Rich Cornelius

So you wanted a deal and you put an offer in on a short sale, perhaps even against your realtor's advice. 1 month went by, then another, and finally you hear back. The documentation is in order, the bpo was completed, and the Seller is countering your offer price $40,000 HIGHER! Huh? You thought that offer, while low, was enough to snag this home that is on the edge of foreclosure. The banks need people like you to unload these homes, right?

WRONG.

Like any other negotiation, dealing with banks on short sales DEMANDS you know their bottom lines, procedures, and rules of play. The first fallacy is that they NEED YOU. That is incorrect. Every bank has procedures for divesting themselves of bad investments and they stick to them UNLESS it's in their favor to take the shortcut, i.e. your offer. Even if a lender's REO department is flooded with inventory, it does not mean they will accept $.50 on the dollar for that beat-up 3/2 in need of a little TLC. Banks and servicers see only numbers, not rotted wood or broken windows. If the numbers don't work for the bank, then it's a waste of your time.

Which leads us to BPO's (Broker Price Opinions) and appraisals. While we all know the real estate sector is beat down, it doesn't mean that old 3/2 isn't worth a plug nickel. Lender's use appraisals (sometimes multiple appraisals) to arrive at a proper market value for the home, in accordance with their procedures. One lender I deal with automatically takes 5% off the BPO price to account for delays, time, and condition. So do yourself a favor...comp out the property BEFORE making your offer, ask the listing realtor for comps to justify value, and if you lowball, expect a counter (or someone else to slide a higher offer in after the bank counters yours).

If much time has elapsed since the property was last appraised, consider requesting a new appraisal. Guaranteed it will come in lower and closer to market value.

Just remember - the bank doesn't care if it needs new windows, the tile job was done poorly, or the cabinets are older and need freshening up. Heck, they don't even care about the age of the roof, the a/c system(s) or even the paint. Your negotiator is OVERWHELMED, OVERWORKED, and EXHAUSTED...there is very little motivation for them to work outside the framework that is set up. If they can't sell the home via short sale, the file is simply shipped over to their legal dept for foreclosure, then onto the REO dept for re-sale. No agnst, no emotion, etc...just a simple numbers game. So do yourself a favor and offer the RIGHT number so you, too, can be a winner in this market.

As a followup to my last post, I am now firmly of the opinion that Buyers and Sellers will now have to work closely together with understanding, patience, and flexibility if they are to achieve the results each desires. Whether it be re-writing addendums with bank-approved verbiage, extending closing deadlines for additional file approval, or even adjusting sales prices to include closing costs for Buyers, we have entered into an extraordinary time.

Sellers that don't want to play ball can find themselves back with the home they that they had sold. I encourage all sellers to be open-minded and let the other party know you intend to work with them to finish the sale.

As proof that now is an excellent time to buy, clients of mine who closed on Friday received a VERY competitive rate of 4.6% WITH NO POINTS!

Sales are up and if you've been montioring your favorite property for awhile, there's a good chance someone else may have snagged it up. I can attest that there is a ton of JUNK on the market...over-priced, beat-up homes that are perpetual listings and will probably never be "sales".

Is the market stabilizing? No one really knows. This market can't freefall forever and data is indicating a stabilization in certain segments. Get out there and get that home you've been wanting...

BUYERS AND SELLERS BEWARE!

Mortgage companies are putting YOUR escrow monies at risk!

Standard Florida Association of Realtors-approved sales and purchase agreements provide for a certain number of days (agreed by both parties) by which the Buyer will furnish a mortgage committment letter, thereby removing the mortgage contingency from the contract. If the mortgage letter is not supplied within the prerequisite timeframe, then it is automatically removed as a contingency.

Whether it is active or passive, the removal of the contingency for mortgage qualification puts a Buyers escrow (aka earnest money deposit) in jeopardy.

As a sidenote, many clients ask me how much escrow monies they should put down on a contract. The simple answer is twofold: there is no hard and fast rule in the State of Florida AND whatever sum is agreed upon by both Buyer and Seller. Buyers always want less, Sellers always want more.

I represented the Seller in a recent transaction and the day before closing, the Buyer's lender requested additional comps (comparative market sales) for the subject home. Apparently, their automated valuation program showed it to be a lesser value than the certified residential appraiser's appraisal did. This was a large inconvenience for both parties (and all involved) but moreso a large risk for the Buyer. What if the lender came back and said "Sorry, we cannot approve this loan...not because the appraisal showed less value than the purchase price, but because WE, the lender, don't think it's worth the money we're lending to the Buyer."

Whoa.

The Buyer has now passed the timeframe to cancel based on qualifying for the mortgage, which means their escrow is at risk. Obviously, the Seller is pushing to close asap but they are powerless observers as the lender completes it's due diligence.

The moral of the story is to use caution when dealing with the mortgage contingency clause. Even if all the dominoes line up, the mortgage lender may throw a curveball at the end that RISKS YOUR GOOD FAITH DEPOSIT.

I was reading an article in our daily real estate news bulletin and came across this gem:

"A "secret shoppers" test of 100 IDX-powered broker Web sites found that 33 percent of agents do not respond at all to inquiries about other brokers' listings. For those who did answer queries, the average response time was over 10 hours."

My first thought was I'm not surprised. It's one of the most common complaints I hear..."I called 14 realtors and you're the only one that called/emailed me back."

Well, this is a well-known secret for every realtor...communication is the key to our success. We are communicators and facilitators of both real estate and INFORMATION. Now mind you, I will never throw stones...have I let an inquiry sit in my email box over the weekend? Yes (I am ashamed). Have I put off returning that one phone call on the home that won't sell? Yes (I am ashamed of that, too).

However, I am successful in real estate because 9.9 out of 10 times, I will respond to inquiries as I receive them whether in the office, on the road, at home during dinner, etc. Why? Because it's my job. My sellers depend on my timely and informative responses to successfully market and sell properties.

Many agents forget that THEY are an extension of their marketing campaigns. They spend $1000's of dollars wooing buyers but drop the ball when the inquiries come in. Heck, most buyers are somewhat reticent to call realtors anyway (which I understand 100% - who wants to be hard-sold when they just need some details on a property?).

I encourage buyers and SELLERS to test me. I think you'll like the results...

I receive a question from my blog this past week that I thought might be important to other readers. The names have been removed to protect the guilty ;-)

QUESTION:

I have recently been in a late fee problem at a trailer park in Dade County. The manager charged me $2 a day after the 15th of the month, and a standard flat fee of $15 for the first 15 days that kicks in when you are 10 days late. Each month that you are late the months begin to run parallel to one another like horses in a race. In other words, while March is late and accruing late fees of $2 a day, so is February. The end result is a cocktail of late fees totalling $150 or thereabouts when I paid everything on April 1st. I think this must be illegal. Can you help me?

MY ANSWER:

Thank you for your email. I can offer advice about what I would do and how I would interpret your lease, but Florida law says I must inform you that I am NOT a lawyer and CANNOT offer legal advice.

That disclaimer aside, can you email me a copy of your lease? From my experience with various contracts and HOA's, all monies due are applied to the deficient balance first, then towards the rent that is not yet late. In other words, You can't skip February, skip February's late fees, and then pay March in full. Any payment you made would be first credited towards February rent and late fees, and then to March rent.

That does have the snowball effect that you mentioned...not only is February late and accruing penalties, but March then goes late because your March rent is applied first to February.

I am not familiar with Dade County, but Pinellas County has a legal hotline for consumers http://www.pinellascounty.org/consumer/. A similiar Dade County office would be able to direct you further.