SHORT SALES from a BUYER's Perspective

Short sales are very much worth purchasing.  They are an opportunity for you – the Buyer – to purchase a valuable property at (very often) less than market value.  They are better than purchasing a foreclosure     because the seller is still living in and caring for the property, and although the property may be somewhat neglected due the seller’s financial distress, you can be somewhat assured that they won’t angrily destroy or rob the property of fixtures or amenities before you take possession of it. 

Definition: A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.

Plain and simple -- this happens because the seller cannot sell their property for what they owe.

Steps in a Short Sale: 

¨       As a requirement of doing a short sale, the seller must list their property in the MLS with a Realtor.

¨       The property is listed at fair market value

¨       Seller signs an Authorization to Release Information granting their Lender permission to discuss all   aspects of the Short Sale with their Realtor.

¨       Seller requests a Short Sale Package from the Lender.

You want to work closely with your Realtor (your Buyer Agent) to make sure that the seller is serious and is completing all steps required by their lender in a timely manner.  This can be a long process for you, and it doesn’t need to be delayed by the seller’s inability to comply with the process.  You also don’t want to wait for months and months only to find out that your offer has been rejected by the investor based upon the seller’s failure to complete their part of the deal.

¨ Seller accepts the buyer’s offer.

So far, this has been the easy part.  From your perspective as the buyer, everything that has taken place is as it would be with a typical real estate purchase.

Now comes the waiting  .  .    .  .  .  .  .  . 

A Negotiator is assigned by the lender.  Unbelievably, this takes about 4-5 weeks and is highly dependent upon whether or not the Seller has produced all of the lender required documents (much like applying for a loan) and a file has been started.  It is also dependent upon how experienced the Seller’s Realtor is.  An   experienced short-sale Realtor is very good at navigating and guiding the process and will keep the Buyer Agent informed.  A week listing (seller) agent can be a real handicap to the process and it will then be up to the Buyer Agent to push and prod and pull the necessary information from the process and keep you informed.  The number one reason that short sales fall apart is buyers pulling out of the process.  Since the purchase of a short sale property is generally a good financial opportunity for you, as a well-informed Buyer, you will never pull out. 

You must be patient, but . . .

 Having a good Buyer Agent will make this process a little more tolerable for you.

¨ Seller's lender accepts the buyer's purchase offer.  This takes some time – anywhere from 3 to 8 months, sometimes longer.  During this process, there will be requests for additional information from the seller, additional market analysis will be completed, an appraisal will be completed, and you will be reviewed as a viable purchaser.

¨ In addition to the Investor accepting the Buyer’s offer, the Seller also has to accept the lender’s terms.  This means that whatever terms the lender/investor sets forth for repayment, the seller has to agree to it.  Of late, lenders are asking for very little from the seller – anywhere from $500 to $2000 dollars and are not forcing the sellers to accept 1099s for the dismissed debt.

¨ Transaction closes when the buyer delivers the funds, the lender releases the lien and the seller delivers the deed.

 Seller Qualifications for a Short Sale

¨ You must have a hardship.  This can be anything from the home’s market value has dropped to   bankruptcy.  Here are some examples:

1. The home’s market value has dropped.  This must be substantiated by seller’s Realtor with      comparable sales.

2. The mortgage is in or near default status.  It is no longer the case that you must stop making your mortgage payments in order to be considered for a short sale.  Lenders own more homes (foreclosure) than they can handle; therefore, they are much more apt to accept a short sale. 

3. Financial hardship.  The Seller must submit a letter of hardship that explains why the seller   cannot pay the difference due upon sale.  Some  examples of hardship are:

a. Unemployment

b. Divorce

c. Medical emergency / sudden illness

d. Bankruptcy

e. Death

4. The Seller has no assets.  The Short Sale Package will undoubtedly include a copy of Seller’s tax returns as well as a financial statement.  If the Lender discovers assets, they may require you to pay back the short fall.  They may, however, discount the pay back.

Short Sale Recommendations:

¨ Hire an attorney.  This is not in place of a Realtor, it is in addition to. 

¨ Be organized, punctual and courteous.

¨ Work closely with your Realtor and Attorney. 

¨ Your Realtor should communicate regularly with the seller’s Realtor.  Information is power, and eludes confidence.  You want to be well informed all the way to closing.  

I tell you all this because from a Buyer’s perspective, this process can seem like a big, black hole.  You write the offer, the seller accepts it, the offer goes to the lender and you are told that you have to wait 3 or 4 months to hear anything.  WRONG!  Do not accept this explanation.  If you have an experienced and strong Buyer Agent, you should be informed every step of the way.

That is how I do business.  

ABSENTEE BUYING

Knowing that you did a great job for a client is reward enough, but I received this extraordinary and unexpected gift from a client who moved here from Taipei City, Taiwan.

I helped her and her family buy a home -- sight unseen -- in Ann Arbor, Michigan. 

I extend the same unwavering service to you, even if you want to see the home you are buying first!  


AND, if you are moving to a new location, I can help you as well by assuring that you have the opportunity to work with a top-notch, professional, full-time Realtor in your new locality.

My Brokerage -- Edward Surovell Realtors -- belongs to a global network of premier real estate firms in 30 countries throughout the world. 

Leading Real Estate Companies of the World (Leading RE) represents the best known local and regional real estate firms.  These companies continually outsell the competition and I will personally assure that you are teamed with a Realtor who is your best fit.


Moving here?  Ask for me.  I would be delighted to interview with you to assure that we are a good fit.

RECYCLE TREE BIRD SHELTER

RECYCLE your Christmas Tree into a shelter and feeder for the birds. Place the Christmas tree  on your deck, in the garden or backyard and use it as a bird feeder and sanctuary. Fresh orange slices, strung popcorn or suet will attract the birds and they can sit in the branches for shelter. (Make sure all decorations, hooks, garland and tinsel strands are removed). Eventually the branches will become brittle and you can break the tree apart by hand or chip it in a chipper.

CHRISTMAS TREE RECYCLING

Christmas has come and gone.  It's time to take down the decorations, including the tree, but don't just throw your natural tree away! Here are some tips on what to do with your tree after the holidays: 

Curbside pick-up for recycling- Most areas will collect trees during their regular pickup schedules 2 weeks following Christmas. Call for an appointment to have a non-profit in your area pick up your tree. Ann Arbor has a program - contact your City website for specifics.

Some Boy Scout Troops offer a pickup service for a small donation (often $5); call your local troop to find out.

Drop-off Recycling:  Take your tree to a drop off recycling center.

Tree Recycling / Mulching programs are a fast-growing trend in communities throughout the nation. A Christmas tree is biodegradable; its branches may be removed, chipped, and used as mulch in the garden.

Bird feeders: Place the Christmas tree in the garden or backyard and use it as a bird feeder and sanctuary. Fresh orange slices, strung popcorn or suet will attract the birds and they can sit in the branches for shelter. (Make sure all decorations, hooks, garland and tinsel strands are removed). Eventually the branches will become brittle and you can break the tree apart by hand or chip it in a chipper.

Fish feeders: Sunk into private fish ponds trees make excellent refuge and feeding area for fish. So, use it first for a bird feeder, and when the ice melts -- a fish feeder.

HOW TO BUY A FORECLOSURE

Finding the solution to most problems is easy because most people “know” the answer before they begin to solve the problem.  

LISTENING to that ANSWER, however, is difficult. 

So, my suggestion is open your mind and explore ideas beyond your paradigm.

You may say that I digress, but I am just setting you up to capitalize on the opportunities that are before you.  If this scares you, turn the page . . .

SO . . .

It is common knowledge that you can get a great deal if you buy a foreclosed home. 

There are no free lunches, however; and every good deal comes with a price.  Rewards come with risks.  IT IS NEVER TOO GOOD TO BE TRUE.  If it is, turn and run  .  .  .  Run fast.

Foreclosures are a wonderful way to buy an inexpensive home – either as your principal residence or as an investment.  A certain investment in your education will occur along the way.

HERE ARE PIQUES OF WISDOM:

Hire a Realtor -- An industrious, savvy, full time, educated, short-sale and foreclosure certified Realtor.  This will result in a partnership – you and the Realtor that is WORKING FOR YOU, with you and in your best interest.  Your Realtor can search various MLSs, check public records, do the research, show you properties and generally advance your best interest.

Have your financing in order.

If you are going to pay cash, you will need to show proof of funds when you place your offer.  This means that your money needs to be liquid – not in a CD, not in other investments – in your bank account and readily available.  If you are going to finance your purchase with a mortgage, BE prequalified.  Your very good, full-time, educated and industrious Realtor can give you a list of LOCAL, honest, reputable lenders to choose from.

Avoid Banks.  They have made their bed and they can just lie in it.  They are not interested in you; they are interested in their bottom line.  If their properties are not listed on the MLS, then they do not abide by the same ethical rules and code of ethics that a realtor does.  In other words, you are not protected.  Work with a Realtor.

Private Foreclosures:  If your Realtor is truly industrious and foreclosure certified, they will know all avenues to a foreclosure.  This means private foreclosures.  They will know how to search the public records for you to find homeowners who are on the edge of a foreclosure.  They will know how to find recently foreclosed homes and guide you in that direction.

Be prepared to make a REAL offer.  Investors (the bank, banks, or combination of lenders) expect (and owe it to their stock holders) to sell at market value.  Decide how much the home means to you and make your offer (with your professional, full-time, educated and certified Realtor).  The price you set should be based upon your budget and upon the sale price of recent comparable solds.  If you do your best, but lose it, then you will be able to move on and with good conscience. 

Be prepared to make many offers.  When you learn value – including the estimate of repairs – you will be comfortable making offers within your budget and comfort range. In partnership with your team mate and Realtor, you will learn this.  Yes, a house is a home, and figuratively a shelter that you will live in until it no longer suits your family, financial or future needs; but if the mortgage crisis has taught us anything it is that YOU HAVE TO HAVE AN EXIT STRATEGY.  When moving time comes, you want to be comfortable that selling price will get you what you out and moving forward.

Common wisdom says that we are in for several more years of REOs (bank-owned homes).  If you want to participate . . . 

BE PREPARED. . . 

NORAD Santa . . . Track Santa's Journey

Follow Santa as he journeys around the earth with NORAD Santa  which uses Google Maps and Google Earth.  See images and videos of the places that Santa visits on his Christmas Eve journey around the world.  Checkout Countdown Village and Santa Snacks -- how many cookies do you think Santa has eaten?  Find out if airplanes ever intercept Santa (FAQs).  There's much to do even before Santa jumps into his sleigh (Countdown Village). . .

YES, residential home prices continue to trend upward!  If you listen to the national news media, you may find this hard to believe, but according to a recent report in Realtor.com, Ann Arbor's housing secor is "close to becoming a seller's market."

Higher sale prices reveal that year-to-date, we are up 2.5 percent over this time last year. 

Mortgage rates continue to remain low allowing you to affordably purchase more if you so choose. 

Employment in the area is improving as well.

If you have been sitting on the fence, now is the time to jump in.

Residential Statistics for November 2011
Location	New Listings	Sold	Avg Sale $	Avg  DOM
Ann Arbor	75	67	$317,024	68
Chelsea	17	8	$123,000	117
Dexter	20	11	$324,743	93
Lincoln	22	15	$126,033	61
Manchester	9	4	$215,500	60
Milan	14	7	$133,932	65
Saline	29	22	$289,081	90
Whitmore Lake	4	1	$178,500	17
Ypsilanti	21	15	$76,976	41

Condominium Statistics by School System -  November 2011
Location	New Listings	Sold	Avg Sale $	Avg DOM
Ann Arbor	30	23	$128,404	56
Chelsea	3	2	$103,500	12
Dexter	0	1	$72,500	119
Lincoln	1	1	$22,000	39
Manchester	2	2	$40,950	105
Milan	0	1	$155,000	260
Saline	1	1	$129,085	479
Whitmore Lake	0	0	$0	0
Ypsilanti	2	3	$65,050	6

*Based on information from the Ann Arbor Area Board of Realtors MLS for the stated period

Areas are based on school district.