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5/13/09
$8,000 First time Homebuyer credit
Yes, I know it's been some time since i've put a fresh blog up, but I promise to not let it go as long as it has been in between. This entry is going to be covering the $8,000 first time homebuyer credit being offered as in incentive to first time homebuyers.
In an effort to boost some sales, and reach out to all the first time homebuyers who are on the fence deciding if they want to take the plunge and purchase, The Government is offering a no strings attached 8000 credit for first time homebuyers! There are some stipulations that must be met for one to be eligible for the first time homebuyer credit.
The biggest hurdle to overcome is that the potential first time homebuyer is only labeled a first time buyer if they have not held ownership in the last 3 years. The first time homebuyer must also purchase by the end of december 2009. Once that criteria has been met, an $8000 credit will be issued to the first time homebuyer who made the purchase. It's NOT a tax cut; it is a TRUE credit! What's even better is that after securing the home, it's even possible to get the first time homebuyer credit before next years taxes! For Full Details please consult your CPA, but an amended return can be filed, and the credit can be taken advantage of before the typical 2009 tax season.
This is a HUGE advantage to everyone who has been on the fence about buying... $8000 dollars on top of the other great tax benefits, and the best part; You'd have your own home. Couple that with the AMAZING interest rates being offered right now, and the rock bottom price of housing. Any of these three components on their own (First Time homebuyer credit, amazing interest rates, and low low prices) are strong on their own. In tandem these three are an Epic force.
I would love to consult with anyone who has any questions or concerns regarding the amazing situation buyers are in to take advantage of the market. Thank you very much for reading this blog... next up will be another take on short sale (how much easier they are becoming to negotiate and qualify for)
Jason Caballero (602)718-6240
JasonCabRealEstate@yahoo.com
11/15/08
New Changes in Financing
Hello Everyone, thanks for all the continued support in reading these blogs concerning the Phoenix Real Estate market. Im going to tackle the fickle temperament of Financing in today's market. FHA has been ratcheting on restrictions, Conventional loans have been made harder to get... but there are some gems still lying around waiting to be capitalized on.
Currently, FHA has a 1% down program available through specific lenders and programs. It works as a 92% 1st loan, a 5% second, and 2% grant... Thus leaving 1% needed. 99% LTV is pretty good in this marketplace! (In ANY marketplace!) There are a few stipulations (Income, full doc approval, etc.) If you want more details, PLEASE contact me and I can put you in contact with a lender who can help accomodate this. Even if you are just looking for details. Anyway you slice it... compared to conventional (Fannie and Freddie) requiring 10% down in Arizona, 1% is fantastic. Now, normal FHA downpayment is currently 3% (Once January 1st rolls around, it jump up to 3.5%) Now there is another program that can get you into a house for 0% down, but there are more stipulations and requirements that must be met.
Welcome the USDA Rural lending program for a no money down solution. There is one problem with it; The area you want to purchase your house must fall into what is designated "Rural." Buckeye, Maricopa, Queen Creek, and other outlying areas are deemed rural. Parts of Goodyear, Surprise, Apache Junction, Gilbert, Laveen, etc. are also in that area. These deals workout that if you are under $73,000 Annual Income, purchase a house in the area, and can provide a full Doc approval, You will be approved for 102% financing! 100% to the purchase of the house, and 2% to payoff the Mortgage Insurance Premium. So you can get into the house for nothing down, and with some proper contractual negotiations to get closing costs... Getting in can be very cheap (If everything goes ideal, the only expenditure would be inspection period, but that's assuming a clean deal with no fuss from the selling side.) But it IS possible (I have done it!)
Anyhow there are many changes coming up... and there are still great deals out there... get out there and mix it up! Thanks for reading... Until Next time...
9/11/08
Time Frames of Short Sales and REO (Bank Owned)
This has been a very sought after question as of late, so I thought I would delve into it and give everyone THE ONLY CERTAIN THING ABOUT TIME FRAMES REGARDING BANK OWNED REOS AND SHORT SALES; UNCERTAINTY!
There are simply too many people, eyes, hands, feet, opinions, number crunches, hours, gallons of coffee, and sugar brimming snacks that go into distressed properties to EVER ascertain a formula for the exact timing. You can get good approximations and get it close… but there are just too many factors that have to all go right to get it done lightning quick and accurate; Murphy’s law has a field day with this.
Short sales for example have to first be crunched and assessed by the listing agent to get a good idea to market the house for. Once a good figure has been sought out, then the short sale package is put together (If buying a car is the camelback mountain of paperwork mountain ranges; a short sale is the Himalayas, rockies and Mt. Fuji. Letters of explanation, a plead for financial amnesty, statements, calculation explanation, assessments, BPOs. . . Let’s just say a small forest is razed to make it happen. So within all this, in itself… there is a recipe for a long and unknown time period. Once the package is in… the lender themselves have to pick it apart, order some BPO’s, crunch numbers… and determine how much Mortgage insurance will cover, and how much they will eat, what they need to net… Is it cheaper than a full blown foreclosure, etc. Once you pass all of those landmines, and your offer has been beaten, burned and bloodied… then it gets carted off to the investors (usually Fannie) to get the short sale approval letter… it’s the secondary market that’s taking the shot. Then once you get that sought after letter… THEN, and ONLY then… you start your regular escrow time periods. Day 0 of Inspection and COE period. Whew! So after all that waiting, you have your regular closing time to deal with; Loan documents to get in, conditions to be cleared, inspection, appraisals, etc. 30 days on the average. Does this give you an idea why it’s hard to nail down a time frame?
On a CRUDE rule of thumb… you’re probably looking at right around 8 – 10 weeks from GROUND ZERO (Ground Zero being when your buyer signs the purchase contract, and it’s thrown into the listing agents hands) This hasn’t even included the time beforehand of getting the house ready to list, and the package together. Offer submitted to listing agent, and them sifting through their other offers, and having their seller sign the one they like, and send it off to the bank (assuming multiple counter offer) that right there is roughly 3-5 days. Off to the lender the offer goes! It gets received, and due to the workload, will be shuffled in the lenders hands for 2-3 weeks. Questions come back… put it up against their data to see if applicable… then a negotiator and the BPO is ordered (broker Price Opinion) to make sure that the value the contract calls for is legitimate (Even though some BPO agents are absolutely terrible at it). BPO takes about 7 days to complete and turn in… this puts you at 5 weeks already. Negotiator gets more stuff needed. Grooms the listing agents to put together file for approval from investors. 6 weeks roughly now… Then OFF to investors for final sign off, and get the short sale letter back… this is ROUGHLY 10 business days… so another 2 weeks… puts you right around 7. Letter comes back… WHAM! You open escrow and on with that… Now this example I put forward assumes very small setbacks. Some setbacks and hiccups can be colossal! See Short Sales are a PAIN! Ok now on to REO Time Frames!
NOW, REO response times are WAY better than Short sales by a long shot! You can’t argue with 3 – 5 days to get acceptance! (Some are more… I have personally gotten approval with one in 18 or so hours… Nice work Kevin Jennings) But there are a lot of thorns on this rose. If multiple offers come in… YAY you find yourself in a multiple counter offer situation. Everyone loves those. You counter, and play and negotiate and fart around for about a week til it gets resolved and the winner of small gauntlet gets the opportunity to be . . . . . . . . YES you guessed it… they are ALLOWED to be countered *you just won 10 cents in the lottery.* In this counter they basically render the AAR purchase contract VOID, and supercede it with their own boiler plate addendum, with the first two pages being the terms (price, COE date, title company, etc.) So right now, you’re looking at right around 2 weeks… not bad right… well now for the hard part. The banks love being very hands off… being strictly as-is and even covering their butt against mold. (On a sidenote I wish these turkeys would learn; there aren’t a lot of lenders that are going to provide financing to someone for a house completely INFESTED with mold spores and fungus! Or any other huge issues for that matter… they just clog up the drain that leads to a clean transaction, anyway that was my small diatribe) So in their quest to be as inhumane and safe as possible, they CLAIM an offer isn’t accepted *Even though they let you fight, and counter, and draw blood to be countered* until their signatures are on it. Basically they counter you with a counter offer… that’s not really a counter offer… it’s way more unilateral. They give the terms, they make YOU accept the terms, and then they leave themselves the option to just kill the deal with no recourse allowed. Slimy REO addendums! Anyway, to get the counter back, takes about 10 business days again. NOW make sure you get everything signed you needed. . . if you have to make an addendum, they will DRAG their feet on signing it! So ok, all in all you’re about 3 weeks to a month in when you get the addendums back. Now, you go into escrow like anything else. I have seen REO’s close in 10 calender days. *Not super common* but it is possible. So there are your rough Time frames in a nut shell for Short sales and REO’s. Let’s recap
SHORT SALE from ground zero will ROUGHLY take 8-10 weeks til you open escrow
BANK OWNED/REO from ground zero will ROUGHLY take 3-5 weeks to open escrow
THANKS again for reading! Remember, there are no foolish questions; It is ONLY foolish to NOT ask questions!
-Jason Caballero
New Housing Bill and How it will affect Real Estate Consumers.
Hello all, I am back, after a short hiatus, I am ready to delve back into these issues head first.
President Bush is lated to sign a new Housing Rescue Bill which will affect a lot of standards and norms we have in our current market. There are some good and really bad results from this new Housing Bill. Im going to delve into these now. Let's start off first with the bad.
1) Fha Limits will change.Where as currently they are lending 97% LTV, it's going to change to 96.5% LTV. Let me explain how this works out. LTV is Loan to Value, and that is the amount of the loan you can receive financing for. For example, if you have a $200,000 house you are going to purchase via FHA, Currently they only loan 97% LTV, which means they will give you 97% of the money needed to purchase that real estate. So the remaining 3% is your responsibility as downpayment. In this situation 3% of $200,000 is $6,000. So you would need to come up with $6,000 out of pocket. Well when the housing bill goes into effect *it's estimated to be in full swing October 1st 2008* the New LTV will be 96.5% Meaning that you, the borrower, will have to come up with not 3% but 3.5% of the purchase price. So on our $200,000 example we had from before, you would need to come up with $7,000 now, instead of $6,000! This is a bit of a problem, but there is something else that is being taken away which would constitute needing to get out there and buy up some REO's, short sales, and other properties quickly.
2) All Seller Assisted downpayment gift programs (Ameridream, Nehemiah, Etc.) are all going to be invalid come October 1st. These programs are set up for the Seller to provide assistance to the Buyer with their downpayment. Now because it IS illegal for a Seller to ouright give money to a Buyer for down payment assistance, these programs were put into use to get around this red tape. With Ameridream and Nehemiah, it is possible for a Buyer to truly get into a house with No money down! These programs are great and have been the mainstay of many FHA buyers. If these programs go away, not only can buyers not get any aid with their downpayment, they will also have to come up with more money to get their house! A lot of REO's have been approving Ameridream and other downpayment assisted deals. Short sales as of late have been following suit. So this will play an interesting role in how thing will pan out. Now that you have heard all of the bad... now for the good.
The good) Now every 1st time homebuyer that has purchased a house inbetween April 9th 2008 and July 1st 2009 will be eligible for a credit up to $7,500!!! So basically, if you are a 1st time homebuyer and you buy a house within these dates, You can get up to $7,500 back, straight up!! This is a pretty serious incentive to buy a house! Coupled with the other norms changing, it's a recipe for needing to hurry up and get out there and purchase a house! If you were on the fence before, NOW is the time. Especially with all the REO's being added daily, and Short Sales becoming a bigger force in the market, the efficiency on those is starting to get better.
In Re-Cap this is what we're up against:
1)FHA LTV's are changing from 97% to 96.5% LTV. This means you have to come up with 3.5% as opposed to the current 3% downpayment.
2) Ameridream, Nehemiah, etc. downpayment gift programs are going to be obsolete as of October 1st 2008 (as quoted by CNN.com, and many legal and housing experts are predicting this.) So if you didn't have any money to put down, this would be a great time for you to take advantage of Nehemiah and Ameridream before they are no longer valid. Utilize Ameridream and Nehemiah before they die.
3) You will receive a credit up to $7,500 for being a 1st time homebuyer between April 9th 2008 and July 1st 2009!!
What else can you be waiting for, please contact me today and I will help you take full advantage of these opportunities!
Also, City of Peoria is offering a $15,000 downpayment grant for anyone buying a foreclosure in the City of Peoria! This is seperate from Ameridream and Nehemiah so this is not going to go away in the same manner, but the money is limited!! So with this, you eat up a huge chunk of your downpayment *resulting in lower payments, better rate etc. etc.* AND you can have seller assisted concessions to you can get into your REO of choice in Peoria for 0$ due at Close of escrow! Now this program is valid for all REOs (REO - Real Estate owned, Lender owned properties. basically they are properties that have fully foreclosed. I am trying to get word form them if they are going to give the full $15,000 on short sales, but they have been evasive. I will update this as soon as I get word from them.
So there you have it. If you have any questions at all or any other inquiries PLEASE don't hesitate to ask me!
Remember, there are no stupid questions; It is only stupid to NOT ask questions. Thank you for reading this, I look forward to hearing from everyone
Jason Caballero
Dan Schwartz Realty, Inc.
Mobile: (520)250-6369
Office: (602)274-8322
Email: Jasoncabrealestate@yahoo.com
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Ok i had some issues with my blog... So i hope this reaches everyone.
This blog is dated July 18th, 2008 and is regarding listing a short sale as opposed to becoming an REO :
Hello everyone! Whew, went on a small blog hiatus there. Now im recharged and ready to go! New subject today is the power of Short sales, On the listing side!
Now I already have a pretty detailed section on short sales on my main page curtailing how they work out, what is required, etc. etc. (some of which has already changed. FOR EXAMPLE. . . now they're starting to look at doing closing costs) yet they are more concerned with their net, so sometimes you have to raise the price to accomodate your closing costs. (for example, house is listed for 100000. You want three percent concessions. That's 3000. So a lot of times the bank would like to see an offer of 103,000 with 3% concessions) Anyway, the point here is that if you are in a bind and trying to avoid foreclosures (IE in the preforeclosure status), The Short Sale is very powerful! REO's are fantastic buying side, but everyone of those REO's/Lender Owned properties all had someone take a foreclosure sized bite out of their credit report.
On Short sales this is a situation where WHO you have listing the property is super important. ASK! are you familiar with short sales? Agents are starting to get a better handle on short sales and REOs as a whole, but a lot are lazy. They'll list them with no pictures, no descriptions on them (no personal touches, or detailed descriptions; pretty weak agency in my opinion.) Same goes for REO Agents, but that's a story for another day. Short sales, like REOs and every other listing require good exposure if you want to help pull the home owner out of their potential wreckage. They are a long winded procedure that ends up being a arduous, overwhelming and downright infuriating. . . YET with the proper agent it can be a great experience.
One of the major keys to success is having an annoying gnat attitude about it. If your agent says they'll call every few days or once a week; they are just asking to get put on the bottom of the pile EVERYTIME!!! These people need to be hounded, and bugged, and inquired, and have their shoulders looked over constantly! You'd think a bank would want to get a situation for a possible foreclosure (REO) off their books as soon as possible. (Banks are not in the business of Real Estate Owneds (REO); They are in the business of selling money!) If someone advertises being a short sale expert; question them! What do I need to have together in my short sale package (here is a good one to get them with cause there are some standard items people need, and then other specifics depending on who the bank is, and what temperment they feel that day) so if they give you a definitive answer, or make it sound vague . . . gauge that out. They need to first get your approval to negotiate on your behalf with your bank ON THE SUBJECT PROPERTY ONLY! Read the letter they put together, and make sure they don't have full access to everything concerning that bank *Especially if you bank there, or have other properties* they should only be granted full access to THAT loan. Period.
Then this is where it starts to get messy; the "short sale" department at a bank is their loss mitigation, or some other similar name, department. This is a pain to get in touch with, to even find out numbers for, etc. Once you've made the plunge this far, you have to turn your A game up and get answers! They might ask for the whole short sale package now, and tell you they're ordering a BPO (Broker Price Opinion) and they'll tell you a value they want the house listed at. This is the PERFECT scenario, so as you can guess it RARELY happens! Most of the time on short sales, they will let you submit the short sale package, and then tell the listing agent, "We want an offer before we go any further. . . " What a shot in the foot! now you have to wait for someone to make an offer on the property. This is where that nicely showcased jazzed up home that was expertly marketed for you comes into play. You'll get that potential short sale (or also called lender/corporate approval listing, or Sale subject to lender approval) a lot of exposure, and in turn showing, and finally offers. Now what property is going to be seen first; the nicely staged, great pictures well described house... Or the one with no pictures and ONLY has instructions on what to attach with the offer where the house description should be.
The listing agent can make or break these deals! it's crucial to have someone informed... Now for the good part *yes there is a light at the end of the tunnel IF you can make it that far* . . . After all of the paperwork, and constant fighting everyday on the phone, and bugging, and annoying, and pestering, and prodding, and incessant iron willed determination; you get an acceptance letter from the lender. WHOO HOO it's approved! Now you have an approved short sale. (there are still hurdles mind you, what if it took 3 months to get this letter... is your buyer still around? maybe, maybe not... but then at least you know what price the bank wants, and you run with it from there) So now that it's approved, (the buyer should already have a fully executed contract from the seller within the contract acceptance date) you send out the letter, open escrow. . . and now you have to dodge all of THOSE bullets that normally would be the only ones! See how glorious short sales are... but wait, I told you there was some good stuff, right!
After the bank slashes the agents commission and finally accepts defeat and gives that acceptance letter, the client who's house was in foreclosure gets to sell it for less than they owe. . . and they are FORGIVEN FOR THE FULL AMOUNT! you owe 178,000, you get approval to sell it for 150,000. . . you don't have to pay that 28,000 you just saved. . . AND it's not going to be reported as supplemental income to the IRS. Now after all the hell you and your listing agent had to endure; Here is that light at the end of the tunnel. How it affects your credit is different each time. it's usually 30-60 points off of FICO *heard of it being less, other times a little more* but that sure beats having that foreclosure for 7 years on your credit report... AND you saved money!
So instead of staving off the inevitable, get in contact with me immediately! This is a long process, so allowing ample time is crucial! With everyone working diligently towards the goal of closing it out, avoiding becoming an REO (foreclosures), and being forgiven for the full amount of your loan via paying less. . . this isn't a bad option at all! REMEMBER last thing that is important; you need to prove that you have a financial hardship and NEED their help.
Thank you so much for reading this... If any of this interests you, you would like to learn more, (or learn about anything else related to real estate), want listing, etc. Please contact me! I appreciate it, thank you all very much for reading this!
REMEMBER...
There are no foolish questions; it is only foolish to NOT ask questions!
Jason Caballero
Dan Schwartz Realty, Inc.
Mobile: (520)250-6369
Email: JasonCabRealEstate@yahoo.com
Concessions and Downpayment. How to get into your house with 0$ closing costs
May 18th, 2008 2:59 AM
Ok, here is my new blog, and in this one, I'm going to cover easier ways to obtain Real Estate via savvy means of purchase. Yes it is true, in the wake of all the distressed properties (Bank REO's and Short Sales) The tides have shifted to support a buyer's market and prices have taken a steep descent. Even just four months ago. . . CMA's were not Including distressed sales to help evaluate a rough value of property. . . yet as the months progressed, it was evident that "Regular sales" were quickly being replaced by statistics usurped from Short Sales and REO's... What's this mean? Basically that all the Focus on Short Sales and Bank REO's have helped lower market value of homes. Bad news for sellers, but EXCELLENT news for buyers. and with the large inventory of homes, there is no shortage for buyers. ; awaiting the rock bottom deal is not going to take a lot of time. Along with the sliding prices *which appears to be slowing...* there are "incentives" being negotiated on behalf of the buyer to sweeten their purchase. These can include having all closing costs paid for, and even getting the down payment covered.
This is how it is possible for someone to get into a house with $0 closing costs! Now, there are going to be some items that do need to be purchased *Inspections* and money that has to be "fronted" *earnest money*. If everything goes clean in the transaction, and all closing costs are accounted for and covered by the seller, you will receive a refund of your earnest money come Close of Escrow. . .
As for Down Payment, The Ameridream Downpayment Gift program, or Nehemiah is called upon to complete the down payment assistance. Now these are not actual grants given; the down payment is given by the seller, and it passes through the hands of the foundation to rinse the addition of the money to the transaction. It's basically just like the seller paying your closing costs, only this one for down payment requires an extra hoop to jump through (it's not even a big deal to fulfill either).
Couple those two elements with FHA financing in the current market, and you have dynamite! FHA only requires 3% down as opposed to conventional loans requiring 5% down. So you, or the seller, have to come up with less to fulfill loan pre-requisites. Now you have the Short Sales and Bank REO's providing you with a severely discounted price, you have programs set up and ME as your knowledgeable REALTOR able to negotiate these terms and tie them into the contract; that's a recipe for powerful buying!
If you have any questions about ANYTHING I covered, PLEASE feel free to get in contact with me. AND REMEMBER give me some feedback! Thanks for reading all of this, I look forward to speaking with you soon!!
Jason Caballero
Dan Schwartz Realty, Inc.
Mobile: (520)250-6369
Office (602)274-8322
JasonCaballero@DanSchwartzRealty.com
Homeruns, Strikeouts and Underqualified listing agents
April 30th, 2008 2:05 AM
Hello all, welcome to blog number 4! *whoo hoo im climbing up the ranks here! Today im going to tackle Short Sales offers, Bank REO offers, What you should weigh when offering, and terrible listing agents and their ridiculous methods.
Ok first off I will dive into Short Sales and REO properties. REO's are taking off! They are RED HOT right now! Just recently I put an offer in on one for a client; We were the first one's in the house, and had an offer in writin and faxed over when the listing was only 14 hours old! well by hour 48 the listing agent had 8 offers! REO's are flying off the shelves! Well considering what you offer is a humongous factor now. Yes, it IS a buyer's market, but with all these REOs and Short Sales providing some of the greatest buys of all time, competition is startin to heat up! REO's are entering escrow in as little as a week! that's breakneck speed. Like the one mentioned above, it's in escrow, and took 4 days to get there. Another great asset with the Short Sales is that they're being submitted to the lender, The lender finally gets back an answer after dragging their feet and passing the buck, and the buyer can't qualify! So what you're left with, is a property that the bank already knows what they will take for it. All you do is swoop in there and snatch it up.
Now, with that being said it's getting a little harder to get the moon in transactions such as these. Sure, the lender's are motivated to get rid of the property, and will consider some pretty off the wall stuff, but currently when they have around 4 offers to pick from, all the extra stuff written into the contract will completely bypass the "i feel offended and angry about having to counter back your lowball" process and just go straight to filling out line 392! (that's where the seller conveys their rejection to the contract) The REO's are being priced so aggressively, there almost isn't a need to knock 20 grand off the price. It turns out you'll end up hamstringing yourself. In essence you will end up with a "strikeout" and not that "homerun." Swing cautiously, you could be full count with two outs, and there won't be another at bat in the game to produce. The bottom line is listen to yourself. Listen to your emotions, your needs, your timeline. Maybe it would not be so bad to offer full price with your concessions instead of 25 grand less with concessions if it means you get the house, right? On the other side of the coin, there are so many houses being put up everyday that your next at-bat will just be a new game.
Now for those terrible listing agents handling these REO's and Short Sales! Banks are thinking that just cause a brokerage is a RE/MAX office... OH they are a national chain, they know what they're doing. Well, do they realize that the majority of RE/MAX offices are franchises? Same goes with Keller Williams, Realty Executives, Century 21, etc. Hey, an agent is an agent, and their affiliation does not always mean that is the kind of agent they are. Banks and their REO processing don't always think this way. So you get These REO's going to sometimes small brokerages with a big name. HA! I had one listing agent *who was also the DESIGNATED BROKER* just flat out not submit my offer because he had another with the bank. Isn't it flat out a violation to not present an offer to your client. In this canse, the REO property was owned by the bank, so he was supposed to present my offer! well he didn't. The other big problem I have are listing agents who are not willing to get aggressive with the bank regarding short sales. If you have an offer, and they are taking their sweet time, you need to motivate them. Get in their face, Hound them everyday. Don't just send one email and leave one voice mail and wait. That doesn't help ANYONE!
Here is another good one, I had yet another offer I submitted on a short sale, and the listing agent did something good; THEY countered by the contract acceptance date! HEY, nice work! Except the agent didn't realize she was missing some key components. In the AAR standard purchase contract, Section 2a lines 50-53 it talks about Loan Contingency. If the buyer can not qualify for the loan, he is out of the contract. Sounds pretty standard right, so the BUYER has a CONTINGENCY to OBTAIN FINANCING. right? Well... in a short sale, the short sale addendum let's us know that the seller has the same contingency, but inverted; the SELLER has a CONTINGENCY to GET OUT OF THEIR FINANCING. So what does this mean? The proceedings of the contract have to move along just like a normal contract would! This means getting the seller's signature and accepting the offer CONTINGENT UPON the seller's getting lender approval. A lot of agents DO NOT do this, and what ends up happening is they give the buying side yet another get out of jail free card. Now let's say the agent gets the approval and present the buyer with a counter offer, what good is that counter if the buyer doesn't like it. They don't have to do anything, cause the original offer was not answered back by the contract acceptance date. so in essence is the listing agent helping out their clients by giving the buying side more freedom to send out other offers and pursue other properties. You bet they are. Ok back to this agent and her procedure. When she countered back she only gave me the addendums I did not have with the contract and a counter offer sheet. Well where the hell is the rest of the contract? The answer was the broker told them the procedure was to not submit back a signed contract until lender approval. Well what good did that do?! She didn't say in the counter offer "all terms to remain the same" So if I got my client to sign the counter offer, They would also be agreeing to any changes made in the purchase contract! Why would I let that happen, furthermore, ALL COUNTERS ARE TO INCLUDE FULL CONTRACTS!!! Even rejections are supposed to have the full contract with it, but it's becoming standard fare to just fax back the last page with line 392 filled out.
Now to tie up this loose end with REO properties being handled by underqualified people. there is a brokerage running around who will not even use their PHONE! they say to email all inquiries. So they deal ONLY with email. It comes in on their blackberry, and it's the most broken ridiculous form of english. It's like they are on the back of a motorcycle trying to respond to an email. It's pretty asenine. Anyway, you can tell my slight frustration with people cutting corners, and thinking they know what's best, even though it's in violation of regs, the law and is sometimes a flagrant disregard for their client's fiduciary.
Either way, thank you very much for reading this... AGAIN, give me some feedback!! those of you who have, I LOVE IT! bring some more, it will only help me get stronger... and remember...
THERE ARE NO FOOLISH QUESTIONS; IT IS ONLY FOOLISH TO NOT ASK QUESTIONS!
JasonCaballero@danschwartzrealty.com
Good bye all!
Jason Caballero
Blog 3: How to capatalize on the current market even though you have a home currently
April 16th, 2008 2:32 AM
Hello all, welcome again to my blog concerning Real Estate. This round we're going to take a little break on Distressed properties (Short Sales, bank REO's, etc.) and get a lil more in depth on options one can do to provide opportunities in the current situation.
If anyone else is paying attention to the MLS you'll see that the MLS numbers are geometrically climbing up the ranks. 297XXXX just kind of snuck up, and it seems like within a week, we'll be breaking the 298XXXX numbers. A lot of them are Bank REO properties, cause they are moving to clear the books. . . Realization has been made that these properties are weighing us down and foreclosures are happening more frequently. A lot of the lenders are just trying to dump their REO's to salvage their losses. What does this mean??? A LOT more REO properties, and these are fantastic deals... *as I said in my previous blog*
Now, what do all these REO's and Short sales have to do with someone already in a home, in a market that is not moving, or not being very kind to a lot of the non distressed sellers?? (Kind of sad... the REO's and Short Sales have flooded so much, the people who have stayed out of default, current with payments and pride in ownership do not get to enjoy their right to sell their property. Kind of like a pyhrric victory and its unfortunate... but it doesn't have to be this way...
For Examples sake, lets say that a family buys a *all the preceding examples are completely arbitrary. that means I made them up* 2000 sq. foot house 3 years ago for $275,000. nice prestigious neighborhood... Well, now that nice neighborhood has been hit with foreclosure, and distressed sales are becoming numerous... Not a big deal right... well that problem with that is a lot of evaluating of value *now for the record, I do NOT give appraisal... I can give a CMA, but I AM NOT AN APPRAISER... Call Tim Barber *google him* if you want to hack out some appraising issues* back to evaluating value, they are based on Comparable properties. Comps as they are commonly called. Well for a while, Bank REO sales and Short Sales were not included when evaluating value... well, now the problem is a large portion of the comps in an area are mostly distressed sales. This puts a huge wrench in the works when it comes to accurately pricing a home. So now the problem is when it comes to selling that 275,000 house, Short Sales and bank REO's have been selling in this fantasy neighborhood have been coming in at around 200,000... Well, what does this mean for the family with the 275,000 who wants to sell? Well it won't happen. for arguments sake let's say they keep current with all payments and have knocked down their principal only a little bit *ah the nice reality of financing*. So they owe something like 267,000 on their home. Well now the increasing REO's and Short Sales have driven the comp pricing to around 200,000. Now they can't sell the house for as much as they even owe! And now that they have stayed current on their payments, they are not allowed to Short Sale the house to get out of it... *Also not to mention, why should they have to get weaseled out of the appreciation that the house should have?* means they're stuck in what they have ... right? Well not exactly...
This is a great oppoturnity to move up!!! and keep around the same payments; Let's break it down like this... the 275,000 house has had the same mortgage for the whole time the family had it. they were obviously comfortable paying it cause they didn't go into default, so they are in good shape when it comes to covering the mortgage. Well, now 275,000 gets you a way nicer home, if YOU go hunting for an REO or short sale. So what's to say that they couldn't ideally find DOUBLE the home for the same price they paid 3 years ago? 4,000 sq. feet for 275,000 now (this is super far fetched... they might have to do some cosmetic work to it or something, but HEY!!! 2000 extra square feet... the only downside to that is your AC bill... that's small potatoes!). Well, ok, but what about our current house?
here's the big kicker... RENT IT!!! that's right, get some tenants in there!
The market has changed A LOT of things... one of them is loan restrictions; they are very strict now *banks HATE risk, and the subprime meltdown nailed everyone in the short hairs. . . cause they weren't cautious enough of the risks. They saw the gold in the horizon and not the river of lava they have to cross to get to that gold.* So loans are harder to get. What about all the people that foreclosed?? THEY NEED A PLACE TO LIVE TOO... they aren't just going to stay with Aunt Gertrude in her 2 bedroom shack are they? So look at the number of renters out there... There are plenty of people, with good income, and a definite need for a home who may have had some trouble along the way and have a nicew blackmark on their credit. Well while they repair their credit, they need somewhere to live right? Aunt Gertrude's feet smell terrible, and her naked soap opera watching ritual just isn't working for your 8 and 9 year old children. THEY NEED OUT OF HER HOUSE... What's the moral of all this banter? These people need a place, so they HAVE to rent. That's where your current primary residence comes in... PUT some tenants in there! Go chase that huge house!!! sign your people up in a 2 year lease. . . wait for the market to turn around. The people in your house... what the hey, be nice, make them pay only the mortgage you have to cover, so nothing comes out of your pocket... You hang on to your old house for a little while, while all the shenanagans that is our current market blows over and you have your nice, new double the size of your old home, you get to make your NEW home... so let's RECAP... You keep the same payment *Cause the house is the same amount of money*, you get MORE house. . . You have tenants in place on your old house, so you're not losing any money. . . they are keeping your mortgage afloat... and for roughly the same price a month, you have more house... Oh there is more don't worry... What happens when the market turns around, and your old house for 275,000 is now worth 350,000??? hmm, who hates putting roughly 75,000 into their pockets (LESS, cause more than likely you have some closing costs, and commissions to pay) but ideally you get paid!!! so now you just cleared over 60,000, all the while you got your new home, for the SAME payment... think about it this way, you got paid 60,000 to live in a house double the size of the one you had, and your payments stayed the same... So... if your old house went up, who knows what your new house. . . *That has double the features and amentities, and lot size and square footage of your old home* what is that going to be worth...? You see where im going with this???
OK... that sounds about good. Now to address these horror stories of Real Estate, i've been giving them some thought, and I wonder if anyone is even reading these blogs. . . I know they are extremely informative and cover short sales and bank REO's and advancing your Real Estate education *im laying it on thick huh?* but is anyone even interested in hearing about someone getting left out to the wolves... YOU DECIDE!! EMAIL me and let me know if you want to hear something like that... As for now, im going to put the bookmark here for now, and pick up the struggle another day *Soon! constant updates are a beautiful thing.* Im going to try somethin else new...
IF YOU READ THIS BLOG AND LIKED IT; PLEASE, EMAIL ME AND LET ME KNOW WHAT YOU WOULD LIKE THE NEXT TOPIC TO BE ABOUT. I promise to make a dilligent effort to cover any topic you give *I would prefer it stay about REAL ESTATE seeing as how that is my profession, but I will make an attempt on anything requested.* OK
Thank you for reading this blog, and please as I say again... GIVE FEEDBACK!!! ask questions; you know the score.
There are no foolish questions; It is only foolish to NOT ask questions!
Thank you for readin this and I look forward to speaking with everyone soon... best wishes
Jason Caballero
JasonCabRealEstate@yahoo.com
Short Sales vs REO Properties
April 6th, 2008 12:15 AM
Hello all, Welcome again... Here goes blog #2! It's the big showdown. . . REO vs Short Sale and my opinion on them. . .
Ok, let's get a LITTLE background together so there is not any confusion *they still might be, so I apologize ahead of time for that!*
Ok, Now short sales, *if you haven't read my section on short sales* Let's go over the basics of a short sale:
- You pick up the property for less than even the current lien on it (example, Owners owe $120,000, you might get it for $100,000)
- The time frame is up in the air! the most recent acceptance I got for some clients of mine was almost a full 2 months!
- Depending on the listing agent for the short sale, it can be a smooth process of a Terrible feces storm; Some listings advertise needing lender approval, and have not even opened communications with the bank!!! for example, the listing agent and his clients just decide to do a short sale, without consulting the lender;' this is a problem! What if the owners aren't granted permission to short sale their house? Your offer was a complete waste of time. But if they have their stuff together, and start putting a file together it could work out a lot more stream lined
- The more liens on a property, the more steps you have to climb to reach that peak.
Whew, ok still with me?? let's go on and hit the highlights of a bank REO (Lender owed)
- REO Properties have already foreclosed, so they are just being held by the lender. No ridiculous waiting around for the loss mitigator to decide the fate of your fragile offer; Most REO property offers will get a response in 3 business days. MUCH better than an unknown response time.
- The REO has already nailed the lender right in the groin; They had to shell out all the money to foreclose on the house, and they have to get it up to speed *clean out all liens, and get it ready to transfer title* They won't make any money on it sitting on their books so they are motivated!
- Same with Short sales, REO properties are usually sold "as-is" without SPDS and a Clue Report, so your inspection becomes even more crucial.
Now a lot of people get the misconception that everything in this market needs to be an OBVIOUS home-run. . . Knocking 40,000 off the price! etc. Well a lot of these distressed sales are already priced VERY well. *not all of them* but the majority of them are given a very attractive price tag to get them moving. The bottom line?? If you are considering buying, NOW IS THE TIME! there are some serious home runs just waiting to get spanked out of the park. You might have to paint some walls and repair some drywall... maybe buy a fridge, but it's worth it! Now for the final knockout punch, which is better?
Well In my opinion, I find it is easier, and better to work with REO properties as opposed to Short Sales. The time frame is almost the best feature. . . Short sales can take 3 months or sometimes even longer to close. What if you have a strict time period to get into something? the short sales might not agree with your time frame. Lender owner REO's get an answer fast, and they are willing to negotiate. Either way, this is the time to get nuts! Ok, i think i'll stop it right around there, next blog I'll be sure to tell some good story about breach of fiduciary, or where someone dropped the ball on a deal. Thank you again all for reading this. . . AGAIN!!! give me feedback!!! Ask questions. . . I've said it once, and im sure i'll say it a bunch of times again:
THERE ARE NO STUPID QUESTIONS!!! It is only foolish to NOT ask questions. That's what im here for so let me have it. Ok, til next time, best wishes
Jason Caballero
jasoncaballero@danschwartzrealty.com
Just Getting started!
April 4th, 2008 2:18 AM
Hello!, and welcome to Jason Caballero's online Phoenix Real Estate Blog! This is more of a formal introduction, kind of like first day of college; you get some syllabi, scope out who's in your lecture, hear some boring chatter about your professor's disertation and then you get released. This is probably just going to get chalked up as boring chatter. . . I can't jump right into stories about people getting sent up the flag pole, or issues needing mediation, or arrogant listing agents (Those are a great pet peeve of mine). Ok, with fiduciary in mind and all aspects of providing the greatest protection to your client, what happened to professionalism?? When you come in with an offer less than ideal, they take it as a personal attack! Like you want to violate the sanctity of their home and pilfer their personal assets just cause you present an offer 10,000 below asking price. Seriously, come on now. The biggest one is when they don't even present your offers *To all you REALTORS who do that, it's illegal, cut it out! and while we're there, give yourself the international "Shame Shame" signal (the right index finger sliding across the top of the left finger from palm to finger tip).*
Now, back to the introductory part of all this. . . If there is something I write in a future blog that you absolutely HATE; TELL ME! If there is something I write that you absolutely LOVE; TELL ME! If there is. . . (just kidding) you get the idea; I love feedback. It's how someone gets stronger and better, especially negative feedback. Don't be shy, if you have anythin to say, email and let me have it! That's what I plan on doing here, I have read some other blogs, and they seem very stuffy and superficial, like they are sleazily trolling for fresh meat while having a smile. I plan on tackling difficult and prevalent factors in the Phoenix Real Estate market, such as:
- Short Sales, REO properties, Foreclosures and other distressed sales
- Arrogant Realtors, Horror stories and upcoming trends
- Insight on how the market is going
- the gritty truth about how distressed sales are eating non distressed properties alive
I hate to use the cliche' final list entry and say much more, but it's true! much more! I just hope that everyone will abide by the rules *if you have the impulse to say something, hit up my email!*
Thank you very much, I appreciate it!
Jason Caballero
JasonCaballero@danschwartzrealty.com
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