Tales From The Short Sale Trenches

Tales From The Short Sale Trenches

With two thirds of the local Northern Nevada listings being Short Sales today, it is important to know what is going on in the World of Short Sales. It is especially important to remember that each Short Sale is unique unto itself and these stories shouldn’t keep you from buying or selling such a property. Remember, forewarned is forearmed. Seller’s circumstances vary, the lenders and their investors vary, the market changes, etc. There is no one formula for success.

While many Short Sales go through handily, there are those that defy logic, reason, and sanity. We had one such situation last week causing us to call a U.S. Senator for assistance. What caused such a drastic action? Consider the facts. On December 30th we received a Short Sale approval letter providing that escrow close by February 21st. No problem, everyone went in to action and we are well on our way to closing. On January 18 we got an amended Short Sale letter saying we had to close on January 25th. Whoa! What’s going on?

Correspondence with the lender revealed it to be a FNMA … Fannie Mae … requirement and they will not postpone the Trustee’s Sale (foreclosure) which is scheduled for February 2nd. The Buyer’s lender said she can close on the 4th, but no movement by the bank until January 24th when they said we had until January 31 to close. This with a Seller expecting her fourth child on March 1st not knowing if, or when, she is moving. For the sake of a couple of days there may be another bank-owned property in the neighborhood.

We had another dandy experience with lender Short Sale lunacy last week. Here’s the back story – Listed at $235,000. No action until priced at $189,000. Two offers – one at $184,000 and one at $165,000. Bank counters $197,000 which is accepted. We motor along getting ready to close when suddenly the bank comes back with a price of $250,000, a requirement of the investor. Clearly, the home is not worth that kind of money.

We assemble information to show value, confirm with all parties that they are at their maximum price and contribution and go back to the lender. The lender accepts the original deal, which was theirs in the first place, and we continue on for a couple of days. The bank comes back at $222,000 from the investor … Fannie Mae … with no give. The market just isn’t there, but the investor is locked up. Had to get some tricks out of our sleeves on this one … we’ll see if they work.

Our Advice: It is amazing how belligerent the investors are becoming. Yes, it is their right as it is their money, but it seems senseless for them to negate viable Short Sales only to acquire the property via a Trustee’s Sale. They seem to be forgetting the human side of things – the homes that are being destroyed and the incredible emotion that is tearing at so many people these days. Most sellers are victims, not strategic Short Sellers. They are selling short because they have to. Whether job loss, divorce, illness, transfer, or any other valid reason, it is beyond their control. Had prices not dropped they could sell and move on with their lives. With the market being what it is, they have no choice but to sell short or let it go. When they opt to sell short they don’t deserve the emotional roller coaster that is thrust upon them by inconsiderate lenders representatives.

Stay strong in your Short Sale. It can be maddening, but stay the course and you will be justly rewarded. When it comes to choosing professionals to assist you with your real estate needs…

Experience is Priceless! Lisa Wetzel & Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com

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Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley , Carson City and the tri-county area of Douglas County , Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: Carson Valley Listing Book or visit our website at www.CarsonValleyLand.net or www.CarsonValleyLand.com

Northern Nevada Short Sales vs. New Short Sale Rules

Northern Nevada Short Sales vs. New Short Sale Rules

New Short Sale guidelines were just released for the Homes Made Affordable, HAFA, program. They take effect on February 1st, and loan servicers have been encouraged to implement them as soon as possible. The HAFA program was originally instituted to help expedite the Short Sale process, but the results have been abysmal. The new changes are intended to change those results.

The new guidelines are quite varied, each addressing a weakness in the system. Interestingly, the Loan Servicers are no longer required to verify a borrower’s financial information to determine if the total monthly loan payments exceed 31% of the borrower’s monthly gross income, but they must verify the borrower’s hardship. Each Servicer may include a requirement on their own that borrowers provide updated financial information. Another significant change is that there is no longer a minimum distance requirement for how far a Borrower moved to cause a problem holding the property. Also, the Borrower’s reason for relocation does not need to be connected to re-employment or transfer of employment.

The property must be or must have recently been the Borrower’s primary residence. Now a property that has been vacant or rented to a non-borrower for less than 12 months prior to the date of the Short Sale Agreement is eligible. The 6% cap for payments to each subordinate lien holder has been removed. The Servicer can determine the amount or percentage of the unpaid lien that will be paid to each subordinate lien holder up to a point where a $6,000 aggregate cap has been reached.

The lender must communicate an approval, disapproval, or counter within 30 days of receipt of an executed sales contract. This should help reduce the number of Buyers that walk away out of frustration with past delays. The Servicer may not charge vendor fees against the listing broker’s commission. Also, the real estate commission paid shall be the amount indicated on the listing agreement, not to exceed 6%.

The HAFA program does not apply to Fannie Mae, Freddie Mac, FHA, VA, or USDA (Farm Home Loan) loans. Servicers are not required to implement the new terms to any loan reported via the HAMP Reporting Tool, or for a borrower already determined ineligible for HAFA, but they are allowed to reevaluate borrowers using these guidelines.

Our Advice: Short Sales constitute 30%, or more, of the Northern Nevada Real Estate Market right now. Short Sale nightmares are real, but many go through just fine with minimal hassle, just a lot of hard work on the part of your agent. Don’t decide whether or not you are going to sell or buy a home that is selling short based on what you’ve read or heard. Take your specific situation to your agent and discuss it thoroughly. Many factors come in to play including the lender involved, the property value perceived by the investor, the Sellers circumstances, Buyer’s circumstances, and more. These new changes will have a positive impact on the success probability of many potential Short Sale properties. Check it out – you might find great results for your situation, both Buyers and Sellers.

More rule changes to make things better? Time will tell. We’ll see if the fine tuning gets the job done. When it comes to choosing professionals to assist you with your real estate needs … Experience is Priceless! Lisa Wetzel & Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com

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Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley , Carson City and the tri-county area of Douglas County , Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: Carson Valley Listing Book or visit our website at www.CarsonValleyLand.net or www.CarsonValleyLand.com

Measuring Square Footage

Measuring Square Footage

Homes in Northern Nevada are generally sold on the basis of Square Footage. In other areas emphasis is put on “rooms”, how many rooms are in a house. We feel that can be misleading as room sizes differ with the property. You can have different sized bedrooms or dining rooms offering dramatically different utility of the home. The total Square Footage under roof, however, gives one a good idea of the extent of the living area improvements. If there is enough minimum square footage the Buyers can look at the floor plan, how the home is laid out and how it will work for their intended use.

With square footage being so important, it is critical to get accurate measurements. This can be easier said than done on some properties where the property can be measured by the Assessor, Agent, Owner, Appraiser, or Buyer and you may end up with five different measurements. The difference isn’t always in the math, it can be a sag in a measuring tape, a fraction that is treated differently, a mistaken interior garage wall location determination, etc.

Understanding how a home is measured is critical. All measurements are from the outside of the house. When determining Square Footage the agents are seeking to establish the “Living Area”. Living area is space intended for human occupancy, a definition which helps to understand why there are minimum height requirements, requirements for a finished interior, that it be directly accessible from other living area, and that it be heated by a conventional, permanent heating system.

It sounds simple, but there will be discrepancies on how a tape measure is read, conversions from inches to decimals, how to treat a bay window (to be included it must have a floor and a height of 7 feet according to some standards), and bonus rooms over garage with sloped ceiling (slope can’t meet the floor, height at least 5 feet, at least half of room with minimum height of 7 feet), and second story of a two story open foyer (should be excluded from square footage – is good cubic footage which applies to utility and aesthtics, but not square footage.) Beware, too, of above and below grade value differentiation, separate guest quarters being included in the main dwelling Square Footage, and the “bonus” room language. Commonly called a bonus room because it isn’t a family or living room and is extra Square Footage of good utility, a bonus. It is not a true “bonus”, however, as in “something in addition to what’s expected”- you are paying for it.

Our Advice: It is important to understand this as in our area Square Footage is second only to Location as a contributing factor in making a home buying decision. Not only does Square Footage assist in the preliminary determination of a home meeting a Buyer’s space needs, it also provides an easy means to estimate a home’s value using comparable property sales. Make sure you understand where the Square Footage you are relying on came from. Many local agents use Assessor’s Office figures when listing properties. Those were measured by professional appraisers and are usually accurate unless the home has been modified. If the size is being determined from plans understand that the as-built product can differ from the plans. One should always measure for peace of mind.

Confused? Hire an appraiser to measure, not appraise, your home. Have some fun – measure your home and do the math. See how close you get. Good luck!

When it comes to choosing professionals to assist you with your real estate needs … Experience is Priceless! Lisa Wetzel & Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com

Choosing An Agent in Northern Nevada … Ask A Lot Of Questions

Choosing An Agent in Northern Nevada … Ask A Lot Of Questions

Whether selling or buying real estate in Northern Nevada, you’ll undoubtedly find the services of a Professional Real Estate Agent invaluable. There’s a reason the most savvy and successful investors always use good Agents. Good Agents not only get the job done, they keep you safe along the way. The art is to find a good professional Agent.

The biggest ad, the biggest claims, or being the biggest pest does not the best Agent make. Ads cost money, but many agents use them to simply “buy” business. They look to attract new customers for any property, not the listing they are purporting to advertise. If there is little or no inventory in the ad then it is clearly image advertising. Important for business to an extent, but understand it for what it is.

Virtually every agent is Number One at something. There’s the top producing agent types that you are seeking and then there’s the qualified Number One, like “the #1 listing agent that has seven grandkids, owns a black and white dog, and two cats”. What is really important is an agent’s production, and more importantly, their production for the type of property you are buying or selling. If you want a horse property with water rights on ten acres you don’t want to hire a condo specialist, and vice versa. Yes, in our region many agents are truly diverse in their knowledge and experience and can actually professionally serve those extremes, but you must be certain for yourself that the Agent you are working with is capable.

So how do you select an Agent? Initially, you will have some method of introduction. It could be a referral from a friend, an attractive ad, or an internet website. You might just walk in the office and meet a stranger. Once you’ve made contact, understand that you are both interviewing one another. The agent should be learning about your wants and needs, what it is that you are looking to accomplish. They should probe, ask you questions. You, too, should be asking questions … many questions. Do they handle the type of property that you are looking for or selling? What is their experience – both in real estate and in dealing with the type of property you are working with? This is especially important if you have a need for specialty knowledge, i.e. – short sale, bank owned, water rights, floodplain, seven figure price range, ag-deferred property, remodeling, etc.

Our advice: Not all Agents refrain from venturing in to the unknown … potentially at your expense. You don’t want a lawsuit to get what you want, you want good professional service. Ask a lot of questions. You should be able to get references from the Agent, the names and contact information for other people that had a similar situation that the Agent successfully assisted. Learn about their business. What areas do they work? How many listings do they inventory? How many listings sold? How many short sales have they closed? What is their typical List Price:Sales Price ratio? While asking your questions observe the answers closely. Are they appeasing you, or are they heartfelt.

One of the most important things you should look for in an agent is that they will work for your interest, not theirs. It is your real estate… they are facilitating your transaction. Some let their preferences, or needs, get in the way of the customers’ which can cause you to miss your ideal opportunity. Don’t be a victim to a self-serving incompetent agent – it’s your money on the line! We’re proud of our work and Our References. The other good agents are as well. Find the good ones – you deserve it.

Real estate is truly a people business. The real estate itself is what it is, but the people involved make the difference in the success of the transaction, Buyers, Sellers, and Agents. Evaluate the people you are dealing with so your best deal is made for you and your family. When it comes to choosing professionals to assist you with your real estate needs … Experience is Priceless! Lisa Wetzel & Jim Valentine, CDPE, SFR, RE/MAX Realty Affiliates, 775-781-5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com

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Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley , Carson City and the tri-county area of Douglas County , Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: Carson Valley Listing Book or visit our website at www.CarsonValleyLand.com