May 22, 2012

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Simi Valley Home Owners – HAFA Short Sale Requirements Set To Improve

March 15, 2012 By 2 Comments

What is a HAFA Short Sale and how will it help Simi Valley Home Owners?    HAFA (Home Affordable Forclosure Alternative)  is a government sponsored program working with HAMP (Home Affordable Modification Program) qualified Borrowers/Homeowners to sell their homes when loan modification options fail.

Simi Valley BankIf you have been working on a loan modification for your Simi Valley home and keep hitting dead ends and rejections, or your modification terms are not enough to improve your situation, then selling your house before it goes to foreclosure may be your next step.

Once you have been through HAMP and you have decided your next step is to sell your home; exploring if you qualify for a HAFA Short Sale is the beginning of the Short Sale process.

Recently some of the HAFA Short Sale requirements have been broadened, here are of the few more notable:

  • Occupancy -  homeowners are no longer required to lived in the property within the last 12 months.
  • Relocation Incentives -  $3,000 and assistance are limited to owner-occupied or tenant occupied property at the time of the short sale.
  • Junior Lien Holders -  A maximum of $6,000 has been increased to $8500 that a junior lien holder may collect in the HAFA Short Sale Agreement.
  • Borrowers/Homeowners may stay current on their monthly payments Even if the payments exceed 31% of their gross monthly income.
  • Also some favorable changes in how these accounts will be reported to the Credit Bureaus.

These improvements to the HAFA Short Sale requirements were announced by the Obama administration last week and are expected to go into effect in the beginning of June this year. Additionally the program has been extended through the end a 2013.

My Short Sale Team  processed and closed some of the first Short Sales in Simi Valley and Moorpark when the program was first rolled out. If you’ve been through the HAMP  loan modification process and are still standing wondering what to do next, call me (805)432-7705 for a free consultation about the HAFA Short Sale program for your Simi Valley home.

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Filed Under: Sellers, short sales Tagged With: , , , , ,

10 Mistakes Home Buyers Make with Simi Valley Short Sales

June 27, 2011 By 1 Comment

Simi Valley real estate and homes for saleSimi Valley Short Sales have been a big part of my business for the last couple of years.  These transactions are very complex and not every real estate agent is equipped to handle these transactions.  It is easy to get a seller to agree to list their home, but working with the Seller’s bank to get short sale approval is another story.  Many of the licensed agents that take short sales listings have no business doing so.  It is easy to attend a seminar and get a certification, but each and every short sale I have worked on is different with it’s own set of circumstances,  nothing can be substituted for hands on experience.

Understand that the representative at the bank has a typical work load of over 100 properties on their desk in various stages of the approval process.  My job is to keep my client’s file at the top of that stack and any time the bank representative throws a condition at us, we need to answer quickly and be able to state a case in support of my Seller.

A big part of my success is using a 3rd party negotiator on my team.  My negotiator is Real Estate Attorney and Licensed Broker, while he is acting only as a negotiator, the years of experience between the two of us has proven to a 100% track record in getting approvals.  We have completed traditional Short Sales and Short Sales under the HAFA program.

Your biggest obstacles as a buyer in a Short Sale are mostly going to be related to having unrealistic expectations.  Some will be generated on your own and the rest will be generated by the real estate agent representing you.

#1. Not understanding Market Value – You will write a Low Ball offer for several unsound reasons

  • First unsound reason – The bank already has written this property off at a loss, if they don’t take my offer they will lose even more money down the road.
  • Second unsound reason – They are getting more from me now then they will if they foreclose.
  • Third unsound reason – By the time I fix up the house after I buy it, I will have $50,000 into it, so my offer needs to be $50,000 below asking.

The bank has send appraisers out and paid other real estate agents for market opinions.  The Seller’s lender has a very good idea what the surrounding homes have sold for.  Additionally, I will price my Short Sale Listings at Market value and this is one of the direct reasons why my Short Sale Listings not only get approved, but they also close escrow successfully.   Typically the Seller’s Lender will come back and ask the buyer to come up with additional money if the Seller’s Lender thinks the offer is low compared to the market value.

#2.  Asking for Repairs – You or your agent will think that you can ask repairs after an inspection.  The seller is in a Short Sale because they are broke and out of money. They probably barely have enough money for a deposit on a rental when escrow closes and if your agent puts in your head that you can ask for repairs, you might want to look for a new agent before looking at other homes. Short Sale Lenders do not care that the water heater relief line does not exit to the outside of the home, they don’t care that the screens are broken or that the pool is green.  No they don’t care that the GFI’s are missing in the bathrooms. The Short Sale Lender has a bottom line number in their approval and if the buyer cant work with that number, then the approval will not be issued. The bank’s bottom line number and your low ball offer will not be compatible.  Seller is broke so that means you the buyer gets to pay for the repairs.

#3. Ask for Termite – Your agent tells you to ask for termite inspection and repair.  Once you put it in the contract now your lender is going to require the work be done, but remember the Seller’s bank isn’t going to pay for it and the Seller is broke so the only person left to pay, is you the buyer.

#4. Ask for Home Warranty – Once again the Seller’s bank isn’t going to pay for it and the Seller is broke so the only person left to pay, is you the buyer.

#5. FHA & VA financing - Try a Short Sale at your own risk, because FHA and VA will inspect the house and come up with a list of Lender required repairs.  See #2 and remember the Seller’s bank isn’t going to pay for it and the Seller is broke so the only person left to pay, is you the buyer. FHA & VA buyers have bought Short Sale properties, they just had to come out of pocket for Lender required conditions and repairs.

#6. Closing costs – Your Lender or Real Estate Agent told you to ask for $10,000 in closing costs. The Seller’s bank isn’t going to pay for your closing costs and the Seller is broke so, the only person left to pay for your closing costs is you the buyer.

#7. Unrealistic about time frames – Short Sales take a long time.  I have obtained approvals in as short as 3 weeks to 6 weeks, but the majority of the approvals are taking 90 to 120 days.  If you don’t know how to sit and wait for a long time with little information on the status, then you should not be writing offers of Short Sale properties.

#8. You have a home to sell – While I might be the only listing agent in Simi Valley to complete a Short Sale with a buyer who was selling their home and needed the proceeds from that sale to complete the purchase of my Short Sale;  I have not had any other bank agree to this.  The timing on these short sale approvals is so drawn out and consuming, it is very difficult to hold all the buyers together and wait for approval.  The representative for the Seller’s Lender know this and they do not approve offers that are contingent on the Buyer selling their property first.

#9. Attempt to flip or the old Double Escrow – You want to negotiate with the Seller’s Lender so you can turn around and find another buyer and make a quick profit.  My seller has no motivation or obligation to help you make a fast profit off their loss.  Keep in mind that the Seller’s Lender may have deficiency rights against may seller, so my seller would be crazy to take on larger future tax and deficiency obligations for your investment plans.  I wrote “Beware of Short Sale Flipping” which explains this better, but it can be illegal and FBI has been going after investors that are concealing their profit schemes from Short Sale Lenders.

#10. Not understanding THE SELLER IS BROKE and THE SELLER’S LENDER IS NOT GOING TO AGREE TO PAY FOR THINGS YOU DEMAND.  You should realize by now that there could be as much as $1,000 or even $2,500 of issues on a Short Sale property and if you are not prepared (as a buyer) to deal with those issues, you probably should not be writing offers on Simi Valley Short Sale properties.

The Seller’s Lender has a sale price they are willing to accept for the property that is going to be very close to market value.  The Seller’s Lender will try to get the buyer to pay over market value.  The Seller’s lender is going to try every possible thing they can to to minimize the the costs to sell the property which is why buyer demands are not the concern of the Short Sale Lender.

To understand the short sale process better please read

Filed Under: Buyers, short sales Tagged With: , , , , ,

How does a Lis Pendens affect California Real Property?

June 17, 2011 By 2 Comments

California Lis PendensI see questions all the time about Lis Pendens in online Real Estate discussion forums all the time.  Before diving into the information below please understand the following.  This information pertains to California Real Estate Law. This information was obtained with permission from the California Association of Realtors Legal Department.  I am not an attorney and this information is not intended to be legal advise from me, please seek professional legal help with this matter.

Q 1.  What is a Lis Pendens?

A: Lis Pendens is a Latin phrase which means a pending suit.  When people refer to a Lis Pendens they are generally referring to what Code of Civil Procedure Section 405.2 calls a “Notice of Pendency of Action” (hereinafter “Lis Pendens” and also “Notice”).  The Lis Pendens is recorded in the office of the county recorder and serves as a warning to prospective interest holders in real property that the real property is involved in a legal action (Cal. Code Civ. Proc. §§ 405.2, 405.4).  This means that the person who is asserting a real property claim (the claimant) must file a lawsuit prior to recording the Lis Pendens.

Q 2.  What is the purpose of a Lis Pendens?

A: The purpose of a Lis Pendens is to notify prospective purchasers, encumbrancersand other real property interest holders that any interest acquired by them in the property is subject to the outcome of a legal action currently in progress concerning the real property. Although recording the Lis Pendens doesn’t legally stop a buyer from purchasing the property, the buyer is subject to losing the property to the claimant should the claimant ultimately prevail in the litigation regarding entitlement to the property.  Therefore, for all practical purposes, the Lis Pendens assures the person recording it (the claimant) that the property in question will not be transferred before the lawsuit is resolved (See Question 3).

Q 3.  Can property be transferred if a Lis Pendens is recorded against it?

A: Yes, but if it is transferred or encumbered, the transferee or encumbrancer is deemed to have constructive notice of the legal action affecting the property and takes title subject to any rights or interests in the property the claimant subsequently obtains in the legal action. The rights of the claimant relate back to the date of recording of the Lis Pendens.  Thus, even though the property may be transferred, it is unlikely that any prospective transferees will take the risk that the legal action will be decided in favor of the claimant. Thus, recording a Lis Pendens effectively makes the property unmarketable.

Q 4.  Who can record a Lis Pendens?

A: A party to an action (lawsuit) who asserts a real property claim may record a Lis Pendens.  A real property claim is defined as a pleading which, if meritorious, affects (a) title to, or the right to possession of, specific real property or (b) the use of an easement.  (Cal.  Code Civ. Proc. § 405.4.)

Q 5.  Can a buyer record a Lis Pendens against a seller who refuses to close escrow?

A: Yes, if the buyer pursues a legal claim against the seller for specific performance of the contract.  If the buyer is only interested in return of the deposit or money damages then a Lis Pendens should not be recorded.

Q 6.  Can a buyer record a Lis Pendens against a seller who refuses to return a deposit?

A: No.  If the buyer is only interested in return of the deposit or money damages then a Lis Pendens should not be recorded.

Q 7.  Can a seller record a Lis Pendens against a buyer who breaches the contract?

A: No. A seller may pursue a breaching buyer by seeking either specific performance or damages. When a seller seeks specific performance against a buyer, the seller attempts to force the buyer to purchase the seller’s property. The seller makes no claim against property owned by the buyer and, accordingly, a Lis Pendens recorded against any property then owned by the breaching buyer would be inappropriate. Obtaining specific performance against a buyer is very difficult. More typically, the seller sues the buyer for damages. This is an action for money.  A Lis Pendens is inappropriate in such a case.

Q 8.  Does a liquidated damage clause affect a buyer’s ability to record a Lis Pendens?

A: No. A liquidated damage clause (like the one in the C.A.R. purchase contracts) sets limits on the monetary damages in the event a buyer breaches a contract.  Since a Lis Pendens would generally only be recorded when a breaching seller refuses to sell the property to the buyer, the liquidated damages clause has no effect on a buyer’s ability to record a Lis Pendens.

Q 9.  What does a Lis Pendens claimant have to do in order to record a Lis Pendens?

A: The claimant must do the following:
(1)   The claimant must file a lawsuit which asserts a real property claim (Cal.  Code Civ. Proc. § 405.4).
(2)    A Notice of Pendency of Action must be prepared which contains the names of all parties to the actionand a description of the property affected by the action (Cal. Code Civ. Proc. § 405.20).
(3)   The Notice must be signed by the claimant’s attorney of record. If the claimant does not have an attorney (is acting in propria persona) the claimant must have the Notice approved by a judge.  (Cal. Code Civ. Proc. § 405.21.)
(4)   The Notice must be mailed by registered or certified mail, return receipt requested, to all known addresses of the parties to whom the real property claim is adverse and to all owners of record of the real propertyas shown by the latest county assessment roll (Cal. Code Civ. Proc. § 405.22).
(5)   The Notice can then be recorded in the county in which all or a portion of the property is situated if it is accompanied by a proof of service that the Notice has been properly served on the persons listed in paragraph 4 (Cal.  Code Civ. Proc. §§ 405.20, 405,23).

Q 10. Can a Lis Pendens be recorded if the purchase contract requires arbitration and not litigation?

A: Yes. In the event that both parties to a dispute have initialed an arbitration clause, the party wishing to record a Lis Pendens,must first file a lawsuit and must, at the same time the action is filed, also present to the court an application that the judicial action be stayed pending the arbitration.  Then the claimant must take the steps needed to record the Lis Pendens as indicated in Question 12.

Q 11.  Once a Lis Pendens has been recorded, how can it be removed from title?

A: At any time after the Lis Pendens has been recorded by the claimant, any party to the action or a non-party with an interest in the property (“moving party”), may apply to the court in which the action is filed to “expunge” (remove from the record) the Lis Pendens (Cal.  Code Civ. Proc. § 405.30).  A person who is not a party to the action must first obtain permission from the court before bringing the motion to expunge (Cal.  Code Civ. Proc. § 405.30). The expungement order is not provided by the court unless there is “the giving of an undertaking” (i.e., the moving party must post a bond) in an amount that will indemnify the claimant for all damages resulting from the expungement which the claimant may incur if the claimant prevailson the real proeprty claim (Cal.  Code Civ. Proc. § 405.33).
There are three instances in which a Lis Pendens can be expunged.
(1)   The Notice shall be expunged if the pleading of the Lis Pendens claimant does not contain a real property claim (for example, the claimant is only seeking money damages) (Cal.  Code Civ. Proc. § 405.31).
(2)   The Notice shall be expunged if the Lis Pendens claimant has not established by a preponderance of the evidence the probable validity of the real property claim (Cal.  Code Civ. Proc. § 405.32).
(3)   The Notice shall be expunged, even if the claimant has established the probable validity of the claim, if the court determines that adequate relief is available by the property owner providing a bond in an amount sufficient to indemnify the claimant for all damages proximately resulting from the expungement (Cal.  Code Civ. Proc.§ 405.33).

Q 12.  What does “preponderance of the evidence” mentioned in the previous question mean?

A: Essentially, to show a “preponderance of the evidence” means that the evidence presented is of greater weight or more convincing than the evidence which is offered in opposition to it (Black’s Law Dictionary 616 (5th ed. 1983)).

Q 13.  What does “probable validity of the claim” mean?

A: It means that it is more likely than not that the claimant will obtain a judgment against the defendant.

Q 14.  Who has the burden of proof in a motion to expunge a Lis Pendens?

A: The Lis Pendens claimant (Cal.  Code Civ. Proc. § 405.30).

Q 15.  How long does a property owner or other party bringing the motion to expunge (“moving party”) have to post a bond if ordered to do so as a condition of granting the motion to expunge?

A: The court will set a date on which the moving partymust return to court and show that the bond has been obtained. If the moving party fails to demonstrate by that date that the condition has been fulfilled the court will deny the motion to expunge. (Cal.  Code Civ. Proc. § 405.33.)

Q 16.  Can a Lis Pendens claimant ever be required to post a bond in order to keep the Lis Pendens of record?

A: Yes. The court may require the claimant to post a bond in order to maintain the Notice. If the court issues such an order andthe claimant does not show compliance with the court’s order on the date established by the court, then the court will order the Notice be expunged.  (Cal.  Code Civ. Proc. § 405.34.)

Q 17.  What is the effect of a Lis Pendens if it has been expunged or released?

A: Once a Lis Pendens has been expunged or voluntarily released it is no longer considered actual or constructive notice of any of the information contained in the Notice. Subsequently, anyone who, for valuable consideration, becomes a transferee of an interest in the property shall not be deemed to have knowledge of the matter contained in the Notice whether or not that person had actual knowledge of the action. Thus, expungement or voluntary removal of the Lis Pendens allows the property to be transferred free of any cloud otherwise caused by the recording of the Notice.  (Cal.  Code Civ. Proc. §§ 405.60, 405.61.)

Q 18.  Can attorney fees be awarded as a result of a motion concerning expungement or maintenance of a Lis Pendens?

A: Yes. The prevailing party on any motion made to expunge shall be awarded reasonable attorney fees and costs unless the court determines that the imposition of these fees and costs would be unjust. The same rule applies to the prevailing party on a motion made to request that the claimant post a bond as a condition of maintaining a Lis Pendens.  (Cal.  Code Civ. Proc. § 405.38.)

Q 19.  What effect does expungement of a Lis Pendens have on any lawsuit between the claimant and the property owner?

A: None. While as a practical matter the expungement of a Lis Pendens affects the parties’ relative bargaining power in an action, the expungement does not otherwise affect the legal relationship between the parties to the dispute.

Q 20.  If a Lis Pendens has been expunged or removed, does a subsequent purchaser of the property take title subject to the outcome of any lawsuit still pending between the claimant and the property owner?

A: No. (See Question 17 above.)  That means that a subsequent purchaser does not have to give up the property regardless of the outcome of the lawsuit between the claimant and the property owner.

Filed Under: Buyers, Foreclosures, Sellers, short sales Tagged With: ,

I’d Like To Buy Your House For Cash – Beware of Short Sale Flipping

June 9, 2011 By 4 Comments

Homes For SaleA series of news reports over the last few years are covering a problem that has hit the Short Sale Market.  As in any market, if there is an opportunity, the opportunist go to work.  This time they are trying to create screaming deals out of Short Sale properties.

These flippers target houses on the verge of foreclosure and persuade banks and mortgage companies to accept lowball buyouts, sometimes by using questionable appraisals and not disclosing that a quick sale at a higher price has already been arranged, experts say. (source: Herald Tribune The New Flipping:Short Sales)

If you are having trouble with your mortgage, have been trying to get a Loan Modification and you have fallen behind in your payments, now is the best time more than ever to be skeptical of anyone who approaches you about your home.

Once you get behind on your loan payments, here in California it won’t be long before your lender will file a Notice Of Default (NOD).  The NOD is a public record filed at the county recorder’s office and there are several private companies that mine these records and provide a subscription to interested parties. RealtyTrac and ForeclosureRadar are two of the better known services.  Investors, home buyers and real estate brokers subscribe to these services.

  • Real Estate professionals use the public filings on properties in foreclosure to find more business as a means to see if those in foreclosure would like to try and Short Sell their homes.
  • Investors are looking to get homes below market value so they can clean them up and put them on the market for a profit.
  • Home buyers typically believe they are going to get a home significantly below market if they can contact a home owner in foreclosure directly.

Once an NOD is filed against your property, expect your phone to ring and possibly people come to your door.  If they are offering to buy your house and help you avoid foreclosure this should be a very big red flag.  Let’s assume your house has a market value of $400,000 and you owe $500,000.  You have know way of knowing the true market value of your home without getting an appraisal or broker price opinion (BPO) from a disinterested third party.  The person standing at your front door or calling you on the phone is coming to you directly cause they want your property below market value and the farther below market value the better for them.

Here is the rub,  if they promise to handle everything and work with the bank to short sell your home, if they then can convince the bank to take an amount significantly below market value, that could be seen as defrauding the bank. In this article from Bloomberg, Banks face fraud from short sales as home flopping spreads you can see that the banks and FBI are catching on to this scheme.

Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.

 

Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.

The Federal Bureau of Investigation, the California Department of Real Estate and mortgage finance company Freddie Mac have warned that such schemes may be spreading after a plunge in values left homeowners owing more than their properties are worth.

When you get approached directly by people trying to make deals, they aren’t at your door for charity.  Also other promises such as selling you back the property, letting you stay as a renter or that they will give a cash incentive after escrow closes are all signs of more trouble.  Every single Short Sale transaction I have worked on in the last year has involved a document from the Short Sale Lender, that is signed and notarized by both buyer, seller and all real estate agents involved.  This document  has all parties acknowledge that the transaction is at “Arms-Length” and that the Buyers are not getting money at or after closing (there is one exception I will explain later), there are other terms as well.

If a Real Estate Professional approaches you to help you with Short Sale, then interviewing properly is very very important.  A Short Sale transaction is complex and not for just any agent.  Those of us who have completed many Short Sale Transactions will tell you that each and every one is different. In my opinion there is no possible way to claim to be an expert or specialist in Short Sales because no two short sales are the same.  Experience, closing percentage and the agent’s support structure are some of the better indicators to show if the agents you are interviewing can get the job done.  Unknown to the consumer, real estate agent email in-boxes receive offers for short sale training every week.  Each course offers a designation of “specialist”.  While there is value in these classes, nothing beats the experience in putting these transactions together.  There is no cookie cutter formula, it is good old fashioned negotiating and doing the legwork necessary to get an approval.

I have experience in closing HAFA and regular Short Sales with most major banks, including Wells, Chase, IndyMac (One West), GMAC, HBSC, HOME EQ etc.  I have closed Short Sales in as few as 60 days from offer to close of Escrow with the typical short sale talking 120 to just under 180 days from offer submission to closing.  I use a third party negotiator who is a licensed Real Estate Broker and practices Real Estate Law. We have closed every single one of our Short Sale Transactions we have worked on together.  It takes a coordinated effort to keep the loss mitigator’s attention on my client’s file and be able to deliver information in a timely manner to assist the bank in expediting an approval decision.

I have represented buyers on Short Sale purchases and this is why I believe I am qualified to offer the advise that not every real estate agent is cut out to work on a short sale. I wrote about Short Sales from a Buyer’s point of view in Simi Valley Home Buyers 3 Important Concerns with Short Sales Offers

A good review would include:

If your trying to modify your loan, contemplating a Short Sale and you are getting calls from investors and real estate agents to help you with your house, proceed with Skepticism and Caution.  Consider that if you are in danger of losing your home to foreclosure, what benefit is it to you to help someone pull a fast one on the bank so they can get control of your property and flip it for a profit?  We are seeing, as in the articles I quoted above that the FBI and the banks are watching, is it worth the risk?  If Short Sale is your only other option beside a foreclosure, I can help you move through the process discreetly.  Many times my clients have not want for sale signs in their yards and want to keep this part of their financial life as low key as possible and I try to accommodate that where I can.

Disclaimer:  Seek advise from a Tax professional and Attorney as there may be issues related to Loan Modification, Short Sale or Tax Implications. Keller William Exclusive Properties & Ted Mackel is not associated with the government, and our service is not approved by the government or your lender. Even if you accept an offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.


Filed Under: Sellers, short sales Tagged With: , , , , , , , , ,

What is a Short Sale & Can I Short Sell my Home?

April 9, 2011 By 14 Comments

Simi Valley Real EstateWhat is a short sale? A short sale occurs when the seller of a property owes more money against that property than what they can ultimately sell the property for.

Example,   you have a $500,000 loan against your property, but now it is only worth $400,000. Adding the costs to sell your property at $400,000, including any/all other existing debts against that property (property taxes, homeowners association dues, or any other liens);  the bank that holds your loan would have to agree to taking less than $400,000 against the $500,000 loan.

From the example above, it is easy to see that both you the property owner and the bank (your lender), are both in a tough situation. At this point the bank has to evaluate it’s position, your complete circumstances, and how they may mitigate their losses.

One of the bigger myths is that because the bank has a bad  asset or nonperforming asset, the bank has no choice but to capitulate to the demands of buyers because the bank has either already written off the bad asset or cannot carry the nonperforming asset for a long period of time.

For the last year we have had inventory shortages while the banks have had record nonperforming loans go to foreclosure or short sale. or try a modification program.  The banks appear to be controlling the flow of inventory as to not flood the market and not sink prices any farther.

Since the banks are not quick to cut their losses on their nonperforming loans, it is important to understand if a short sale is the right option for you? It’s really easy for a real estate agent to convince you to put your home for sale and lock you into a six month contract. However, without properly evaluating your situation, you could become that agent’s indentured servant in an unbreakable contract.

Before making the decision to try and sell your home with a short pay option, it is imperative to figure out what the probability is to sell your home short.

The following issues are important and can increase chances of your lender agreeing to a short sale:

  • You experienced a real hardship and can you prove it (i.e. health, employment)
  • You property is marketable and it does not have deferred maintenance or show poorly.
  • After figuring all the costs of the sale there a minimum of 10% of the value of the second lien holder or most junior lien holder(s).
    • If not, can you contribute some money or would you be willing to sign a promissory note?
  • You have more than one loan or they both with the same name holder.
  • You can provide all documents necessary as required by your lender in a timely manner?
  • If a notice of default is filed on your property, your lender allow you time to sell your property.
  • You are not presently in bankruptcy or planning to file bankruptcy.

The following issues can hurt your chances of your lender agreeing to a short sale:

  • You do not have legitimate hardship.
  • You have not missed any payments on your loans and are presently current on payments. (If you are current this is not advise to default or make late payments)
  • There’s not enough money to pay off your first loan and you still have junior liens.
  • You are in bankruptcy.
  • You completed a recent cash out refinance
  • You cannot provide full documentation for your hardship package.
  • You have liens or judgments with a private party.
  • There is an notice default and your lender will not give you time to sell.
  • You or your real estate agent priced your home dramatically under market value.

All the above conditions are not a definitive list of who can and who cannot successfully sell their home with a short pay option, it is a good outline to begin a plan. There are many complex legal and tax consequences associated with the conditions above. Nothing contained above is intended to be legal or tax advice. If you plan to short sell your home, you will need to contact attorneys, tax professionals and/or CPAs.

Last, the personnel in the loss mitigation departments at the banks across the country are overwhelmed and swamped with more than 75 files on their desks, sometimes over 100. They have little incentive to cooperate on a short pay. Complete thorough documentation, updated regularly and contact with the loss mitigator assigned to your file, several times a week throughout the process, is only part of what it takes to get a short sale approved. If you plan to go down the short sale path, persistence and tenacity must prevail throughout the process.

As I find related links I will add them here:


Thanks for reading Simi Valley’s Premiere Real Estate Blog!

Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty

Ted Mackel is a top producer at Keller Williams Realty Simi Valley,

specializing in Simi Valley Real Estate

(805) 432-7705

Filed Under: Sellers, short sales, WIKIs Tagged With: , , , , , ,

Trulia Voices Answers Understanding Short Sales Buyer’s Purchase Contract Issues

August 24, 2010 By 1 Comment

Trulia Real EstateShort Sale Buyer Contract deal points can make or break a short sale.  In this video blog I go over the Short Sale Addendum for a quick overview of the form and some commentary on how it can help protect the buyer in the transaction.

Make sure to read:  Simi Valley Short Sale Information here on HomeBuysBlog.com

Thanks for reading Simi Valley’s Premiere Real Estate Blog!

Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty

Ted Mackel is a top producer at Keller Williams Realty Simi Valley,

specializing in Simi Valley Real Estate

(805) 432-7705

Filed Under: Buyers, short sales Tagged With: , , ,

Wachovia World Savings Streamlines Short Sales for Simi Valley Home Owners in Distress

May 5, 2010 By 1 Comment

Wachovia Short SaleYou’re in luck if you have a Wachovia or World Savings home loan and you are facing a short sale as your only option. There is a local representative for Wachovia assigned to the Simi Valley – east Ventura County area covering into the San Fernando Valley including the Santa Clarita areas. This process is unlike any other in the industry.

First, call or text me at (805) 432-7705 and I will come over with a comprehensive Market Evaluation and Marketing Plan for your home.  After we list your home for sale, I contact the Wachovia Rep directly who will then schedule an appointment to meet with you in your home and discuss your hardship in person.  This in person meeting is extremely important and I believe a welcome step by Wachovia. When the bank representatives can see the property and the condition and directly hear your hardship case, it helps tremendously when we try to justify an offer price from potential buyers.

The sets up essentially a conditional pre-approved Short Sale.  Part of the Wachovia plan is to turn around approval on an acceptable offer in 7 days.  Currently the process with most banks I have worked with take more than four weeks and in many cases 6 to 8 weeks to obtain approval. Keeping buyers interested during these long approval times has been the biggest problem in the short sale process. Buyers get tired of waiting and many times move on to different properties by the time the approvals come through.

Another advantage to the Wachovia system is that they require very little paperwork to move forward with short sale. All the other lenders I’m working with now require detailed financial data where Wachovia is not making this a requirement. If you are considering Short Sale as one of your options and you have a Wachovia or World Savings Home Loan, this is the opportunity to forward.

To understand the short sale process better please read

Short Sale Certificate

Thanks for reading Simi Valley’s Premiere Real Estate Blog!

Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty

Ted Mackel is a top producer at Keller Williams Realty Simi Valley,

specializing in Simi Valley Real Estate

(805) 432-7705

Filed Under: short sales Tagged With: , , , , ,

SB 401 – What’s My Short Sale Tax Liability With The State of California?

April 27, 2010 By 4 Comments

Short Sale Tax LiabilitySo, you’re trying to figure out if you have California Tax Liability With The State of California if you sold your Simi Valley home via Short Sale or are planning to short sell your home.

SB 401 is set to work in line with the IRS Mortgage Debt Relief Act of 2007 forgiving tax liabilities that could affect Californians who disposed of their property through a Short Sale in 2009 . It also includes relief for those who received a reduction of principle through a Loan Modification or Cancellation of Debt income from a foreclosure.

Who is affected:

  • If you were party to or will be a party to a Short Sale, Foreclosure or Loan Modification between 2009 and 2012.  2007 & 2008 already had this provision, SB 401 extends this relief now up through 2012.

What Do You Have to Do to Participate?

WARNING:  There are serious liabilities related to home loans if you are foreclosed on, participate in a deed in lieu or participate in a Short Sale.  Make sure to consult with an attorney

DISCLAIMER: I am not a Tax professional nor is this information offering you Tax Advise. This is merely a report on the current passage of SB 401.  All information above should be verified with your Tax Preparer/Professional.

For more information you can read: Simi Valley Short Sale Information on this blog HomeBuysBlog.com

Thanks for reading Simi Valley’s Premiere Real Estate Blog!

Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty

Ted Mackel is a top producer at Keller Williams Realty Simi Valley,

specializing in Simi Valley Real Estate

(805) 432-7705

Filed Under: Real Estate News, Sellers, short sales Tagged With: , , , , , ,

Understanding Home Valuations – Broker Price Opinions (BPOs)

March 15, 2010 By 3 Comments

Understanding Home Valuations – Broker Price Opinions (BPOs)

This Video segment covers the “BPO” AKA Broker Price opinion.

  • What is a BPO?
  • How is it conducted?
  • Who orders a BPO?
  • How many BPOs are ordered?

These are some of the topics covered.  In the segment that will follow this, I will explain how these values are used with Short Sales and Bank Owned homes.  I will show you how to figure if a Short Sale even has any chance of being accepted, based off the listing price.

Recently the Appraisal industry has tried to block the real estate industry from conducting BPOs claiming this is outside the scope of licensed Real Estate activity.  Frankly, I believe this to be a very short sighted view and that both groups need each other.  Appraisers are not actively engaged in the day to day activity of selling and marketing properties and Real Estate agents are not trained to evaluate homes on the same level as an appraiser,  but the voids of the two professions cross over and require cooperation on the part of both groups to get home values right.

For more information you can read on this blog:

Simi Valley Short Sale Information

Thanks for reading Simi Valley’s Premiere Real Estate Blog!
Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams RealtyTed Mackel is a top producer at Keller Williams Realty Simi Valley,specializing in Simi Valley Real Estate(805) 432-7705

Filed Under: Buyers, Sellers, short sales Tagged With: , , , ,

Simi Valley Home Buyers 3 Important Concerns with Short Sale Offers

January 5, 2010 By 6 Comments

Estimated Costs to Sell Your Simi Valley HomeAs a Simi Valley Home Buyer in this market you will be confronted by many homes for sale that are Short Sales.  Before submitting an offer buyers should be concerned and careful about the process they are about to enter.  The current market conditions for buyers has been difficult for many. Inventory levels have been extremely low and Buyers have not had much freedom of choice.

Short sales are not only stressful for buyers, but they are equally stressful for sellers. The problems of a short sale can be divided into a couple different classes.

  • Experience of the listing agent
  • The number, type and complexity of the lien’s against the property
  • The tolerance level of the buyer

The experience of the listing agent is critical to the success of the short sale. In a short sale, a loss mitigation department is assigned to the particular property in question. The individual assigned has many properties to oversee. Knowing the work load these loss mitigators carry, a good listing agent will either have a short sale negotiator working on the file, or will have the time to dedicate an aggressive campaign of keeping their client’s file at the top of the lost mitigator’s stack.

An experienced short sale listing agent will properly price the property so as to not create delays with the loss mitigator. What is important is, that the bank has already hired out for several Broker Price Opinions (BPOs) and possibly an appraisal. THE BANK KNOWS THE MARKET VALUE. Underpricing these properties is a serious mistake on the part of the listing agent, both for the buyer and the seller as the bank will have no motivation to undersell the property when they have the option and power to foreclose.

How well did the listing agent pre-qualify the property before taking on the listing? A short sale may be doomed before it is ever offered for sale. The more loans and liens the property has against it, the more difficult it will be to obtain an approval to sell the property short. Most properties have a first deed of trust and many others will have a second deed of trust. The holder of the first deed can pretty much call the shots, because if they foreclose the junior lien holders will receive nothing. If the property has additional liens, such as judgments, taxes, etc.; then these junior parties  will most likely have to agree to take less than what is owed. In the case of Taxes, those will have to be paid and that will reduce what the other lien holder may expect.  In the case of a judgment, remember those judgements in California can be renewed and follow a person around a long time, so the judgement holder may not be willing to take a reduced amount.

Here is an example, the property has a first deed of trust  for $400,000, a second deed of trust for $100,000, a judgment from a lawsuit in the amount of $25,000. The home is  currently worth $400,000 with supporting appraisals and BPOs. The holder of the first deed knows that there will be costs involved to sell the home and some sort of settlement for the holder of the second and the holder of the judgment. However if the first forecloses, the second and the holder of the judgment will get nothing. What if the holder of the second or the holder of the judgment demand more than what the first will willing to give? In most cases the holder of the second will probably be looking at getting no more than $10,000 and the judgment holder a couple thousand dollars. While these types of complex short sales can close after lengthy negotiations, it is important to understand as a buyer what you are getting into. It is important as a buyer to know if the listing agent has either the personal skills to pull this off or people working with them, such as a negotiator to pull this off. It is also important to know going in that three liens against the property are going to be more difficult to get approval on than in the case there is only one lien.

The buyer’s tolerance level is going to be tied to the expectations created by the agent that is representing them. Being told that short sales are long and lengthy process is not enough.   Buyers should be educated on the process. Before the buyer writes an offer on a short sale, the buyer’s agent should get the background details on the property so the buyer knows what they could possibly be getting themselves into. Granted the buyer’s agent’s ability to get all the details will be limited,  as the buyers agent cannot do a proper public records search without the seller’s Social Security number and driver’s license. However, the majority of the information should be available from the listing agent and  from the information that real estate agents can obtain from title insurance companies. If the listing agent does not have detailed information on the number of liens against the property, then proceed with caution or maybe pass on the property until you can be satisfied with how big a task will be to negotiate a short sale.

I can only stress enough, with a short sale, is to go in with both eyes wide open.  Be prepared for a long process and know when to walk away.  you don’t have to stay away from a Short Sale if you know the things to look for and a Short Sale may be a better value than a foreclosure.

For more information on Simi Valley Short Sales:

Thanks for reading Simi Valley’s Premiere Real Estate Blog!

Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty

Ted Mackel is a top producer at Keller Williams Realty Simi Valley,

specializing in Simi Valley Real Estate

(805) 432-7705

Filed Under: Buyers, short sales, WIKIs Tagged With: , , , , ,