Short sales and the sale of bank-owned properties showed steady increases in the Puget Sound area in the first quarter of 2012, according to the Washington Property Solutions 1st Qtr 2012 Short Sale Statistics Report.
In the first quarter of 2012, short sales and the sale of bank-owned properties accounted for 40 percent of all home sales (single family homes and condominiums) in King County. That figure was up from 36 percent in the first quarter of 2011.
In Pierce County, the percentage of distressed property sales increased from 43 percent of all home sales in the first quarter of 2011 to 54 percent in the first three months of 2012.
The jump in distressed property sales was particularly high in Snohomish County where the percentage increased from 38 percent of all home sales in the first quarter of 2011 to 51 percent in the first three months of 2012.
The full report includes historical sales data for both Short Sales and Bank-Owned Properties in King, Pierce, Snohomish and Kitsap counties.
Friday, April 20, 2012
Thursday, April 5, 2012
New Washington State Laws Benefit Homeowners Doing Short Sales
The last week in March, the governor signed into law some significant changes that benefit homeowners involved in a short sale or facing foreclosure. If you have a client in either of these situations, you will want to let them know how they might benefit from these changes.
▪ Time Limitation for Collecting on Deficiency
A lender agreeing to the short sale of an owner-occupied property must now provide written notice of whether it intends to either waive or reserve its right to collect on the deficiency. Also, the time period to start legal proceedings to collect on a deficiency has been reduced from six years to three years. Again, these changes only apply to short sales of owner-occupied properties. They do not apply to foreclosures. In the case of foreclosures, a lender has up to six years to collect on a deficiency.▪ Referral to Mediation
Homeowners that qualify for mediation under the Foreclosure Fairness Act may now be referred to mediation up to 20 days after a notice of trustee sale has been recorded. Prior to the change in the law, once a notice of trustee sale was recorded, a referral to mediation was no longer available.▪ Time Period for Trustee's Sale
The time period between recording the notice of trustee sale and holding the trustee sale has been extended from 90 days to 120 days. This change applies to owners of owner-occupied residential properties who are entitled under the law to receive a letter from their lender notifying them of pre-foreclosure options.The above is just a basic summary of several new changes. We always advise homeowners to consult an attorney regarding how these changes will affect their own situation.
Monday, April 2, 2012
How Form 22SS Affects Lender Review of the Short Sale
I get questions regularly from brokers who are concerned about how the terms they outline in Form 22SS will affect how the bank reviews the short sale offer. Contrary to what you might expect, many lenders don't review Form 22SS at all. Banks will look at the contract, but they're not concerned with the terms. In a short sale, the bank alone dictates the terms, from sale price to closing date. They will look at the net proceeds, and also check to see if there is an addendum that outlines concessions that they will not allow, such as having a seller live in the property after the sale and pay rent. Concessions of this type will all but guarantee that the bank will not approve the sale.
While Form 22SS is of little consequence to the lender, it is critically important to your client. Form 22SS clarifies the process and terms that the buyer and seller agree upon in order to complete the sale. That includes:
▪ Whether timelines in the agreement- such as deposit of earnest money or inspection- begin upon mutual acceptance rather than the delivery of lender consent
▪ The number of days a seller has to deliver lender consent to the buyer
▪ The conditions under which the buyer can terminate the contract
It's very important to fully understand the implications of how you fill out the form. For example, in Paragraph 4 TERMINATION BY BUYER, if you check neither of the boxes, the buyer can terminate the contract at any time for any reason. With all these options and variables, Form 22SS can be confusing. If you need assistance with your transaction, we're happy to help. Call Richard Eastern at (206) 612-5541.
While Form 22SS is of little consequence to the lender, it is critically important to your client. Form 22SS clarifies the process and terms that the buyer and seller agree upon in order to complete the sale. That includes:
▪ Whether timelines in the agreement- such as deposit of earnest money or inspection- begin upon mutual acceptance rather than the delivery of lender consent
▪ The number of days a seller has to deliver lender consent to the buyer
▪ The conditions under which the buyer can terminate the contract
It's very important to fully understand the implications of how you fill out the form. For example, in Paragraph 4 TERMINATION BY BUYER, if you check neither of the boxes, the buyer can terminate the contract at any time for any reason. With all these options and variables, Form 22SS can be confusing. If you need assistance with your transaction, we're happy to help. Call Richard Eastern at (206) 612-5541.
Tuesday, March 27, 2012
Short Sale Myths vs Reality: Closing Time
Many agents and buyers have shied away from short sales because they hear horror stories about them taking 3-6 months to close.
Here's a reality check: In the hundreds of short sales we've closed, the time from mutual acceptance to Lender Consent has averaged 60 days. If someone is inexperienced with short sales, that process can take considerably longer. Short sales require significantly more paperwork than a traditional sale, and if you don’t have a system for collecting and submitting that paperwork to the lender according to their individual requirements, things can really bog down. Many large lenders use a platform called Equator for all aspects of the short sales process, from submitting paperwork to ongoing communication. For those not familiar with Equator, getting up to speed on the software will also prolong the sales process. Most brokers we work with prefer to spend their time building their core business, and leave the short sale negotiating work to short sale specialists with a dedicated staff that handles all the details.
Here's a reality check: In the hundreds of short sales we've closed, the time from mutual acceptance to Lender Consent has averaged 60 days. If someone is inexperienced with short sales, that process can take considerably longer. Short sales require significantly more paperwork than a traditional sale, and if you don’t have a system for collecting and submitting that paperwork to the lender according to their individual requirements, things can really bog down. Many large lenders use a platform called Equator for all aspects of the short sales process, from submitting paperwork to ongoing communication. For those not familiar with Equator, getting up to speed on the software will also prolong the sales process. Most brokers we work with prefer to spend their time building their core business, and leave the short sale negotiating work to short sale specialists with a dedicated staff that handles all the details.
Wednesday, March 21, 2012
Major Changes Coming to HAFA
As of June 1, there will be significant changes to the HAFA program. The updates will allow a homeowner to remain current on their mortgage, qualify for HAFA, and go through a short sale with less of an impact on their credit.
The major changes include:
▪ The deadline for submitting for HAFA eligibility will be extended a full year, from December 31, 2012 to December 31, 2013.
▪ The removal of occupancy requirements: HAFA until now has required homeowners to have lived in the property within the last 12 months. This requirement is being removed.
▪ The $3,000 relocation incentive will be limited to properties occupied by an owner at the time of the short sale.
▪ Mortgage payments will be allowed to exceed 31% of the homeowner’s gross monthly income. The effect of this will be to allow a homeowner to remain current on her mortgage and still qualify, minimizing the overall potential impact to her credit, and certainly shortening the waiting period to purchase in the future.
▪ Junior lienholders may receive up to a maximum of $8,500, up from $6,000 previously (these are incentives to junior lienholders).
▪ There are also new mandates regarding what the lender can state on the borrower's credit report that, reportedly, will lessen the impact on the borrower's credit rating.
We'll post any new information as we receive it. We have more information about HAFA here.
The major changes include:
▪ The deadline for submitting for HAFA eligibility will be extended a full year, from December 31, 2012 to December 31, 2013.
▪ The removal of occupancy requirements: HAFA until now has required homeowners to have lived in the property within the last 12 months. This requirement is being removed.
▪ The $3,000 relocation incentive will be limited to properties occupied by an owner at the time of the short sale.
▪ Mortgage payments will be allowed to exceed 31% of the homeowner’s gross monthly income. The effect of this will be to allow a homeowner to remain current on her mortgage and still qualify, minimizing the overall potential impact to her credit, and certainly shortening the waiting period to purchase in the future.
▪ Junior lienholders may receive up to a maximum of $8,500, up from $6,000 previously (these are incentives to junior lienholders).
▪ There are also new mandates regarding what the lender can state on the borrower's credit report that, reportedly, will lessen the impact on the borrower's credit rating.
We'll post any new information as we receive it. We have more information about HAFA here.
Wednesday, February 8, 2012
Annual Short Sale Statistics Report
Short sales and the sale of bank-owned properties showed steady increases in the Puget Sound area through 2011, according to the Washington Property Solutions Annual Short Sale Statistics Report.
The percentage of single family home sales that were short sales remained fairly consistent from 2010 to 2011. The increase in distressed property sales overall as compared to 2010 is attributed to a steady increase in the number of bank-owned property sales. The report includes historical sales data for both Short Sales and Bank-Owned Properties in King, Pierce, Snohomish and Kitsap counties.
The percentage of single family home sales that were short sales remained fairly consistent from 2010 to 2011. The increase in distressed property sales overall as compared to 2010 is attributed to a steady increase in the number of bank-owned property sales. The report includes historical sales data for both Short Sales and Bank-Owned Properties in King, Pierce, Snohomish and Kitsap counties.
Monday, February 6, 2012
Short Sale War Stories: How A Third-Party Negotiator Can Kill Your Short Sale
Over the past few weeks, we've heard a number of stories from brokers who've had their short sales held hostage by third-party negotiators. Here are a few cautionary tales:
Case #1
The listing agent contracted with a third-party negotiator who typically gets paid out of closing costs (1.5% of the purchase price). However, in this case, the bank was not willing to pay buyer's closing costs. The buyer did not have an additional $7,200 in cash to bring to closing. The listing agent was willing to kick in 1% and requested that their negotiator take 1% instead of 1.5%. The negotiator refused to complete the sale without being paid the full 1.5%.
Case #2
A law firm negotiating a short sale neglected to have the listing agent or seller sign a services contract, leaving it unclear who was responsible for paying their 1% fee. Once the short sale was approved, the firm asked the listing broker to pay the fee of $3,100 and threatened to not allow closing until they were paid.
If you depend on a third-party negotiator for your short sale listings you are to a large degree at the mercy of their process and their timing. One third-party negotiator claims that their fees are paid by the lender "over 50% of the time." If the lender opts not to pay the fee, you may get stuck paying some or all of it.
So what are your options? We believe that short sales are foremost real estate transactions, and they should be handled by real estate brokers. Negotiating the short sale should be a part of the professional services that the broker offers at no additional fee to anyone. When we co-list with broker partners, we take the responsibility of negotiating the short sale. Our co-listing commission is 1% of the sales price. There is no fee to the buyer or buyer’s agent. The best way to avoid being taken hostage by a third-party negotiator is for you to be in control of the sale.
Case #1
The listing agent contracted with a third-party negotiator who typically gets paid out of closing costs (1.5% of the purchase price). However, in this case, the bank was not willing to pay buyer's closing costs. The buyer did not have an additional $7,200 in cash to bring to closing. The listing agent was willing to kick in 1% and requested that their negotiator take 1% instead of 1.5%. The negotiator refused to complete the sale without being paid the full 1.5%.
Case #2
A law firm negotiating a short sale neglected to have the listing agent or seller sign a services contract, leaving it unclear who was responsible for paying their 1% fee. Once the short sale was approved, the firm asked the listing broker to pay the fee of $3,100 and threatened to not allow closing until they were paid.
If you depend on a third-party negotiator for your short sale listings you are to a large degree at the mercy of their process and their timing. One third-party negotiator claims that their fees are paid by the lender "over 50% of the time." If the lender opts not to pay the fee, you may get stuck paying some or all of it.
So what are your options? We believe that short sales are foremost real estate transactions, and they should be handled by real estate brokers. Negotiating the short sale should be a part of the professional services that the broker offers at no additional fee to anyone. When we co-list with broker partners, we take the responsibility of negotiating the short sale. Our co-listing commission is 1% of the sales price. There is no fee to the buyer or buyer’s agent. The best way to avoid being taken hostage by a third-party negotiator is for you to be in control of the sale.
Subscribe to:
Posts (Atom)
Posts
