The good news is that 4,706 short sales were closed YTD in Orange County. These homeowner avoided foreclosure, lenders were able to minimize their loses and buyers were able to enter the market.
The distressing news is that 5,759 short sales were canceled, expired and withdrawn in the same period. In other words. That means that over 50% of all short sales attempted this year - failed.
The why is easy ... the process is ridiculous. It usually goes something like this:
First, agents typically under price the property to attract buyers who would otherwise stay away from short sales. Then, dozens of buyers place offers on this and many other properties at the same time. Next, the lenders take months and months to even consider the offers. In the meantime, most of the buyers have moved on to other properties ... except the buyer with the lowest offer. But unfortunately, his offer is 20% below the comparables and the lender says "no".
So then, the agent goes back on the market and tries to get another offer at this possibly, but not guaranteed "approved" price. Then maybe this time, if they are lucky, they'll find a reasonable offer, if the negotiator hasn't closed the file yet, they get the highly coveted approval letter.
Unfortunately, the approval is only good for 30 days and as we all know, it's almost impossible to get a loan closed in 30 days in today's market. So, on Day 28 the buyer's agent sends over an urgent extension request and the negotiator responds that this delay is unacceptable and someone is going to have to pay a per diem for them to even consider an extension.
But remember, the glass is almost half full and despite this process, we are able to get 45% closed.
So, how do we fix it? Based on my inexperience with our current process, here's the easy solution to get about short sale success rate up to 95%.
1. First, the seller submits a standardized hardship financial package to the lender
2. The lender has a negotiator assigned to the property within 7 days
3. The negotiator orders an appraisal and 2 Broker Price Opinions within 7 days
4. The lender evaluates the package and the market value, and gives the homeowner an approved price with a 90 day window to get the property under contract
5. The homeowner hires an experienced Realtor who lists the property as an "approved short sale" that can be closed within the same time frames as a standard or REO sale.
If the answer is "yeah, but ... they don't have the resources" - that's crazy nonsense. This process would save them a fortunate in time, administration, personnel and eventually foreclosure costs.
Have a great week!
Seven Gables Real Estate
License #01727426
www.TheOCExperts.com
www.OCMarketUpdate.com (blog)
Direct: 714 276-7006
Fax: 714 917-2293
"If You Can't Explain it Simply, You Don't Understand It Well Enough"
~ Albert Einstein
"If You Can't Explain it Simply, You Don't Understand It Well Enough" ~ Albert Einstein
Every day I read articles, statistics, trends and countless opinions on real estate. In Orange County, the market snapshot and outlook has never been clearer.
Orange County Market Facts
1. Supply has dropped nearly 50% since last year (7,768 properties in the OC)
2. 28% of our supply are short sales and only 22% of active short sales are closing
3. There are only 333 bank owned properties on the market in Orange County, but 444 closed last month, meaning we have only a two week supply of REOs.
4. Interest rates are at artificially low rates and WILL increase
5. Investors are back in the market - both flipping and holding properties
6. Buyers are competing with dozens of other buyers for properties
7. Properties are selling for 98% of list price, and often - much more!
8. More bank owned foreclosures will hit the market
9. There is plenty of pent-up demand to handle more supply
10. It's finally possible to achieve "positive cash flow" on Orange County rentals
In addition, we have tax credits available to both first time and move-up home owners. In short, it's the best time in recent history to purchase real estate.
What to do next: Find a great agent who understands how to beat out the competition, write a winning offer on your behalf and protect your interests throughout the process.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
License #01727426
www.TheOCExperts.com
www.OCMarketUpdate.com (blog)
Direct: 714 276-7006
Fax: 714 917-2293
Good news for buyers and the housing market. These changes are effective when the President signs the bill. The credit offers several new features, including a $6500 credit for people who are not "first time" homeowners and a binding contract rule which will take away some of the pressure in April, 2010 when the credits are scheduled to expire. See the chart below for a summary:
This video had me laughing and crying at the same time.
As agents who list REO properties and also represent entry level buyers who are frustrated by the system, this video sums it all up and hopefully will remind all REO listing agents that we must rise above the insanity and do things right - every time, with every offer ... or simply say "no" to more listings.
We're still in "yes" mode, but if this is ever us, we're done!
http://www.youtube.com/watch?v=SM7oWKgCVo4
Nancy Moeller, CPA, Real Estate Broker
Direct: 714 276-7006
I was reading a blog this morning by an REO listing agent who was baffled (and very upset) by the number of calls she gets for status on her REO listings, despite her warnings not to do so in the MLS. She promises that her listings are kept current daily and goes on to say that a property is always "active" until the seller executes final documents. That is absolutely true and also the problem.
This process from the seller selecting an offer to final seller acceptance can take 3 - 7 days. In the meantime, all other offers are effectively ignored, rejected or "held in back up".
As an REO listing agent, we update our listings daily, but and this is the key - we provide the information that buyer's agents are calling about so they don't have to call. Here's an example:
10/01/09 - Multiple offer situation. Highest and best were due yesterday. Bank has countered one offer and rejected all others. Paperwork is with buyer. Property will remain "active" until both buyer and seller execute. We welcome your offers and if this working offer is not executed, we will contact all agents who submitted an offer to confirm your buyer's commitment to their originally submitted offer.
And while we still get calls, we don't get nearly as many because we give them the information they are calling about, and as such - we are able to return our calls and maintain our relationships with our valued realtor partners.
Another tip - we used to get calls asking us "How many offers do you have ... where do we need to be?" Now, we answer in the MLS.
10/01/09 - Property is active - please show and submit offers. We welcome your calls, but we will not disclose the number of offers or offer amounts we have received. Please do not submit any offers without first showing the interior of the property to your client.
We must realize that we are all in this together and help make each other's jobs easier so we can serve our buyer and seller clients more effectively.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
License #01727426
Direct: 714 276-7006
Fax: 714 917-2293
 |
|
|
As a CPA, REALTOR® and financial expert, I focus on protecting our clients financial interests in the sale.
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2009 ActiveRain Corp. All Rights Reserved
