tucson short sales

Tucson Short Sales – Part 5 – End Game Short Sales

This is the fifth and final installment in my Tucson Short Sales series.  I would suggest reading part one (Tucson Short Sales – Part 1 – What are Short Sales?) part two (Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?)  part three (Tucson Short Sales – Part 3 – How to Short Sale My Home) and part four (Tucson Short Sales – Part 4 – The Offer is in to the Bank) before reading this article.

Once your purchase package has been submitted to the bank it will typically pass through several levels before reaching someone who has the actual authority to make a decision on the offer.

Larger lenders have different negotiators at each level who each have a specific task. A bottom level negotiator will typically review a package for completeness and ensure that everything is signed as required. A mid-level negotiator will typically order an appraisal or BPO on the property to find current market value and then attach that to the file and pass it on. And a high level negotiator will take all of the information provided along with the valuation of the home and render a decision.

The same process applies for smaller banks but usually one negotiator handles all of the tasks listed above.

“How much will the bank accept?” is the question I am usually asked by potential clients.

You will usually hear that there is a magic formula that lenders use to decide whether or not a short sale offer is sufficient. And truthfully, there probably are. But there isn’t an industry standard that can be cited in this article that you can use to accurately gauge your chances of obtaining a short sale acceptance.

It is different for every lender and for every situation. I’ve had deals with the same lender (Bank of America) where they were willing to accept different percentage of payoffs for properties just months apart. By the time you read this article the standards will have probably changed again and they will continue to evolve for the next few years as we work our way out of this mess.

If you would like to search the Tucson MLS for Short Sale, Bank-Owned, or Foreclosure homes, search for Tucson Homes for Sale or contact me for a comprehensive list.

If you would like assistance in avoiding foreclosure feel free to contact me for a no-cost consultation.

tucson short sales

Tucson Short Sales – Part 4 – The Offer Is In To The Bank

This is the fourth installment in my Tucson Short Sales series, I would suggest reading part one (Tucson Short Sales – Part 1 – What are Short Sales?) part two (Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?)  and part three (Tucson Short Sales – Part 3 – How to Short Sale My Home) before reading this article.

After the offer has been submitted to the bank (typically to someone in the Loss Mitigation department), your file will probably be assigned to an intermediary or negotiator. These people have many files just like yours on their desks and their job is to evaluate each offer to see if it warrants further consideration. Many banks have a bottleneck at this stage in the process and simply cannot keep up with the number of short sale packages coming across their desks.

The bank has to know what the actual market value of the home is before it can intelligently evaluate a buyer’s offer. They will usually order an appraisal or Broker Price Opinion (BPO) to determine the market value of the property which will help them decide which course of action to take with an offer (accept, reject, counter).

The next step in the process is usually the one that takes the longest. After a valuation of the property has been completed and the offer has been deemed complete the holder of the note has to decide what to do.

You see, many times a mortgage has been resold by your mortgage company to an investor or group of investors (whether individually or in a “bundle” or other mortgages). When this is the case (the bank doesn’t hold the mortgage note), the investor(s) has to evaluate the offer and choose either to accept, reject, or make a counter-offer.

This step can be even further complicated when there are multiple lenders (80/20 or 80/10/10 loans, for example).

The short sale process typically takes no less than 30 days. There are some lenders, smaller ones usually, who can respond more quickly to an offer. I have seen short sales take seven months from contract submission to close of escrow, and I have seen countless short sales that have gone to foreclosure because the bank did not respond soon enough. This is definitely the most stressful and frustrating part of the short sale process because it involves waiting. And more waiting. And then, more waiting. Sometimes you’ll get lucky and have a responsive lender but nine ten out of times you won’t.

For the next step in the Short Sale process (End Game Short Sales) stayed tuned!

• Tucson Short Sales – Part 1 – What are Short Sales?
• Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?
• Tucson Short Sales – Part 3 – How to Short Sale My Home
• Tucson Short Sales – Part 4 – The Offer Is In To The Bank
• Tucson Short Sales – Part 5 – End Game Short Sales

If you would like to search the Tucson MLS for Short Sale, Bank-Owned, or Foreclosure homes, search for Tucson Homes for Sale or contact me for a comprehensive list.

If you would like assistance in avoiding foreclosure feel free to contact me for a no-cost consultation.

tucson short sales

Tucson Short Sales – Part 3 – How to Short Sale My Home

This is the third installment in my Tucson Short Sales series, I would suggest reading part one (Tucson Short Sales – Part 1 – What are Short Sales?) and part 2 (Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?) before reading this article.

Since I wrote the first two articles in this series the Senate and House passed a Housing Rescue Plan that President Bush is expecting to enact. In short the bill will allow many homeowners who are in financial distress and who purchased a home between January 2005 and June 2007 to essentially refinance their home to 90% of the market value of their home. Read the article about the Housing Rescue Plan here.

We will continue with the assumption that you (the homeowner) has decided to proceed with the short sale process. Because the process is generally complicated with many timelines and necessary documentation, several Consumer Resource Groups have sprung up to assist homeowner’s. If you are considering a short sale please call call one of the below agencies first for FREE assistance/advice on whether a short sale is your best option.

Counseling Resources for Struggling Homeowners
Neighborhood Assistance Corp. of America www.naca.com 1-888-302-6222	Homeownership Preservation Foundation www.995hope.org 1-888-995-4673
ACORN www.acorn.org 1-866-672-2676	HomeFree-USA www.homefreeusa.org 1-866-696-2329

Once you’ve resolved to go ahead with a short sale the process is relatively simple. You market the home as you normally would in a home sale, have showings, entertain offers, etc. Once you have an accepted offer, it is then submitted to the bank along with whatever documentation the lender requires; together this is generally called a “short sale package”.

Once a completed “file” is submitted the bank will then assign the file to a “negotiator” or “intermediary”. These processors generally have many files on their desk at one time and much of the timeline is eaten up here. For the next step in the Short Sale process stayed tuned!

• Tucson Short Sales – Part 1 – What are Short Sales?
• Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?
• Tucson Short Sales – Part 3 – How to Short Sale My Home
• Tucson Short Sales – Part 4 – The Offer Is In To The Bank
• Tucson Short Sales – Part 5 – End Game Short Sales

If you would like to search the Tucson MLS for Short Sale, Bank-Owned, or Foreclosure homes, search my Tucson MLS or contact me for a comprehensive list.

If you would like assistance in avoiding foreclosure feel free to contact me for a no-cost consultation.

tucson short sales

Tucson Short Sales & Lender Owned Homes Continue to Rise

This morning I went back through our MLS data and charted how many sales there have been for short sale and lender owned homes for the past few years. I was curious to see what the trends looked like and if they matched up what I’ve been seeing lately, and for the most part my assumptions were true. Below are the numbers:

	Short Sales			Bank Owned
1999	1		1999	67
2000	3		2000	82
2001	7		2001	98
2002	6		2002	115
2003	8		2003	75
2004	4		2004	74
2005	0		2005	29
2006	2		2006	112
2007	31		2007	149
2008	132		2008	297

 

Keep in mind these results are from the Tucson MLS and because I searched on the keywords “short sale” and “lender” we may have a few extraneous results. I’ve been in touch with the MLS staff concerning the lack of Tucson MLS designations for short sale and bank-owned homes and apparently they are working on a solution.

What we see are several trends dating back to 1999. There was a mild rise in short sales/bank-owned homes in 2002 which fell off during the housing boom, and then in 2005 there weren’t any short sale records in Tucson.. not surprising considering the inflated market.

In 2006, however, we see almost a 300% increase in bank-owned homes with only two short sales. This can be attributed to a couple things:

1. Housing market was starting to trend downward
2. A lot of people who refinanced and/or took out HELOCs in 2005 with the thought of selling in the near future were suddenly faced with a mortgage higher than their home’s value
3. Short sales were still fairly uncommon to real estate agents and homeowners

In 2007 as real estate agents became more educated on short sales and received the proper training closed short sales went up. So far this year, in only seven months, we are already at 132 closed short sales which is a dramatic increase from just last year.  Lender owned homes have also mushroomed to 297 closed deals this year and will likely surpass 450 sales before the year is over.

So what will the next year or so look like for short sales and bank-owned homes? Personally I think we will probably spike at the end of this year, perhaps next spring, and hold fairly steady for a bit while banks unload their excess inventory and agents continue to be successful in short sales.

If the “Housing and Economic Recovery Act of 2008” being proposed by Senators Chris Dodd (D-CT) and Richard Shelby (R-AL) actually is passed I think this number may go up in the short term; in my opinion the bill, while well intentioned, is fraught with potholes and danger signs that can’t be ignored and it practically enourages homeowners to go into default on their mortgage. Read the .pdf linked above and see if you come to the same conclusion!

tucson short sales

Tucson MLS needs new designations

Since the influx of short-sale and bank-owned homes I have been waiting for the Tucson Association of Realtors (TAR) to get on board and add specific designations in our MLS system to address these items. It is entirely too cumbersome to search the Tucson MLS on keywords in the description fields when looking for a lender-owned home or home going through a short sale.

I don’t know how many times I’ve run the same search with the following keywords in the “Description field” and gotten different results: lender, bank, reo, foreclosure, foreclosed, short sale, short. And then, some agents only put these keywords in the “Agent Remarks” section (only us Realtors get to see those) so that makes it even more time consuming.

What’s the hold up? Apparently ARMLS (the MLS for the Greater Phoenix Area) has two such indicators to search on, “Lender/Corp Approval Required” and “Lender Owned Property”. Many other MLS’s across the nation have the same capability and yet we have not caught on.

It reminds me of the short sale addendum situation for TAR; I was at a special short-sale information session a few weeks ago and TAR finally has a draft of an official TAR created short-sale addendum; I just wish it would have been done last year.

Granted, most offices/companies already have their own version of a SS addendum but the TAR form should eliminate the headache of not having a standardized form.

Not only would having these additional search criteria make it easier for us Realtors but it would make it easier for consumers as well. Let’s hope it gets changed soon!

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