Realtor


You’ve found THE house and you’re ready to take the big step and write an offer.  But what is the right price?  Should you start low or come in at full price?  Should you offer more than asking price to seal the deal?

Determining the best offer price is based on a variety of factors, the first being the price of comparable properties.  Your Realtor will research sales and current listings, usually going back no more than 6 months.  She will try to find homes that have a similar number of bedrooms and baths and square footage.   She will also look for properties in the same or similar neighborhood of the same age.  Other factors she will consider might be upgrades and amenities, such as a remodeled kitchen or swimming pool, or view.  The more like the home you hope to buy, the better the comps.

Reviewing the prices of the comparable sales and listings will usually give you a reasonable price range.  The next step in determining your offer price is to look at the condition of the home.  If there are obvious repairs needed, such as new carpet or paint your offer price might be at the lower end of the price range for the comps.  On the other hand, if the home is in move-in condition or has other outstanding features or upgrades, your offer price should be closer to the top end of the range.

Another important factor is the competition.  How long has the home been on the market?  How long were the comps on the market?  Are you competing against other offers?  Is there a scarcity or over-supply of similar homes in this price range?  As with any commodity supply and demand are important factors in determining price.

And finally there is an emotional component.  If this truly is your dream home and you can’t bear the thought of having your offer rejected, you might be inclined to offer above the asking price and even above the comps.  Just be aware that if you are getting a mortgage on the property and it doesn’t appraise as high as you are willing to pay, the difference will most likely have to come out of your pocket.  You should also be cautious about buying at the top of your personal price range or depleting your savings as it will be difficult to enjoy your dream home if you’re house poor.

As I noted in a post earlier this year price isn’t everything when it comes to getting your offer accepted, but it is the most important factor.  Work closely with your Realtor; listen to her guidance, ask questions and carefully weigh all of the factors.  In the end the decision is yours so please, do everyone a favor and don’t waste time with a ridiculously low offer!  If you want the house, bid like you mean it…you might not get another chance!

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No secret, actually.  The success of your short sale all comes down to your listing agent.  Really.  Negotiating a short sale is one of the most challenging jobs in real estate today. An agent representing a short sale client is responsible for helping them get out from under a huge financial burden and save their credit, and responsible to the new buyers for closing the deal in a reasonable length of time.   Without the right agent representing your interests it’s easy for the deal to fall apart and your home go to foreclosure. 

Here are some important questions to ask a perspective agent before listing your home as a short sale: 

1)      What is their short sale experience and what percentage of attempted sales have they successfully closed?  This is not the time to hire an inexperienced agent as short sales are an intricate process that requires an understanding of lender procedures and requirements.

2)      Do they do their own negotiation, or do they work with a professional negotiator?  An experienced, professional negotiator may be a real plus as that leaves the agent with more time to focus on marketing your home and finding a qualified buyer.  Also, a professional negotiator will have established relationships with a greater number of lenders which can often help expedite approvals.

3)      Will the agent pre-qualify you for the short sale?  Although the lender will have the final word, an agent should be familiar with all required documentation and be able to pre-qualify you for a short sale.  If economic hardship cannot be proven it is unlikely that the bank will approve a short sale.  They should also be able to let you know if you might be eligible for HAFA.

4)      How will the agent determine the list price of your home?   Listing your home too low may get you a quick offer, but it’s likely the bank will counter and you may lose your buyer.  Remember, the bank needs to recoup as much of the loan amount as the market will bear.

5)      What is the process?  An agent should be able to explain the entire process and timeline and describe exactly how and when you will be updated on progress.  They should also be able to provide information about the pros and cons of moving early in the process or staying in your home until closing.

6)      How will they market your home?  Over 90% of buyers begin their home buying search online.  Make sure your agent can provide an extensive online presence for your listing.

7)      What is the outcome that you can expect?  The agent should be able to discuss the potential outcomes including 1099s and deficiency judgments. They should also make recommendations to you about seeking the advice of other professionals, such as a lawyer and accountant.

8)      And finally, can they provide you with references of past short sale clients?   Hearing from a satisfied client can go a long way to easing your concerns.

A short sale is a complicated transaction, but it needn’t be stressful.  Please don’t hesitate to contact me with your questions or concerns.  I have a 100% short sale success track record and look forward to hearing from you.

I attended a 90 minute webinar yesterday, designed to get me straightened out about the importance of social media and how to use it effectively in my business.  The presenters are somehow experts (though obviously they’ve only been doing this for a few years).   They spoke about LinkedIn, Twitter, Facebook, YouTube and blogging and how to position yourself on all of this media to gain massive lists of people who will magically consider you the go-to person for your specialty.

My mind is reeling.  First of all, I consider myself very good at what I do, and pride myself on the service I provide to all of my real estate clients.  But I don’t take myself so seriously as to think that there will be 30,000 people just waiting for my next tweet!  And even if I did, do I really want the responsibility of keeping-up this continual stream of content bits and pieces? 

The experts pointed out that the average user spends 55 minutes on Facebook every day, not to mention time spent updating LinkedIn, sending tweets, uploading a new video, or of course, composing a new blog post.  Besides feeling that I am totally failing Social Media 101, I came away from the webinar wondering when I’m supposed to actually do any of the real work I’m trying to promote!   Having thousands of people like me or what I do is useless if I don’t have the time to do it.  So I’ll keep you posted on my progress, but don’t expect a tweet any time soon.

If you think it’s OK to ignore the ketchup that dropped on the carpet, and that black fur growing in the bath tub is normal, do me a favor:   Don’t list your home for sale.  As a Realtor, I’ve seen more than my share of filthy, smelly houses, but yesterday’s showing put a surprising twist on what people consider acceptable. 

Entering the front door of the home I noted several rows of shoes in the foyer.  Normally, this is a sign that the occupants care about keeping their floors clean and don’t want to track dirt from the outside world into their home.  However, as I gingerly stepped onto the carpet, not only did I keep my shoes on, but I was wishing I had worn waders to protect me from whatever life forms were living in the carpet!  What were these homeowners thinking?  The carpet was stained to the point that it was difficult to determine the color and piles of dog and cat hair billowed around my feet at every step.  And they remove their shoes?  Really?

Most sellers of course don’t live in a pig pen, and if your standards of cleanliness are a bit relaxed, that’s your business.  However, most of us become so comfortable in our own environments that we may not be able to see things that will distract a buyer.  When it comes time to sell your home, listen to your Realtor!  Most buyers lack imagination and will not be able to see past dirt or clutter.  Hand prints on the walls and less than clean appliances are seen by the buyer as work they don’t want to do. 

Ready to sell your home?  Ask your Realtor for a candid evaluation of items that need to be cleaned and/or repaired before you worry about the list price.

Whether you’re considering a short sale purchase, or the short sale of your own home, understanding the process will relieve some of the stress.

The first thing to understand about a short sale is that unlike a traditional equity sale there is an all-important 3rd party that controls the fate of the deal:  The lender(s).  In order for a short sale to occur, the lender or lenders must approve the transaction.  This involves 3 items for their consideration:

  1. Can the current owner show sufficient financial hardship to prove that he cannot pay his mortgage?
  2. Is the price offered consistent with comparable sales in the area?  The bank wants to re-coup as much of their investment as possible.
  3. Will the bank or investor agree to settle for less than the amount owed, or will they choose to foreclose?

Step #1 – Pre-Qualification

Let’s start with pre-qualification of the homeowner.  Before taking a short sale listing it should be the job of the Realtor to understand the financial requirements and pre-qualify the seller.  This involves having the sellers complete a financial worksheet and reviewing their income and assets.  Whether buying or selling, this is a critical step and one reason why working with an agent that is experienced in short sales is important.  If the sellers don’t financially qualify, there is no point going any further. 

Step #2 – Documentation

Once it has been determined that the sellers qualify, the Realtor or qualified short sale negotiator, will contact the seller’s lender and determine the exact requirements for submission as they are all slightly different.  It will also be determined at this point if the lender participates in the government HAFA (Home Affordable Foreclosure Alternatives) program as there may be incentives for both the sellers and the lender, and certain procedures may be streamlined.  In any case, the Realtor will work with the sellers and collect all the necessary documentation.  This will include: 

  1. A statement of general information
  2. Financial worksheet
  3. Handwritten letter explaining their hardship
  4. 2 months pay stubs or year-to-date Profit and Loss statement if self-employed
  5. 2 months bank statements
  6. Tax returns for the last 2 years
  7. Most current statements for all retirement accounts or other assets
  8. Authorization form to allow Realtor or negotiator to speak with the lender(s)

Step #3 – Sale of the Property

The house is then listed for sale as a short sale.  Both listing and selling agents must agree to equally split whatever commission the lender decides to pay.  Once an offer is received the Realtor should carefully examine the offer and make sure that it is an offer the lender is likely to accept; the price should be consistent with comps; the offer must not be contingent on the sale of the buyer’s home; and the buyer must understand that it is unlikely that the lender will pay for any termite work or other repairs.

Step #4 – Submission of the Short Sale Package

The listing Realtor or negotiator submits everything to the lender for approval of the short sale and the sale is noted in the MLS as “Contingent”.  Again, it is important to have an experienced Realtor or negotiator who makes sure that the submission is not only complete, but that it is packaged neatly and easy to read and understand.

The package goes to a special department at the lender where it is reviewed.  If there is any documentation missing or unclear, they will request additional information. Unfortunately, even this initial review can sometimes take 4 weeks or longer.

Once this initial review is completed and the package confirmed as complete, a negotiator representing the lender will be assigned.  It is the job of this negotiator to carefully review the file and make a recommendation as to whether it should be approved, or not.  If there are 2 lenders (a 1st and 2nd mortgage), this entire process must be completed for both lenders. 

Step #5 – Negotiation

During the actual review and negotiation process, the lender’s negotiator may counter specific items in the offer including the purchase price and the requested commission.  In the case of the second mortgage holder (who stands to lose the most), they may also request that the buyers make a financial contribution.  Again, this is where experience counts.  The seller’s Realtor or negotiator should be in communication with the lender’s negotiator several times a week, working to move the deal along and arrive at terms that are favorable to the seller and buyer.  This part of the process can drag on for weeks, or even months, although some lenders have streamlined the process.  Also, keep in mind that many of the 2nd mortgage holders won’t even begin the review process until the 1st lien holder has approved the sale.

Step #6 – Approval

If the lender’s negotiator recommends approval, the file goes to upper management or the investor for final approval.  Generally speaking, if the file makes it this far, it is usually approved.  But again, this final leg of the process may take an additional week or two.

And finally, the letter everyone has been waiting for – the approval letter.  Assuming all terms are acceptable to sellers and buyers the sale will now proceed as a “normal” sale.  The approval letter will stipulate a date by which the sale must close or the approval is no longer valid, usually 30 days.  Hopefully the buyer has hung-in during the approval process, and at this point the clock starts ticking for buyer inspections and contingency removals.

Navigating a short sale as either a buyer or seller can be overwhelming.  Making sure you’ve got an experienced professional on your team is the best way to protect your interests.  Questions?  Just give me a call.  619-846-9249.

The sarcastic answer in today’s market might be, “Not much.”  My husband thinks that some sort of insanity has a grip on his otherwise logical wife.  He just shakes his head as I watch one more episode of House Hunters or Property Virgins and asks, “Don’t you get sick of looking at houses?”

And I guess for me, that’s where the answer lies:  I love houses!  Big houses, little houses, modern, traditional, tree houses…..I am completely intrigued by the shelters we each call home.  From the time I was a little girl, I enjoyed drawing pictures of different types of houses and designing floor plans.  And today, every time I unlock a door to show a home I’m still excited to see what we’ll find inside.  Okay, sometimes its cockroaches and filthy walls, but looking past the mistreatment, the bones of the home have something to say.

Houses solve the most basic problems of existence.  Our homes provide shelter, protection, and a place to prepare and eat food.  And if that is where their function and purpose ended, being a Realtor would be pretty dull.  But houses speak volumes not only about who we are individually, but who we are as a country and civilization.  Houses reflect how we as people, wherever we live, respond to the challenges of our physical and economic environment.

Since WWII the U.S. has witnessed a huge housing boom where we’ve seen our houses change along with our economy and lifestyle.   The small bedrooms, closets and bathrooms of the 1950s have given way to master suites that often occupy as much as a third of the total square footage.  Kitchens are no longer cloistered behind a swinging door, but are open to the living area. And who would have thought that you’d ever hang a TV above the fireplace?

As we all continue to feel the economic squeeze of recent years, we see new trends developing in our homes as well.  The mega mansions so popular at the early part of this century are just too expensive to maintain, and we see many people downsizing to more manageable homes.  Little used rooms, such as a formal living room are becoming obsolete as the great room becomes the center of the home.  And as interior space shrinks we develop our exterior spaces as outdoor rooms.  Less is the new more, and I predict that the need to reduce our footprint will drive significant changes in our homes over the next twenty years.

So do I love being a Realtor?  Absolutely!  Can’t wait to see what I’ll discover tomorrow behind the next front door.