Short sale myth-busting

Something I hear out there from a lot of agents, most of them not doing short sales from the listing side is Chandler short sales are getting easier to get through than they used to be. Well maybe if you are comparing them to 2007, but short sales are not any easier to get closed today than they were 6, 8, 12 months ago. In fact they may be harder.

Short sales often have the MI company, or investor or servicer pushing back wanting more money, cash contributions, promissory notes or relying on bad valuations and sticking firm. I am not sure why banks are putting their foot down more than they used to, it may be because the cost difference now between a short sale and foreclosure may not be as great because of all the extra staff that has been needed to be hired to process them. But whatever the reason is, one thing is certain if you are looking to get into short sales because they are getting easier, be prepared to be stunned.

Kristin and I probably talk to a few agents each a month that start doing short sales then come asking for help. They conversation is usually concluded with them making a statement such as “I am not doing another one of these short sales again.”

Chandler short sales a lot like Chandler weather

The weather in Chandler Arizona is in my opinion the best in the country. Here in Chandler it is sunny an average of 330 days a year. This morning when I woke up was one of the other 35 days a year as it was windy, dusty and about to rain. So while the weather in Chandler is great, it is not perfect.

Just like the weather, even with the best short sale agents things will not work out 100% of the time. The industry average of short sale closings is close to 40%. The best agents will close somewhere between 80-90% of their short sales. If any agent tells you they close 100%, RUN. They are either lying, have lost their mind or have not done enough deals.

There are reasons that short sales do not pan out that are sometimes out of the control of the listing agent. But while no one will close 100% of their deals, there is still a big difference between those closing 80-90% and the industry average of 40%.

The reason some agents close 85% while other agents close less than 30% is a combination of experience and understanding that every no is just one no closer to getting a yes.

Short sale advice: Be cautions, even from this site

I was talking with another agent from Scottsdale yesterday and we were talking about some of the problems we are seeing with short sales right now. We ended up talking about my videos and short sale training in general. One thing we both agreed on is is you need to be cautions of advice on the web.

If you are selling your house or an agent looking for tips this site and other sites which give advice on short sales can be a great resource. At the same time, there are great dangers. Things on the Internet live around forever. A post I wrote or a video I did about Fannie Mae or Bank of America 6 months or a year ago may no longer be relevant at all.

The short sale scene and the dynamics of the deal are always changing. Advice about how to overcome a promissory note or about getting an extension on a foreclosure date on a Fannie Mae property a year ago would get you no where today. Advice on how to escalate within Bank of America a year ago may not be relevant to how we do it today.

If you are taking advice from a video or blog post take it with a grain of salt. Just because something works for one agent does not mean it will work for you too. And if it is advice from more than a few months back, it may not be good advice today. That is one of the important things about short sales. It is a lot harder to take a short sale transaction now and then as a listing agent than it is to be in them every day. When you are in them ever day you see changes as they happen and can make quick adjustments.

The forms we include in our short sale package change on a regular basis and we now have different packages for different banks. If you are doing a Chase short sale you will not receive the same package from us as if you were doing a Bank of America short sale.

So remember, be cautious and if you are looking for a short sale agent make sure it is someone who is staying active in short sales on a daily basis.

Chandler short sale phrase of the day: managed chaos

Managed chaos, this is the word or the phrase of the day. When you are doing a short sale whether you live in Chandler Arizona or anywhere else, your short sale agent is going to need to know how to manage chaos. That is exactly what a short sale transaction is.

In a short sale transaction you have the buyer and buyers agent, listing agent, investor, servicer, servicer escalations department, MI company all wanting the best deal for them in the time frame they want, which is usually now. Everyone involved is going to be saying no a bunch of time, threaten to pull out or not approve it and eventually you get the approval letter then Fannie Mae wants you to close in five days.

There are so many road bumps and obstacles to overcome in many short sales that to an outside observer or anyone but the short sale agent it probably seems like chaos. The thing is, to the agent who is doing this every day and in the trenches it is chaos, but managed chaos.

We anticipate these problems are going to come up. We know what is normally going to happen next and prepare everyone involved. We have a plan on how to deal with these issues and know how to get around when a new issues arises. The key to a successful short sale is knowing how to expect the unexpected and managing the issues when they explode. And they will explode.

HAFA: Sorry Alex and NAR, still not a game changer

HAFA… you heard me talk about it before A year ago, the day it was announced. The same day I said it would not work. There there was nothing in it that was realistically going to make a change.

In October of this year I reported that only 342 HAFA short sales had been closed in the first six months of the program. Not exactly stellar results or a game changer for the short sale industry as some “experts” and NAR claimed it would be.

Now there are new changes to the HAFA program.

The first change to the HAFA program is servicers are no longer required to verify a borrower’s financial information to determine if their debt-to-income ration exceeds the 31%. This sounds great on paper, but most of the homeowners who are looking for a short sale I have seen already had debt-to-income rations above 31%.

As far as the second-lien goes, there was a change there too. Originally the second-lien investor had to agree to accept 6% of the unpaid balance owed to them up to $6,000. The new guidelines eliminates the 6%, but still keeps the $6,000 cap. This could actually help a little, but I don’t think it is going to make much of a change. Many of the second’s are still not going to agree to this unless the same investor owns both liens.

So with these changes again I give them credit for trying, but if the government really wants to make programs work they are going to have to get those who are in the trenches involved in suggesting changes.

I don’t expect much of a change in the HAFA program. The approval rate may go up 100%, but that is still going to be a tiny percentage of all short sales that get approved. Sorry Alex and NAR, this is still not a game changer.

NationStar short sales, changes you need to know

NationStar Mortgage has recently taken over servicing for a lot of loans including major servicers such as CitiMortgage. NationStar has also moved their short sale system to Equator following the likes of GMAC and Bank of America. While Equator is a great system, how each servicer utilizes it can vary and NationStar’s results are yet to be seen.

There is a danger you need to be aware of though when opening up your new NationStar file in Equator. NationStar has given all their new files new loan numbers which you may not be aware of. You need to make sure you use the new loan number and you are not using the old number. If you use the old number everything will appear to be fine, and you will not be given any warnings. However, the system will kick out the file and not tell you.

Rant alert: I wish we could call agents out by name

Every now and then i do a rant video. I know there are people out there who dont like my rant videos, for those, this video and post are not for you.

The code of ethics for real estate agents says we need to be honest to all party in the transaction and that includes one agent to another and the buyers agent to the seller.

So agents, I know you have a fuduciarey responsibility to your buyer, but if you write an offer on a short sale and it says in the addendum you have ernest money for 90 days to give it time to be negotiated, then you are bound contractually.

If your buyer decides three weeks later later they want out of the deal, but when they learn they will lose their earnest money if they back out then mysteriously change their mind and decide to stay in, it is your responsibility to be honest with the selling agent.

In this situation the agent was just looking for the first opportunity to get out and save the earst money. As a matter of fact when we asked if the agent if the buyer was really still in because we did not want to lose the houes to foreclosure the agents response was sign an addendum to release the earnest money and we will answer that. That right there tells you they knew the buyer had been out of the deal for a while. Unfortunately for me the code of ethics does not allow me to call out the agent or i would get in trouble.

Yes you have fuduciary responsibility to pretoect your buyer, but you also have the responsibility of being honest. And buyers if you are not sure if you want the house, if you havent seen it yet, don’t write the offer. If you do, and your offer is accepted, then you need to fullfil the contract.

Short sale: But I don’t want to lose my “home”

We have been talking about making a decision to short sale your house. One thing I hear often is “but its my home.” I can assure you, you are not selling your “home” you are selling a house, a piece of real estate. I have talked to plenty of people over the last few years who have sold there house and almost all of them have said this and I cannot think of one who was not happier six months after the deal was done.

A house is blocks, plaster and windows, a home is where you and your family live and make memories. It is very easy to go just about anywhere and make it a home. You don’t sell your home because you can take any house and make it a home for your family. That is what you need to protect because a home should not be a financial strain.

I understand the emotional ties to the place you live, but we need to remember family is what is important and you can build that “home” just about anywhere.

In two years when you may be ready to buy the next house you will be so far over the house you are in now it really wont matter

I know it is easier said than done, but really dont get hung up on the this is the perfect house. For every perfect house there are a dozen more perfect houses out there for you.

But I have a contract and it would be unethical to short sale

Is there a moral or ethical issue with breaking your contract and doing a short sale? No it is a business decision and I tell you why in this video.

I feel like a failure because I need to do a short sale

So we hear all the time that people feel like they are a failure because they need to do a short sale, in truth, they are the winners.

I run through a short sale scenerio in this video where a standard middle income average home owner can be as much as $100,000 ahead in 14 years because they chose a short sale instead of remaining in their home.