The Goad Team's Blog

While the Las Vegas Market continues to see large amounts of foreclosures, lately there has been lots of good news as of late. Currently many reports are coming out that are stating that Las Vegas is the #1 fastest recovering market in the nation, and a recent report on CNN was stating that Las Vegas is the most undervalued market in the nation. Obviously all of this is good news, some of the best news we have received in some time is the “Price Per Square Foot” statistics recently reported by Sales Traq in regards to Las Vegas existing home price stabilization. Prices appear to have stabilized at around $75-$80 per square foot over the past six months, with the exception of Hi Rise condos, which may be bottoming out around the $200-$300 per square foot range.

The National Association of Realtors have also reported that the nation as a whole is seeing higher and higher numbers of homes sold each month. While no one can guarantee the reasons for this turn around, many: real estate professionals, governmental housing authorities, etc. are contributing this turn around to the continued record low interest rates along with the tax credit that was extended till April 30, 2010 and also expanded to include even more home buyers (initially the tax credit was only offered to First Time Home Buyers).

Although many local Real Estate markets are showing signs of improvement, there is still a long way to go to stabilize the Real Estate Market as a whole.

Las Vegas Market Conditions 2/12/10 - Part of a recent e-mail to one of our clients on the current market conditions in Las Vegas, NV.

Dear XXXXXX,

At this time Las Vegas is the number one fastest recovering market in the nation. I tell you this so that you are aware of what is happening in our market. In the resale market, most properties listed for sale are in one of two categories - Short Sales or REO’s (Bank Foreclosures) with the bulk of the listings being Short Sales. In case you are unaware, here are some facts and descriptions of the two different scenarios, and other options available:

 The Goad Team Link to CNN Clip on Las Vegas Market Conditions.

• Short Sale Description – The seller owes more on their mortgage than the property is worth. The seller accepts an offer made on the house, but it is up to their mortgage company if they are willing to take a loss on what the seller owes them in order to sell the property. The offer has to be submitted to the bank, and how long they take to review your offer and then accept, reject, or counter your offer can vary from weeks to more often than not…months. The average time frame for that mortgage company to answer is about 90 days. This can be a long and daunting process, and many buyers get frustrated with the process. However, because you are purchasing a vacation home and are not in as much of hurry as someone who needs to move in right away, this is an option for you. I just want you to be aware that this type of sale requires a great deal of patience. More often than not, you will get a better “deal” on one of these types of sales because many buyers and their agents are avoiding these types of listings because the process is SO long and drawn out, frustrating, etc. For more on short sale see our blog http://www.goadteam.com/OurBlog
  
  
• REO’s/Bank Owned Foreclosures – There are fewer listings on the market that are REO’s/Bank Owned Foreclosures than Short Sales, so what happens on these listings is that they end up in “bidding wars”. The process of making an offer on these properties is less frustrating than that of Short Sales, but they are not without frustrations, as well. Most banks will not make an immediate decision when an offer is presented to them, what they do is “sit” on these offers for days or sometimes weeks while waiting on the many more offers that are sure to come in. Most REO listings are ending up with 10-15 offers. What the banks do then is submit a “Multiple Highest and Best Counter Offer,” this means they will present a Counter Offer back saying “Give us your Highest and Best Offering Price” and this is where the bidding war starts. Quit often the banks will only Counter Offer those who are purchasing in Cash, and will state that the offer is NOT contingent upon whether the house appraises for the amount of your offer. This is because an appraisal is not required on an all cash purchases. If you choose to have an appraisal done on the property before you purchase, and the appraisal states that the properties market value is $150,000 but in your “Highest and Best Counter Offer” you agreed to purchase it for $200,000 you cannot later change your mind and back out on the purchase because it did not appraise.
• Traditional Resale Home Type Sales – Very few and far between as very few people have equity in their homes these days, or are willing to come out of pocket by thousands of dollars to sell their homes. Generally these listings sell for much higher prices than Short Sales or REO’s due to there being little to no frustration involved. These listings tend to get even more offers and end up selling for even higher prices than the REO’s.
  
• New Homes – This is your best option if you are not a very patient type of buyer that can handle the stresses, frustrations, and long waiting times that are so common with Short Sale and REO resale listings. Of course there is a price to be paid for not dealing with these frustrations, and that is in the price you will pay for the property. We have access to several types of mediums and a number of contacts in the various new home communities that can help you get a better deal than going into the new home communities on your own. But generally speaking you will pay more for a new home than a resale.

Sorry for the long response but I want you to know what our market is doing and let you decide which direction is best for you and your husband.

John Goad, Jr. of The Goad Team

Realty ONE Group

(702) 586-2772 Ext: 702

www.GoadTeam.com

•1.   That one loan short sales are easier to obtain short sale approval on than those with more than one loan.  That is not to say that sometimes it is indeed easier, but no guarantee.

•2.   That some banks are faster at approving short sales than others.  Sometimes this is in fact the case but rarely.  Most of the time it depends on how busy the bank negotiator is that your file is assigned to.  We get calls from agents wanting to know who the banks are, and if for example we say Countrywide (now Bank of America) the agents response many times will be "they are the worst".  The fastest short sale approval we have ever received was in 2 weeks and the longest it has ever taken for us to receive short sale approval was 13 months.  Both of those were with Countrywide.  I will state this, that our experiences with Ocwen over the last year have been fruitless.  Ocwen has outsourced their short sale department overseas and ever since we have found it impossible to get short sale approvals from Ocwen.  If anyone has had different experiences with Ocwen and have been able to obtain short sale approvals from them, please share any tips or advice that can help us.

•3.   If a trustee sale has been scheduled it is to late to try and conduct a short sale.  See our Line 8 of our blog post Short Sales - What to ask the listing agent before making an offer.

•4.   Sellers are not allowed to receive any money on a short sale.  While 99% of the time this is true, we have had slim occasions where the bank has given our clients what they refer to as "Relocation Funds."  Again this is very rare.

•5.   Pre-approved short sales.  While sometimes these do indeed exist, more often agents are referring to these as "Pre-approved Short Sales" because the bank has previously approved a short sale on another offer.  Just because the bank approved a short sale for a previous buyer that fell through, does not mean that the short sale will be approved for the next buyer...even if that buyers offer the same price and terms that the previous buyer had submitted.  Most often the banks will make you start the short sale process all over again if a new offer is presented.

•6.   That the listing agent has already submitted the short sale package to the bank and now just needs an offer.  Most banks will not accept a short sale package without an offer, so even if the listing agent has submitted all of the other required documentation to the bank other than the offer, most of the time the banks will dispose of it as they do not want it without an offer included.

Thank you for reading our post and please keep in mind we are real estate professionals in the State of Nevada, and that the short sale processes can vary from state to state.  So please keep this in mind when commenting.  Also recent regulations that the government has imposed on banks will require that banks provide the listing agent with prices and terms they will accept for the property and if all goes well this will take alot of the guess work out of trying to submit an offer to the bank that will be accepted, thereby allowing the listing agent to list a TRUE pre-approved short sale.

The Goad Team of Realty ONE Group

More often than not short sales are a long, frustrating, stressful and aggravating process for all involved.  The Goad Team collectively has over 15 years of short sale experience and has successfully closed hundreds of short sales.  Below are some questions we recommend asking the listing agent before making an offer on a short sale listing to help ensure that you are working with an experienced short sale agent that has a reasonablechance of getting your short sale offer approved by the bank.  We have also included a section to help clear up some of the common short sale misconceptions.

1. How long have you been conducting short sales?
2. How many short sales have you completed?
3. What is your success rate at closing short sales?
4. Do you require or recommend an escrow officer (or Attorney for Attorney States)  that is experienced in Short Sales? -  Just as Short Sales are a very specialized field for agents, it is an equally specialized field for attorneys and escrow officers.  If the listing agent is not familiar with, or requesting a certain escrow officer/attorney be used for the transaction, you can be almost certain that the listing agent does not have the experience that will be needed to successfully complete the sale.  A listing agent that is experienced in short sales will more than likely be very pesistent on use of a particular escrow officer/attorney that he/she knows has the necessary experience.
5. How many loans are there on the property? -  There are many misconceptions as to whether or not it is easier to obtain short sale approval if there is only 1 mortgage, 2 mortgages or more.  The fact is that only 1 loan does not necessarily make it easier to obtain short sale approval vs 2 or more loans.  If there is only 1 loan there is a good chance that there may be Mortgage Insurance (herein after referred to as MI) involved, which means that not only will the bank/investor have to approve the short sale, but more than likely the MI will have to approve or the short sale as well.  On top of that, many times the MI companies are requiring the seller to sign a "Promissory Note" and pay them back for some of their losses.  Which leads us to...
6. Is there mortgage insurance involved? - The listing agent may or may not know this.  If the seller is paying MI then the listing agent should know this, however sometimes the banks/investors have purchased MI on their own, so if this is the case many times the listing agent may not know the answer to this question until the bank later informs the agent that they have to get MI approval.  On top of that the banks/investors most often do not or will not tell the agent this until well into the short sale process.  In our experience most Promissory Note conditions of short sale approval are required by the MI Company, so this is the reason for asking how many loans and if there is MI involved.
7. If the agent knows there is Mortgage Insurance involved, has the agent prepared the seller for the fact that the MI Company (or even the bank/investor) may require a Promissory Note be signed requiring the seller to pay back some or even all of their losses? - You don't want to wait on an answer to your short sale offer, which may take months, only to find out that the seller is required to sign a Promissory Note as a condition of the short sale approval, and the seller is unwilling to do this.
8. Is a trustee sale (foreclosure) date scheduled?  If so when is it scheduled for? - More often than not a trustee sale can be postponed if a short sale package/offer is submitted to the bank in time.  However if the sale date is less than a week from the date you are submitting an offer, all parties involved need to work very quickly(especially the listing agent) at processing the offer, have all the required documentation needed from the seller for the short sale package, etc. and submit then short sale package to the bank very quickly.  Keep in mind that it takes many banks a couple of days just to get the short sale package into their systems and most will not postpone the sale date until the package in the system.  Then the listing agent had better be calling the bank to request that the bank postpone the sale date as a short sale offer has been submitted.  A little tip on postponing trustee sales, verify through at least two representatives of the bank that the sale date has been indeed postponed.  You may be told that the sale has been postponed then they go through with the sale anyway.  To help ensure that the sale has been postponed, have the seller call the attorney or company listed on the Notice of Trustee Sale to verify that the bank has advised them to postpone the sale, and if not call the bank back and let them know of your findings.

Thank you for reading our post and please keep in mind we are real estate professionals in the State of Nevada, and that the short sale processes can vary from state to state.  So please keep this in mind when commenting.  Also recent regulations that the government has imposed on banks will require that banks provide the listing agent with prices and terms they will accept for the property and if all goes well this will take alot of the guess work out of trying to submit an offer to the bank that will be accepted, thereby allowing the listing agent to list a TRUE pre-approved short sale.

The Goad Team of Realty ONE Group

This is not fair!  We hear this statement made on a daily basis when it comes to short sale.  Whether it is the buyer or buyer's agent saying "This is not fair that I have to wait so long for an answer back on my short sale offer." or the seller who is saying "It is not fair that they have had our short sale package and offer for months NOW they want me to update all my pay-stubs, bank statements, etc. and they want it in 24 hours or they will close out my file...this is not fair."  Everyone involved in the short sale process is always stating "This is not Fair."  And everyone is RIGHT, it is not fair.  However lets keep in mind the whole "Fair Factor" for everyone involved....

1. Banks/investors- It is not fair that a bank/investor has loaned someone money, but will only be getting back maybe half of the money they loaned someone.  While we are not stating any sympathy for the banks, the fact remains it is not fair for them.
2. The sellers - Many people are loosing homes that they have invested much time, money and their heart into.  We work with sellers who many times are not only loosing their homes, but are one step away from being homeless.  Many of out clients have lost their jobs and have depleted all their savings, retirement investments, 401k's, etc. just trying to keep a roof over their heads but have come to the realization that they just cannot do it anymore.  This is certainly not fair.
3. Listing Agents- We toil away many hours working with banks trying to get them to approve short sales.  Many times the banks loose our short sale packages, close out our files because they claim they contacted us for information (more often than not we never received any such call or the banks called the wrong phone number, etc.) and claim we never answered them.  Today as an example Chase claimed that they contacted us on 12/9/09 for access to one of our listings to conduct a BPO, but that we never got back to them, so they closed out our file.  Well why was there no mention of this until today, after all we have contacted them every week for updates and in fact an agent contacted us a week ago to gain access to the property in order to conduct the BPO.  Two weeks ago they told us they were escalating the file, but no mention at that time they had closed our file and that we would need to resubmit the entire short sale package.  Once we do get short sale approvals, more often than not the banks will reduce the commissions on top of all the insanity they have put us through.  This certainly is not fair.
4. Buyer and/or Buyer's Agents - Submit offers on behalf of their clients and many times have to wait months for an answer from the bank as to whether their offer is going to be accepted or not.  Many buyers are trying to purchase a home before time runs out on the tax credit that is being offered.  Having to wait months for an answer is frustrating and the longer they wait the greater the chances are that they will loose out on their tax credit, and this is certainly not fair.
5. Taxpayers - We the tax payers have bailed out the banks to the tune of billions of dollars.  THIS IS CERTAINLY NOT FAIR!

This list could go on forever, but the fact of the matter is that the short sale process is not fair for anyone involved in it.  Another fact is that short sales are a real estate reality and will be for some time to come.  Many experts are estimating that 40-60% of those who have obtained mortgage loan modifications will still ultimately end up in default and be forced into a short sale or foreclosure, due to job losses, pay cut backs, etc.  So the realities are that short sales and foreclosures will remain a real estate reality for some time to come.  We all need to face the fact that short sales (and life in general) is not all that fair, and get down to the business of saving our clients from foreclosure, getting our clients into homes, and do what we can to help end the real estate crisis that has affected most of the country.

If you are a home buyer or buyer's agent and would like more information on how to quiz the listing agent before making an offer on a short sale, please see some of our other blog posts for valuable infomation you should know before making an offer on a short sale listing.

If you are in default or strugling to make your mortgage payments, please call us and we will happy to help you explore the various options that may be available to you.

John Goad, Jr. of The Goad Team

Realty ONE Group

(702) 586-2772 Ext: 2

Why is my Bank of America/Countywide Short Sale taking so long to get approved?

This is a very good question and unfortunately there are almost as many answers to this question as there are homes on the market. The following is but one example of why it can take so long for an answer to a short sale offer. Recently Bank of America/Countrywide (hereinafter referred to as bank) put a new system in place (actually it is not a new system, it is a system that has been used by many banks for years on their REO/Foreclosures) to "speed up the short sale process". According to a supervisor at the bank all short sales must now be submitted via this new system, rather than a short sale package being faxed or mailed into them, which has been the process for years. If the short sale package was mailed, faxed, etc. to the bank then they are no longer working on that short sale if it has not been submitted via their new system. This means that if you submitted a short sale package to them before they started using the new system then they are NOT WORKING on the short sale until such time as the short sale package is submitted via the new system, more often than not real estate agents are not being informed of this fact until after months have gone by, if ever. But the fun does not stop there...any work that may have been done by the bank before is now useless, as once submitted through the new system as the process starts all over. Best of all when you call to check on the status of the short sale, unless you get a representative or supervisor on the line that knows what they are doing you may or may not be informed of any of this.

Here is an actual example… Back in September of 2009 we submitted a short sale package/offer to the bank on one of our short sale listings. Each week we call to get updates on the status of the short sale offer, and every week we are told that it is being processed. However it was not until after nearly 4 months of being told that the short sale offer is being processed that we were informed that the file was still in a “Loan Modification Status” and that nothing can, or has, been done with the short sale offer due to the fact that there is an open “Loan Modification” even though the bank had turned our client down for a loan modification months ago. Extremely frustrating right? Well this mismanagement on the part of the bank is far from over. Once we were informed at the beginning of January, 2010 that the file was still in an Open Loan Modification status and that they would not work on the short sale until the Loan Modification was closed out, we explained to the bank that they had turned our client down for a Loan Modification months ago and that they need to close this status and begin processing the short sale offer. We were told that they would close out the Loan Modification status and begin processing the short sale (we did this on 2 separate occasions). Toward the middle of January, 2010 during a status update phone call to the bank, once again they informed us that the file is in a Loan Modification status and that our client would have to be the one to call and cancel the loan modification, which our client did. So now here we are on February 8th, 2010 and things are finally moving along with the short sale right? WRONG!!! Once again we are informed that it is still in a Loan Modification status, but a supervisor has stepped in and we are now assured that the Loan Modification will be closed out. HOWEVER at this time we are also informed that “ALL SHORT SALES MUST NOW BE SUBMITTED VIA THE NEW SYSTEM”, so even though we have submitted the short sale package and offer almost 5 months ago nothing will be done until we submit the short sale package and offer via the new system, which will be done tomorrow.

After 9 years of short sale experience and hundreds of completed short sales you would think we have seen every way in which a bank can mismanage their loss mitigation departments, however we are continuously amazed at this sort of incompetence. The above example is just the “tip of the ice berg” on how not only this bank but many others have mismanaged their loss mitigation departments. The banks loss mitigation departments’ primary obligation is to seek out alternatives to foreclosure through such processes as: Loan Modifications, short sales, etc. thereby cutting back on the banks losses. For years banks have been lobbying to be allowed to, in essence become their own real estate agents and be allowed to sell the properties they have foreclosed on. National, State and Local Realtor Associations have fought against this for many years and rightfully so. Over the years banks have clearly demonstrated an inability to adequately manage mortgages and mitigate their losses; which has helped contribute to a national real estate crisis, forced millions of people into bankruptcy and have cost taxpayers billions of dollars. It is important that the public and real estate professional alike continue to support the Association of Realtors and help keep banks out of real estate.

The Goad Team welcomes your comments or if you are facing foreclosure call (702) 586-2772 Ext: 2 and we will be happy to help you explore the options that are available to you.

Foreclosures (aka: Bank Owned, REO’s) vs Short Sales

Most articles you'll find about Foreclosures and Short Sales are focused on sellers who may be losing their home to foreclosure. However, if you're a buyer looking for information on what you should purchase, we've made it easy to understand the differences between Short Sales and Foreclosures!


Aren't Foreclosures and Short Sales the Same?

At first glance, a Foreclosure and a Short Sale (or pre-foreclosure) would seem almost the same. Both of them are being sold for much less than they were last purchased, the bank gets all the money from the sale and has final say as to how much they'll accept, and both are very abundant in this market.

There are some major differences between Foreclosures and Short Sales. We have given you some of the important differences buyers should know before making any offers.


The Short Sale

A short sale is still owned by a private entity and may still be occupied, either by the owner or a tenant. The current owner is no longer able or no longer willing to make the payments, and they are probably unable to sell their home because the value of the home is now much lower than what they currently owe on their mortgage(s). In this situation, one option the owner has is to try to negotiate a "Short Sale" with their bank.

In a Short Sale, the bank allows the seller to sell their home either at or below the current market value and "forgive" the difference. For example, Sally Seller purchased her home 2 years ago for $350,000, and she currently owes $300,000. But because of the rapid decline of the market in the last year, her home is only worth $200,000, so she is unable to sell it. The bank may allow her to sell her home for $200,000 and forgive the difference of $100,000 so that she may avoid foreclosure. She can still be involved in the selling process by hiring The Goad Team of Century 21 Infinity to market the property, procure offers, etc. However, because the bank is granting her the opportunity to sell her home through the Short Sale process, the sale of her home is still subject to the bank's approval. The bank will look at factors such as the seller's financial situation and the home's current market value, and they will determine whether or not they will accept any offers that have been made on the property. So, in essence, you can make an offer on a home that is “subject to short sale approval” and wait for the bank to answer.

"SHORT" sale Time Frame

These days, a "Short Sale" can be anything but short. The time that it takes for this process varies from bank to bank, loan to loan, investor to investor, however be prepared for an average wait time of 30 to 60 Days. Because so many homes are going into foreclosure, banks
have to hire negotiators, who are inundated with files (many are handling over 100 files at a time). It can be extremely difficult for a listing agent to get in contact with their negotiator. Since the negotiator is such a crucial part of the Short Sale process, it is imperative for the listing agent to be contacting the negotiator on a regular basis so that all necessary parts of the Short
Sale can be completed.


Here's how a Short Sale works:

Sally Seller hires The Goad Team of Century 21Infinity and puts her home on the market. After she receives an offer, the offer is submitted to the bank, along with documentation that Sally’s bank wants to review in order for Sally to demonstrate that Sally indeed has a Hardship and can no longer afford to make the monthly mortgage payments, NOT that Sally simply no longer wants to make the payments. The bank(s) will obtain an appraisal or BPO to find out the properties approximate value. The Negotiator will then prepare an analysis of how much will be lost by agreeing to conduct a Short Sale vs Foreclosing on the Property. Once the bank or the investor decide if it is in their best interest they will either issue a “Short Sale Approval Letter” or Negotiate the Terms by which they will agree to a Short Sale. However it may not end there, if the loan is “backed” by a governmental organization (such as Fannie Mae or Freddie Mac) OR the loan has Mortgage Insurance then the Short Sale must be approved by the governmental organization or Mortgage Insurance Company as well.

The Short Sale process is very complicated, and takes time for approval before you can start making plans to move in! In today’s market many times a buyer is able to get a “better deal” on a Short Sale vs a Foreclosure, however keep in mind as with most other things in life, the better deal comes at a cost such as: longer wait times for approval of offers, not knowing for sure whether the bank will approve of the price or terms until after waiting for some time, etc.

Something else to keep in mind when looking at Short Sale properties, is that the listing price for a property is set by the listing agent, and in most cases has not yet been approved by the bank. So until the bank issues the Short Sale Approval Letter, it is not known by anyone just what price the bank will agree to sell the property for. If the listing agent has done their job the listing price SHOULD be at, or close to what the bank(s) can “realistically” expect to get for the property.

The Foreclosure (aka Bank Owned or REO’s)

A Foreclosure (or REO) property is completely owned by the bank. It has gone through the entire foreclosure process and is now fully controlled by the bank. The property generally will be vacant, there are no negotiators to deal with. Instead, you deal directly with the listing agent that the bank
chose as its representative. The bank has already done the ground work and has come to a bottom line price that they find acceptable. There is usually less waiting time for an answer, and once your offer is accepted, you are able to begin the escrow process. REO’s do not need to go through all of the steps for approval that Short Sales do, so it is usually a much easier process to work with. You make an offer, and if accepted you are on your way to moving in.

However in today’s market there is HIGH DEMAND for Foreclosures, as a result, the listing agent many times receives several offers and may put out a "Multiple Counter Offer" to all the parties who made offers. The Multiple Counter Offer will state that there are several offers on the property and will ask everyone to submit their “Highest and Best Offer”. So, after all is said and done, the offers many times end up being much higher than what they were originally asking for the property.

Thank you for reading our blog about Foreclosures and Short Sales. We hope you find this information valuable, and of course if your are interest in buying or selling a property, please give a member of The Goad Team of Century 21 Infinity a call at (702) 586-2772.

With out a doubt...YES.  Prime example, we recently had a client who's home we were selling, we will call them the "Smith's Family".  The Smith Family did not have a home inspection completed when they purchased, as after all it was Brand New, nothing could be wrong with a Brand New Home right? WRONG

There was indeed something wrong with the home, and it was a severly damaged roof joist.  The Smith Family was unaware of the problem, until we procured a buyer for the house, and the buyer of the home had a home inspection conducted.  The home inspector found and noted this broken roof joist, and stated that this was obviouly a builder defect and had been this way since it was new.  Of course the buyer would not purchase the home unless it was fixed.  Because the roof was sagging, from the broken joist, this turned out to be a costly repair to fix the problem ($3,950.00).  Had the Smith Family paid about $400.00 for a home inspection, that would have caught the problem, this would have been the builders issue to fix at that time, rather than the sellers problem to fix later on.  The builders warranty had run out long before we were selling the house, so of course the builder refused to do anything about it.

Bottom line...Always have a Home Inspection conducted on any home you intend to purchase.  Do not purchase a home "blindly" as you never know what you may be getting into.