today, more investors are trying to liquidate their investment properties through the Short Sale process.

WHAT DOES SHORT SALE MEAN?

Before I can educate a first time homebuyer I must first make sure that they truly understand the meaning of the term that is tossed about so casually these days so that they understand what is a short sale.

I offer a short sale definition that simply lets the prospective buyer know that the seller owes more on their mortgage than the home is worth and in order to sell it, the current owner needs to obtain permission from the lender - often a bank.

I'll elaborate, when questioned further that there is an entire short sale check list that each lender has that is unique to them. So what Countrywide, Bank of America, Wells Fargo, One West Bank or USAA expect from short sale REALTORS® is completely different from one another. There is no magic bullet that can speed up the short sale time line or give anyone a special passage to buy a short sale home.

SHORT SALE REQUIREMENTS

As previously stated, each bank will have it's own unique requirements for working with them to liquidate a short sale mortgage.

One of the universal tasks that a specialist in short sale realestate must address is the hardship letter that must be prepared documenting why the sellers unique circumstances should be considered for leniency in the forgiveness of what may be a huge amount of debt. To complete the short sale package, the hardship letter must not only tell the story of woe, but must document the circumstances with pay-stubs, bank statements, tax returns, medical records and anything else that can document the homeowners situation. It is necessary to ‘un-qualify' for the loan and PROVE that the homebuyer CANNOT afford the current mortgage. Loss of equity doesn't cut it.

Many lenders will provide the short sale realty company with a complete sample short sale package to improve the chances of getting the short sale package approved.

HOW LONG WILL IT TAKE?

This is perhaps the biggest reason I try my hardest to discourage first time homebuyers, who have or want to move soon, from getting involved in buying a short sale and why I'll do almost anything if it means avoiding a short sale.

The timeline can be very long - typically in excess of two months. When an offer is made by the buyer and their real estate agent, the listing real estate agent must now complete their "short sale package" with their hardship letter and all of the supporting documentation, which should include some preliminary title work to show any other liens that may be on the property as well as the contract that needs to be in line with market value of the short sale house.

On the receiving side the negotiator for the bank receives the package - but typically won't even take a look at the contract until close to the date when the bank is scheduled to take the home back, through the foreclosure process. You see, these bank negotiators are over-worked. They have a very heavy caseload and cannot spend a lot of time on any one file. The other consideration is they pretty much all work on some sort of bonus program - so the only files they are really going to get deeply involved in are the ones where they believe they will be able to close the deal and earn that bonus before the bank takes the home back in foreclosure and moves it to the REO department for liquidation...or worse sold as part of a bulk sale to short sale bank investors with a pool of other short sales that the bank chose not to negotiate.

The Short Sale process time line can move quickly once in the hands of a competent bank negotiator. So quickly that it is not uncommon for the bank to accept an offer and give the buyer 10 days to close escrow. So the buyer has to have their financing in place, which is why short sales are great investment vehicles for bank short sale investors but for the first time homebuyer who typically does not have a stash of cash and must rely on traditional financing methods which will require a decent credit score, a down payment and closing costs...not to mention some funds in reserve for any rehab work that may need to be done.

WHAT ARE THE CHANCES OF GETTING MY SHORT SALE PROPERTY?

There are those clients who just won't take no for an answer and God Bless them. After I painstakingly go through the details of the process, I am still asked about their odds of getting into a short sale property.

I'll make one last effort to enlighten them and ask the first time homebuyer if they understand what the short sale requirements are and if they are ready to go down the emotional roller coaster ride that will take two to three months...knowing that the statistics are against us. More often I'll get a fairly complete recap along with a, "but we just love this house, and it's in the neighborhood that we both love. Can't we just try?"

At this point, I say of course we can...as I dial the phone and ask one of my buyer agents to meet us back in the office...

Today I reached a fairly amazing milestone in my blogging history - I posted my 500^th blog post to my first and primary blog on ActiveRain.

I have lived in Hemet, since 1998 and just moved 5 miles north in the Hemet - San Jacinto Valley in July of this year, from the unincorporated rural area known as Valle Vista into a tract home in the city of San Jacinto.

Two months earlier, I moved my office from my home into a retail center, the San Jacinto Retail Center, anchored by Fresh and Easy, Jack in the Box, The Bull Pen Sports Bar & Restaurant as well as my next door neighbor, STARBUCKS. The San Jacinto Retail Center is right on the border with Hemet, at the north east corner of Esplanade and Sanderson.

My plan is to build my internet presence for both cities; whereas in the past over 90% of what I did was focused on Hemet.

The Hemet - San Jacinto Valley really is one urban community surrounded by a vast agricultural region of farms and dairy's. There is not the much difference between Hemet and San Jacinto - but then again they are two communities of stark contradictions to one another. As a former resident of the rural east end of the valley, with a Hemet mailing address and now a resident of San Jacinto, I have truly become a local area expert for the entire valley.

THE FUTURE

My plan for blogging now will be divided between my primary Hemet blog and my newly dusted off San Jacinto Blog, where I plan of serving the community with the latest market reports as well as stories about local events and landmarks.

Some of what you read here will be unique to this blog while there will be articles that have a very close resemblance to articles I publish at the other blog. Both are important and both will be maintained.

I am of course, open to suggestions from anyone on topics to write about, as I share my insight to the real estate market in general as well as life in San Jacinto.

Critical Mistakes for the Investor to Avoid: The Loan
by John Occhi REALTOR
Realtor Consultant to Foreclosure Investors

Many real estate investment mistakes can be avoided all together if the investor simply compares apples to apples when considering different loans.

I know, it sounds obvious, but sometimes I think loan packages are as confusing as buying a mattress. You know, you have seen the news expose on the mattress industry where a manufacturer will produce the exact same mattress and sell it under a different model name to each of its retail distributors so the retail guys can advertise the lowest price on that model...because it only exists in that one store.

And that's the way loans can be spun. The same item can be called so many different things and the pricing can either be in basis points, a percentage or even a flat dollar amount - almost impossible for all but the sharpest of experienced investors to sit down and truly compare loan opportunities.

Now, I am a REALTOR®, I don't pretend to be an expert on mortgages - those guys make enough money putting together loans that they don't need my input any more than I want your lender driving around with us throughout Riverside County or any where else in California, looking at investment real estate. They do their thing and I do mine. Together we form your team - so it is important that you work with a lender that can give it to you straight and if there are variances in any of the products he suggests to you, make him break it down so you are comparing apples to apples and leave the oranges in the trees.

Hoping to make your California Real Estate Investment...
A Pleasant and Profitable Experience,

John Occhi, Hemet CA REALTOR