Joe Baker - REALTOR

So why is Bank Of America following in Countrywide's Horrible Short Sale Footprints?

Agents, we all remember Countrywide's slogan of "Nobody can do what Countrywide can" correct? To me, that is an interesting slogan considering the fact that they could potentially have had the WORST short sale processes that could have been dreamt up (Examples to follow). I could have organized a small team to assist me in not caring about their profits too. I can assure you my team would have been smaller and cost much less.

So why is it that after the takeover of Countrywide by Bank Of America, are their processes still just as bad? I assume that Bank Of America is trying to make their business profitable. I mean, it only makes sense right? I've been involved with several transactions in just the past few months that they've elected to give away more than $100,000. If I were a betting person, I'd bet that I'm not the only one out there that can say that. Why or how? It's simple. Bank Of America, formally Countrywide, has an extensive short sale department that has a sole job of reviewing incoming files for consideration of short sale and decide what is more profitable, take the short sale offer now, or let the home go all the way through the foreclosure process. After the foreclosure process the home is listed again for sale. The contacts at Bank of America are very clear over the phone, if they decide that they are not going to accept the short sale, they think they can sell the home for more after the foreclosure process. What a joke that seems to be with them.

Case in point: I had a listing in my local area that the owner had a mortgage balance of $216,000. When I first listed the home, I felt that it was worth about $190,000. We listed it for that and received an offer for $186,000. At the time CW stated their due diligence process (BPOs etc) to figure out if the offer that was presented would be an acceptable offer. Well time has slowly ticked by on this file. Countrywide decided that the offer of $186,000 was not an acceptable offer (They told me it was about $18,000 too low) and they were going to pass on it and closed the file. As time has passed on, the home condition has grown worse. The owner does not live there and is due for 22 payments currently. Much to anyone's surprise, there has been no sheriff's sale date set. I am currently working with an offer that is MUCH lower than that and you guessed it, Bank of America is now just sitting on it.

So that brings up the question, why does the Short Sale Department at Bank Of America not talk to the Asset Management Department (The REO area)? Good question. Chime in Bank of America. I'm sure the thousands of agents that are trying to work with you currently would love to know why you make this process so difficult!

Case Number Two: I represented a buyer who made an offer on a home for $169,000. Bank of America decided that $169,000 was not a good offer and let it go the entire way through the short sale process. According to them, they could make more money by offering it for sale themselves. (I wish I could make a buzzing sound while writing this because that couldn't be further from the truth). So, Bank of America decided to pay the attorney's to do all their work to take this home back to the REO status. Guess what it was listed for? $135,000 - and yep, my buyer got the house. I assume that after the attorney's fees they probably elected to lose $40,000 more. Oh, I almost forgot to mention, Bank Of America is going to 1099-C the owner for the lesser amount this year even though they turned down a much higher offer. After all the ridiculous decisions that Countrywide and now Bank Of America make, that seems to be the best one. I'm sure Uncle Sam would love to know that he's kicking this and every other homeowner while they're down through these poor practices.

HEY Bank Of America - IF YOU'RE GOING TO MAKE THOSE REDICULOUSLY POOR DECISIONS TIME AND TIME AGAIN, WHO ARE YOU PLANNING TO BE TAKEN OVER BY?

Joe Baker

http://www.JoeBakerHomes.com

Is it a must to be LATE on your mortgage payment to SELL your home on a short sale?

I've been on several listing appointments in the past 2 weeks where the owners of the home need to sell but are not late on their mortgage. What's the correct answer? Well, just like everything, the answer is not black and white. I will typically try to hit on several points that show both positives and negatives to both sides that should allow the seller to make their own decision.

Let's be honest, no matter what the situation is for the seller, a short sale is not a guarantee. It is entirely up to the seller's lender. There are not any ways around this. If the lender is not going to approve the short sale, it is not going to sell. There is one exception to this that I can write about later but I would never advise a homeowner to take that particular course.

Some lenders are not willing to look at accepting a short sale unless an owner is late on their payments. Those are just the facts. Most lenders are willing to look at a short sale if the owner is late. The reason for this is because no payments will eventually initiate the foreclosure process. We know the lender doesn't want to own the home.

A late payment will most certainly have a negative impact on the seller's credit. That is no secret. A 30 or 60 or 90+ day late flag is a problem. I ask the owner to think if their current situation is better than what it would be if they didn't have this house anymore. Some sellers cannot afford the home, or are just hanging on by a thread trying to make the payments. Sometimes the answer is of course, they are willing to have some dings on the credit to be more comfortable.

Of course, it never hurts to try to work with the lender to accept a short sale when the owner is not late. The worst they can say is no. If the lender does say they are not going to accept the short sale because of that specific reason, we know what the answer. At that point, the owner can then make a clear and concious decision of if they should be late or not in order to sell the home.

Check out www.JoeBakerHomes.com for more information!

I've been reading some articles in our local newspaper, which I won't name since they are consistently weeks behind and usually completely backwards on their information, that have been saying that we are finally recovering a small amount in home prices etc. They have mentioned that the Twin Cities' market is up almost 20% from a year ago and inventory is on the downward move. While this is true at face value, they are failing to put two and two together as to why these stats are accurate. Let me try to address these issues and maybe shed some light as to what is coming in the somewhat near future.

I think most people would agree with me that one of the major reasons that housing has taken a huge decline in prices is because the normal seller is now competing with the short sale seller and the REO seller. I've mentioned before that banks are not in the business of owning real estate. They are much too smart for that. They are in the business of making money off of interest. If a lender ends up with the home after the foreclosure process, it's certainly just a liability on their books that needs to get rectified. They price these homes to sell and to sell fast. I've been in countless multiple offer situations in 2009 and with the exception of 1 home, there were all REO or short sale homes. Most banks are pricing the homes so they get multiple offers, or even a cash offer. Because of this, the short sale seller is able to price their home nice and low to sell fast too. Heck, what do they care, as long as the underlying investor of their loan(s) takes the offer, they are out of there. That underlying investor is going to hire someone to give them a handful of comps and if the offer is reasonable, they take it (most of the time). Typically, the handful of comps that are returned are REO or other short sale homes.

So, what about the argument that there are fewer houses on the market right now (IE: Inventory is down)? That's true. But why? Currently, there are about 500,000 REO homes on the market across the country. President Obama thought he was doing a good thing when he announced is foreclosure moratorium that was to last several months. While this did help some people keep their homes, what it really did was to force many lenders NOT to be able to sell their inventory homes on the open market? Well how many are there you may ask? 2,000,000. These homes are going to once again flood the market, which will increase inventory and most likely lower sales again.

It seems to me that fluffing information is never a good idea. It would be nice if the news channels and local papers would do a little bit of research as to why certain stats are released.

Joe Baker

http://www.JoeBakerHomes.com

During my marketing presentation to an Owner, I of course talk about things that I do that may be different from what a lot of other agents do. One of those items that I like to do for every Seller are multiple open houses. I can't tell you how many times that Owner or Owners comment that they are unsure of whether or not they would like those pesky open houses. After all, the Owner does have to leave their home for two hours on a Saturday or Sunday.

I always like to ask why?

Here are my favorite three objections to an open houseand how I like to respond:

1.) Owner - "We don't want our nosy neighbors in our home."

Why Not? Just because they are neighbors, that doesn't mean that we cannot enlist them to help sell this home. We certainly know that they are not going to buy the home (Well, most likely). However, all the neighbors have a circle of friendship that extends far beyond what we have. What if they have a friend that is looking that may be interested? That nosy neighbor could be the one to actually procure the buyer from our open house.

2.) Owner - "No serious buyers come to open houses anyhow."

Although it is true that many open house lookers are just passer by-ers, some of the people that will come are actually responding to an ad that was placed. Or they saw a sign for the open house and it's in the neighborhood that they have been keeping their eye on. It's impossible to state unequivocally that all open house guests are just there because they have nothing better to do.

3.) Owner - "We don't want people in our home that we don't know."

MY FAVORITE! Almost everyone that goes through their home with another agent at a regularly scheduled showing will be someone that the owners don't know. Why not allow us to get all the people we possibly can into the home at once? It's not very often that the eventual buyer of the home is a close friend, or even an acquaintance. Strangers are good when it comes to the open house.

Sometimes Sellers don't think of what it takes to sell a home. After all, it only takes one Buyer to buy the home. The trick in this market is getting that one Buyer into the home in the first place. In my opinion, it's always a good idea to get as many people through the home as possible. As I alluded to before, the more people that come into the home, the more the word of mouth starts to spread. That eventual Buyer may not even know they are going to be a buyer until they walk into the home.

I have many buyers right now that don't have the sense of urgency to buy as they once used to. I hear comments over and over stating if they miss one particular house, a better one will come along. I without reservation agree with this statement. But what is defined as a better house? From my discussions with these buyers, a better house is being defined as a home with the same or similar characteristics, but a better (lower) price. A better home used to be a home that had more features, or fit the particular family's lifestyle better.

That brings up my question of how can we be so sure that the market will continue to decline? Most areas, especially the Twin Cities and surround suburbs are still on a slide. That doesn't mean that it will continue indefinitely though. In short, and certainly in my opinion, the answer to my question is no.

Let's look at a market that we are all familiar with, the stock market. There are graphs and statistics and every other mathematical equation available that we can use the analyze the market back to it's inception. Heck, there's probably some graph available that shows the weather on any particular day and what the market did. There are many extremely smart mathematicians and statisticians that make their living analyzing what all this raw data means. However, nobody can predict the stock market with accuracy and certainty. If there were, each and every one of us would be rich. That brings me back to my point. The real estate market doesn't have all the graphs and stats available like the stock market does. There have been over time long upswings, and long downswings. Even if it did have all the trends and stats, we still wouldn't know with certainty what was going to happen next.

It's my belief that we are somewhere on the bottom curve before the valley. Of course, after the valley, or the leveling of the market, it will probably head back up. So what do buyers do? I feel that as a buyer, it is important to find a home that you like, a home that you can call home and see yourself or your family living for the next stage of your life. Don't get caught up in the details of whether or not the home is going to decline a little in value. Take your best shot at that home! What if we are in the valley of the curve, prices may be going up? You may have just missed a super opportunity. I have several buyers with the initial mentality of what I mentioned in the first paragraph get disappointed because they lost the home by a couple thousand dollars from their offer.

As with everything, consumers are driving the market, if you are aggressive, you may actually be the trend to controlling the market! You may actually be the start of home values starting to increase!