THE ART AND SCIENCE OF BUYING SHORT SALES

Still trying to learn all I can about short sales and loan modifications.  Tuesday I attended a seminar by Short Sale Partners who are offering new technology to speed up the short sale process and make it easier for all parties involved to know what’s going on at all stages of the transaction.  I’m guardedly optimistic.  Right now, it’s nearly impossible to know who is doing what or when it’s being done.  This is frustrating for the seller, but can really handicap an interested buyer.

So, what do you do when properties available for purchase are almost exclusively foreclosures or short sales?  Write multiple offers for a buyer?  Many agents are doing just that.  However, a buyer must disclose this on the offer, and write a separate good faith deposit check for each one.  Telling the seller that you’re putting other offers out when your intention is to only purchase one, doesn’t make your offer the most attractive in a competitive situation.  If you don’t write multiple offers, then your buyer gets squeezed by options such as “Do we withdraw this one to make an offer on that one?”  It’s kind of like too many invitations to the prom and wanting to go with the one you have the crush on but not wanting to miss out on the prom and not feeling desperate and …. well you get the idea.

Writing an offer on a foreclosure is much more straight-forward.  You’re dealing with a bank who now owns real estate they don’t want on their books and they must dispose of the property quickly.  It’s all about the numbers and the bottom line.  Responses tend to be faster.  You are dealing with the REO (real estate owned) department.  When you have the signed contract, you’re not going to have to wonder if someone with a better offer is going to step in front and take the deal away.  You can take it to the bank (pun intended) and the title company.

Writing an offer on a short sale is much more risky.   .   You’re now dealing with the loss mitigation department.  They have to decide whether their note holders are better off  renegotiating or modifying the existing loan (homeowner stays in the home and doesn’t sell),letting the homeowner sell “short” (below what is owed), or taking the homeowner through the process of foreclosure.  In most cases, note holders would be better to cut their losses by approving a short sale, rather than taking the property back in foreclosure.  However, the process for making this determination moves at a snail’s pace and involves many more decisions and multiple parties (not the kind that are fun with hats and balloons.) 

In a short sale, the bank doesn’t own the property. It’s still in the homeowner’s name and they may or may not be making payments on their mortgage (call it a note), utilities, property taxes, etc.  The property may be encumbered by more than one note—a first and a second.  The note may have been sold to multiple investors in a packaged deal, or may reside with the original lender, or many other variations in between.  It’s very complicated, and adds to the difficulty of successfully purchasing a short sale.  The property is assigned an asset manager.  When in the process this occurs may vary, and the manager may change in the middle of your deal.  A good question to ask early on is “Who is the asset manager?” 

I’ve taken numerous classes about short sales and read everything I can to stay abreast of them.  I’ve closed some and lost some.  I keep learning, especially from fellow realtors who are also out there in the trenches.  It appears there may be some predictability factors for successful short sales.  Number one, easiest to close, are those with a single mortgage that was the original purchase money from a sub-prime lender.    Those loans weren’t bundled and sold as A-paper loans.  Least likely to close—properties with two loans, each from a different lender, where the homeowner has taken their equity out to use for something other than home improvement (they paid off credit cards, bought a car, bought a boat—basically used their home’s equity as a bank account.)  

If you are considering the purchase of a short sale, make sure you find out all you can about the nature of the liens and loans on the property, whether the homeowner has submitted a complete package with a hardship letter, how far along they are in their conversations with the loss mitigation department, whether an asset manager has been assigned, whether a company specializing in short sales such as Short Sale Partners is involved, and then buckle your seatbelt for a bumpy, hair-raising ride. 

Remember, you may get a signed contract from the homeowner, but until the bank sends you a signed agreement, there is no agreement.  You must have written consent from all existing secured lenders and lienholders to really have a deal.  Unless otherwise agreed to in writing, the homeowner can continue to market the property and take better offers to the asset manager.  You need to be the last one standing when all the gunfire has ceased.  You’ll have to be very patient and remain completely unattached to the results.  Kind of like the “Zen-Master of Housebuying”. Make you want to run out a purchase a short sale?  If you do, give me a call or visit my website at www.DeLongTeam.com.  Good luck and happy hunting.

 

Thank You To Our Veterans

Sunday at church, and the previous Monday at my Rotary, we honored the Veterans in the room by having them stand and applauding them.  Whenever this happens, usually as a part of Memorial Day or Veterans’ Day recognition, I am moved to tears as men and women of all ages proudly stand up around me.  In my Rotary, there are many who have served our country in the military, and still several from World War II.   On Sunday, when our minister, a Vietnam Veteran himself, asked for all Veterans of to rise, only one was present from WWII.  His name is Buzz, and I think of him as a wise and gentle soul. 

Buzz, now a mostly-retired mediation attorney, helped me through my own divorce almost 15 years ago.  He, like my Dad, my uncles, my step-dad, are all or would be in their eighties today.  My step-dad, no longer with us, was at Pearl Harbor on board the Maryland, when Japan attacked.  I remember how he would lose his stiff-lipped composure and fight back the tears whenever he stood for the playing of the National Anthem at ballgames.  He died almost 20 years ago from cancer.  I still miss his stories about growing up, riding the freight trains as a teenager during the Great Depression, and earning his way with hard work and strong character to become a major player in the dairy industry here in Sacramento.  He didn’t talk much about the experiences of war.  I know he lost many comrades in battle.  He sometimes questioned why he was spared.  He didn’t make it to his 80s.  Many have, and are now, like Buzz, standing if they can, and being honored by those of us who are benefited by their sacrifices.

Sunday afternoon I visited my Uncle Ed, also a WWII veteran, at the Sutter Roseville hospital.  He can no longer rise to his feet to be honored for his service.   I got the call from my cousin Sunday morning that he may die at any time.  All of his children were gathered at his bedside.  My Aunt Betty, a second mom to me, succumbed to cancer eight years ago.  Now my cousins are saying goodbye to their dad.  I’m reminded to be grateful that both of my parents are still living.  My Dad’s in Louisiana and Mom’s here living about a mile from me.  She continues to inspire those of us who know her with her energy and enthusiasm for life.  She’ll be 83 in December.  Dad celebrated his 85^th birthday last May.  He’s dealing with Parkinsons and shuffles when he walks.  “Getting old is not for the faint of heart,” he’ll tell you.

I have clients today who are sacrificing for the current conflicts we are involved in.  Right now, I am hoping to get them settled near the wife’s family in Dixon so she’ll have support while her young husband heads to Afganistan.  We’ll be using their VA loan.  We’ve been looking at houses, and we’re hoping to have them into a new home near family before the husband ships out for active duty.  Their children are now ages two and three.  They miss their dad who is preparing for duty at Camp Roberts and has already been gone a month.  I helped this couple find their first home, watched them become parents, sell that home and move to a larger one, while welcoming their second child into their family.   I’ve seen their family grow and know the sacrifices they are making.  Flash forward 60 years and I hope they will be the elders being honored for their service to our country.

One of my other clients always ends emails to me with “All gave some, some gave all.”   I understood more when we began applying for his VA loan.  There’s a pride in being a Veteran, and an honor in being eligible for a VA loan.  So, I honor all of the Veterans today even as I pray that we someday learn to live in peace on this beautiful planet. 

Practicing Patience

I was listening to a Brian Buffini  CD in my car yesterday talking about the current real estate market, how different it is from previous ones, and how patience is the key to getting through this one.  He’s been in the business over 20 years and owns the largest coaching company for realtors in the country.  He’s speaking with thousands of agents every year.  Many are leaving the business after 30 or 40 years.  I’m in my 10^th year, so not exactly a novice..  While I am not inclined to buy into the gloom and doom that many are, I do want to pay attention to trends.  Someone would have to reside on a different planet not to know how foreclosures and short sales are dominating the marketplace as far as available inventory—over 62 percent are bank-owned and a good portion of the rest are short sales.

Patience is a virtue, and boy is it needed if you’re a buyer in this market.  I am working with several buyers right now who have made multiple offers on properties and don’t get the deal.  Cash is still king, especially with banks.  Buffini says he advises buyers to make an offer and keep looking. Don’t get attached.  I have to agree.  I have clients that are happily moved in after months of looking and multiple times at bat.  Finally they scored.

In Sacramento, some areas are back to 2002 prices.  Not everywhere is this true.  Established neighborhoods like Midtown, East Sac, River Park, Sierra Oaks, Arden Park, Wilhaggin, Land Park, Curtis Park have been holding their values better than some.  However, look in Elk Grove, Natomas, West Sacramento where new development was greatest, and you’ll find deal after deal where homes have dropped almost 50 percent from their last purchase price.  Trendgraphix, a data tracking service available only to Lyon agents, helps us sort fact from fiction.  In October 2002, zip codes 95816, 95818 and 95819 homes sold averaged $219/sf.  In October 2008, that figure is $284/sf (just dropped below $300/sf in the last two months).    In Elk Grove and Natomas the drop is actually below 2002 prices of $146/sf to an average in 2008 of $127/sf.

This is a hot market where buyers need to be prepared to act quickly when they find a home they like.  They need to know values, what the property is most likely to appraise for, their pre-approval letter from a recognized and trusted lender, money set aside for a good faith deposit, and a huge tolerance for not knowing what the seller side is doing.  Long waits, no responses, last minute changes and multiple offers are common place right now.  For those that are willing to work with the new terrain, there are good deals to be made.

I love the hunt for that perfect home.  I know that’s the high that most of us who love this business feel when we’ve been able to help someone achieve their dream of homeownership.  When we finally get through the process and hand the keys over, the hours of searching and all the disappointments from deals that didn’t work out, become a distant memory.  It’s the stuff we build our stories on about how we found our own “home sweet home.” 

If you or someone you know needs a trusted advisor to help them find or sell a home in this unpredictable market, I’d love to be the one you call.  Visit my website at www.DeLongTeam.com.  If you’d like to be on my email list for the latest figures from Trendgraphix, just ask.

Remembering and Being Remembered

Today is my birthday.  Lots of calls, emails, cards from family, friends, clients.  I enjoyed a birthday dinner last night and again tonight.  Feels good to be remembered. 

Today was also special because I gave the eulogy for a dear friend at Rotary. It felt good to remember him as well.  I spent time last Tuesday with his widow and daughter Vicky, one of my best friends, in preparation for the two or three minutes I had been given on the podium.  How to summarize a well-lived life so people can catch the essence of the man behind the words—I hoped I could manage it.

As I sat with Vicky and her mom, we began going through the huge basket of cards and letters received since the news of Gordon’s death.  Hundreds of them and not a duplicate in the bunch.  All filled with memories and quotes and the story of a man who lived and loved well. It was clear that Gordon fully embraced life, people, and serving.  He touched their hearts, made them want to be a better person.  I noted some of the repeating themes: “Strong character, generous spirit, role model, friend and mentor”  “left footprints in people’s lives”  “big shoes to fill for all those who admired him and enjoyed his grin and his chuckle” “he brought a special joy into the world”.

Vicky has incorporated favorite quotes from her dad in parenting her own sons   “Remember who you are and what you stand for.”  “Do you have a dime and a toothbrush?”.  Gordon was known as “the great communicator” and the go-to person if you wanted to work on finding a solution to a problem  – but forget about complaining to Gordon, because you’d be met with “So, what are you going to do about it?”  Explain, rationalize and negotiate – that’s the formula he taught and modeled.

For me, he embodied the quiet servant—the unsung hero—the one who gives anonymously and generously.  The volunteer you can count on for Loaves and Fishes, Food Bank, Boy Scouts, Toys for Tots.  Gordon always carried Safeway cards to give to people he thought might need a little extra something.  Gordon donated generously of his time, talent and treasure.  The twinkle in his eyes came from a deep connection of knowing what “living the good life” really meant.  It wasn’t about having a big house, for he could have purchased anything he wanted.  He and his wife still lived in the modest three bedroom they raised their three children in. 

I enjoy showing beautiful houses—large and small.  I’ve found people buy for as many different reasons as there are people.  Gordon modeled what creating a home, no matter the size, was all about.  Their home wrapped itself around guests like a warm overcoat.  In the cozy family room sit several chess sets, cribbage sets, backgammon, and Gordon’s kaleidoscope collection. A huge floor to ceiling closet boasts six shelves bursting with every game imaginable.  His artwork adorns the walls.

When asked how he managed to handle the weight of business and doing right, Gordon ‘s answer: “Live your life simply and with honesty—integrity follows and you sleep good at night.”  I wish my dear Rotarian friend the best as he begins this next journey, and I appreciate the legacy he left.

Under Water

Didn’t get the backyard drains snaked before the big rains came today. Big mistake.

When we bought this home 31 years ago, we didn’t know until the first downpour that this Arden Park home had a history of flooding. The family room was a converted patio, and probably no one bothered to get permits. No such things as statutory transfer disclosures which protect the buyers today from sellers who keep such things a secret.

We loved the home anyway. However, one of our first home improvements was installing drains all around the back and side of the home. They’ve worked well until recently. Tree roots are the culprit. Lesson—don’t put off until tomorrow what needs to be done today.

So, this afternoon I came home after touring three different clients –showing them homes from Dixon to Arden to Orangevale and even down to Rosemont –to find my family room flooding, water up about three inches along the back of my home and pouring in onto the tile floor.

I’ve been babysitting a borrowed pump for about three hours that’s connected to a garden hose redirecting water away from the back door and into my swimming pool. Every 30 minutes, I get up, check to see that the pump is still pumping, and switch out soaked towels with those I’ve put through the spin cycle in the washer.

Right now I’m ahead of the rain. The pump has done its job and I’ve turned it off. It’s 11:30 p.m. and I’m nervous about going to bed. The rain has stopped, but for how long? I’ll have to sleep with one ear tuned to the weather outside my bedroom window.

I have my problem solving hat on. Do I dig up the drains? Install a sump pump? Tear out all of the concrete at the back of the home and have it re-graded away from the home? I just sold a great craftsman high-rise bungalow in mid-town that creatively solved a water problem by installing a combination water feature and drain system. It was one of the highlights of the backyard garden. Might need to call the engineer that designed it. Within every problem is an opportunity!

If you have any questions about disclosures and what’s required when a home is sold, don’t hesitate to contact me. I’ll be glad to get the latest info to you. You can also visit my website at www.DeLongTeam.com.

Happy Halloween!

Happy Halloween! I’m blogging in between trick or treaters. Each year I have an internal debate – will I stay home and hand out treats, or be the Halloween Grinch and turn out all the lights. Almost grinched it this year, but my conscience got the best of me, so after a last minute run to Walgreens for M&Ms, I’m ready for all the angels and goblins.

I’m so fortunate to live and sell real estate in a neighborhood like Arden Park where children can feel safe and welcomed when they knock on the neighborhood doors. Almost three decades ago, when my three sons were in grammar school right here in Arden Park, we’d kick off the season with a Halloween festival at Mariemont Elementary.

On the big night, my husband would join about six or seven other dads with their costumed kids in tow, and they would all head down Fitch Way, moving from house to house, because everyone knew that’s where the best treats could be found. I hear they had a great time. I stayed home where it was warm and handed out treats. My boys would come home with their pillow cases full of candy, too heavy to carry.

Of course, after such a haul of candy, I can remember the struggle to keep the boys from eating everything all at once and making themselves sick. Sometimes I wondered if we should just toss it all in the garbage, but somehow we’d work it out. I stashed their candy on top of the refrigerator when they were very young and doled out slowly. As they got older, I gave up the fight. Nature has a way of letting you know if you’ve eaten too many sweets!

Where does all the time go. Remember the song, “Turn Around”? Sure feels like I was just applying the final touches to their own costumes not long ago. Now two of them are fathers themselves, taking their own place in the Halloween trick or treating traditions. Late afternoon today, I dropped in to see three of my grandsons before they left to go door-knocking in Sierra Oaks where they live. They looked so adorable. A five-year-old pirate, and the two-year old twins dressed as Winnie the Pooh and Spiderman. My youngest grandson, I’ve heard, is dressed as a crab. He’s just learning to walk, so being a crab is quite easy. They live on seven acres in Sequim, Washington. I’ll have to settle for photos. I treasure the pictures of my own sons all dressed up.

Hope you managed to hold the Halloween Grinch at bay and continue to find many opportunities to keep the holiday spirit alive while Mother Nature changes her wardrobe into fall colors and then strips herself bare in preparation for winter. It’s raining outside and the children are heading for drier hauntings. I’ve got candy left over. But I’m glad I participated.

Tomorrow I help three different couples search for homes.  I hope it’s not still raining.  If you ever need help with your own real estate needs, or want to see what’s new on the market, visit my website at www.DeLongTeam.com.

Hello world!

Took a class today in blogging for Realtors.  Don’t want to be the last one on my block to try it.  So, let’s see how it all works.  “Hello world!”  That’s the title the site gives you to start with.  Wow.  That’s a big audience.  I think I’ll focus on a smaller group and if the world wants to listen in, that will be great!

I may be new to blogging, but not to real estate.  September 1999, just over nine years ago, I picked up my lockbox key from Sacramento Association of Realtors, and launched into what has proven to be a wonderful, wild ride.  Hundreds of deals later, I’m still surprised by how unique each transaction is.  Some were smooth, easy from beginning to end.  Others required every skill I could muster to get the deal closed.  Always it’s a team effort.

I counted once how many different people are in just the usual plain vanilla sale–buyer(s) and their agent, seller(s) and their agent, buyer’s lender,  home inspector, pest inspector, underwriter, appraiser,  escrow officer, and insurance broker–that adds up to eleven and doesn’t count the brokers, transaction coordinators, office assistants and countless others in the background.  Today, plain vanillas are the exception.  Buyers are more likely to find they must make offers on bank-owned (REO) properties or short sales, adding another whole layer of complexity to the transaction.

I’m grateful everyday that I’ve had experience as a teacher, spent time getting trained as a mediator, and learned to facilitate small groups.  Even my experience as a chaplain has added an important dimension, especially when it seems only a wing and a prayer will save the day!

If you’d like a great resource for your real estate questions, visit my website:  www.DeLongTeam.com