Saturday, January 10, 2009

Weekly Real Estate Information!

It is very important to keep consumers updated on real estate issues. Click on My Weekly Blog for real estate information and contact me if you need me!

Saturday, January 3, 2009

Do You Really Know the Difference?


REOs Foreclosures Regular Sales Online Auctions Short Sales Pre-Foreclosure

In today’s San Francisco Bay Area market there are numerous properties for sale. I have been working with buyers and sellers in this challenging market. For the most part, prices ranging from $200,000 to $400,000 are being sold as Short Sale or REO properties. There are some being sold on Auction websites. Very few homes in the above price range are being sold by homeowners as what we call a Regular sale. Below are a summarized definition of these types of transactions.

Regular Sale - A sale where the seller has equity in the property. The buyer and seller will the
negotiate price and terms of the sale. The seller is required to provide Disclosures according
to California Law and statute. The transactions in this type of sale are generally much easier to come together as there are timelines in which the seller needs to abide by in the transaction. The seller is motivated to sell and move on in his/her life.

Short Sale - A short sale is the sale of real property where the fair market sale price is less than the loan(s) on the property. A short sale means the seller's lender is accepting a less than the existing loans on the property. Just because a property is listed with short “sale terms” does not mean the lender will accept your offer. These properties must be purchased “As Is” without any repairs or warranties. Some are in need of repair. The lender is already taking a 30% to 50% loss on the property. This is why a majority of the time, they will NOT negotiate on the price. In fact, in most cases in our area, there are multiple offers on most properties that are in good condition and the price will higher than the listed price.

If the property in encumbered with more than one loan, there could be a problem. All of the lenders must agree to a short sale or a contract can never be ratified. There is no guarantee the lender will approve of the sale. My buyers have waited over 4 months for the lender to respond to their offer. We are still waiting for an acceptance! I have heard of circumstances where it took the lender over 9 months to respond and did not accept the offer. Statistics show over the last six months that only 20 % of these sales have closed. The homeowner should consult their CPA or Tax Attorney before entering into a Short Sale agreement.

REO/Bank Owned Property - REO is an acronym for a real estate owned property that has been
foreclosed on or repossessed by banks or lenders. These properties are also sold in “As Is” condition without any repairs or warranties. The seller (lender) is exempt by law from completing any disclosures. The agents involved in the transaction are not exempt from completing their visual inspection as per California’s disclosure laws.

Prior to these properties going on the market, the lender has had an agent submit a BPO (Broker’s Price Opinion). So, just as in a short sale transaction, the lender is already taking a 30% to 50% loss on the property. This is why a majority of the time, they will NOT negotiate on the price. In fact, in most cases in my area, there are multiple offers on most properties that are in good condition and the price will higher than the listed price. Again, some properties are in need of repair. The process for bank approval can be anywhere from 3 – 10 days.

Pre-Foreclosure Property - A property where the homeowner has fallen behind in their payments or when a Notice of Default (NOD) has been filed against the property by the lender. May not have much flexibility in negotiating. These properties may be regular sales or potential Short Sales. The homeowner should consult their CPA or Tax Attorney before entering into a Short Sale agreement.

Online Auctions - Recently I have found that some of the REOs that have not sold were placed on an online auction website. Do not be fooled in thinking that you can purchase these properties lower than what they were listed for by an agency. The agency still has the listing. The website starts with a minimum bid and the buyer is made to believe that they can purchase this property for this amount if there are no other bidders. Not so, there is a reserve amount that the lender expects to get for the property. This price is usually what the real estate agency has listed the property for in the multiple listing service. There is a 5–10% fee paid to the auction house in addition to the final bid price. These properties are all “As Is” sales without inspections or warranties.

For All Your Real Estate Needs:
Jean Powers CRS,ASP®,PMN,e-PRO
Real Estate Broker
510.908.9002 Cell/Text
http://www.jeanpowers.net/
Homes@JeanPowers.com

Friday, January 2, 2009



My state association has great information for Realtors to pass on to the consumer. I have been a state director since 1993 which keeps me updated on current laws, contracts and also allows me to be part of decision making on many issues that arise on our committees. Below is information I received from the California Association of Realtors regarding the timeline for foreclosure on owner occupied 1-4 unit properties.


When a real estate transaction involves a property in foreclosure, knowing the foreclosure timeline helps you as the real estate agent to assess whether you have enough time to close escrow before the foreclosure sale. Starting September 8, 2008, California has a special foreclosure timeline for loans originated between 2003 and 2007, inclusive, which are secured by owner-occupied residences.


Indeed, loans involved in short sales are likely to be owner-occupied loans from the years 2003 to 2007, which was the heyday for subprime lending.

The special foreclosure timeline does not apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations. The special foreclosure timeline will remain in effect until January 1, 2013. (Cal. Civ. Code § 2923.5.)


FORECLOSURE TIMELINE FOR OWNER-OCCUPIED REAL PROPERTY LOANS (made from 2003 to 2007)


The approximate minimum time frames for the non-judicial foreclosure of owner‑occupied real property loans made from 2003 to 2007 are as set forth below. In California, most lenders elect to foreclose non-judicially by conducting trustees' sales, not by judicial foreclosure.


Pre-Foreclosure Period
A lender may initiate the foreclosure process when a borrower defaults on a loan, such as by missing a mortgage payment. However, a slight delay may not justify acceleration and foreclosure by the lender. Hence, in practice, lenders generally wait a few months after a missed payment before starting the foreclosure process.


Day 1: Lender Contacts Borrower
For owner-occupied loans from 2003 to 2007, a lender initiating the foreclosure process must generally contact the borrower by phone or in person to assess the borrower's financial situation and explore options for avoiding foreclosure. During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.


Day 31: Filing of Notice of Default
For owner-occupied loans from 2003 to 2007, the lender may file a notice of default 30 days after contacting the borrower to explore options for avoiding foreclosure. The notice of default must be filed in the county where the property is located and a copy must be mailed within 10 business days after recordation to the borrower and all other persons who have requested such notice. The notice of default informs the borrower of the default. It must also include the lender's declaration that it has contacted the borrower to explore options for avoiding foreclosure, tried with due diligence to contact the borrower, or the borrower has surrendered the property.


Day 121: Filing of Notice of Trustee's Sale
Three months after the filing of the notice of default, the lender may record a notice of trustee's sale setting forth the date, time, and place of the upcoming trustee's sale. Because of the gravity of a notice of trustee's sale, it must be widely disseminated. The notice of trustee's sale must be recorded, posted, mailed to the borrower and others, as well as published once a week for three consecutive weeks in a newspaper of general circulation.


Day 145: Deadline to Cure Default
Up to five business days before the trustee's sale, the borrower may reinstate the loan by curing the default or paying the missed payments plus allowable costs. After the reinstatement period expires, the borrower still has the right to redeem the property by paying the entire debt, plus interest and costs (not just the arrearage), before the bidding begins at the trustee's sale.


Day 152: Trustee's Sale
Although California law allows a trustee's sale to take place 20 days after the posting of the notice of trustee's sale, lenders customarily wait at least 31 days instead to help protect against federal tax liens. At the trustee's sale, the property is sold through a public auction to the highest bidder. Title is transferred to the successful bidder by trustee's deed.


USING THIS FORECLOSURE TIMELINE
A foreclosure timeline helps you as a listing agent ascertain whether you have enough time to market and sell the property as a short sale. Depending on the stage of foreclosure the homeowner is in ("Foreclosure Stage"), the chart below gives you the total time frame you have, at a minimum, to sell a property as a short sale before the trustee's sale occurs ("Minimum Time Left to Sell").


Foreclosure Stage
Minimum Time Left to Sell
Homeowner just missed making mortgage payment for the first time.
About 6 to 8 months total


Homeowner has just been contacted by the lender to explore options for avoiding foreclosure.
About 5 months total


Notice of default has just been filed.
About 4 months total of trustee's sale has just been filed.


Date of trustee's sale is on notice of sale
As an example, if a notice of default has just been filed, you have a minimum of about four months to sell the property before the trustee's sale may occur. That's four months not only to find a buyer, but also to get the lender to approve the short sale and close escrow. The short sale lender may agree to postpone the trustee's sale in some situations (such as when there's an accepted offer), but be sure to get any agreement for a postponement in writing.

December Parties!





Do you have a group of good friends and celebrate each other's birthdays? I do. Every year the group takes the birthday person out to dinner. Last week I have 2 friends, Michael and Sandra whose birthdays are in December. The group decided to take them out to lunch at Bing Crosby's in Walnut Creek. This restaurant opened a couple of years ago and became an instant hit. It's nostalgic with an atmosphere of the days that Bing was alive and a great place to eat. We all gave gifts to the birthday boy and girl and also exchanged Christmas gifts. Lisa's family makes their yearly tamales and we all received a batch! Umm Yummy! I can't remember whose birthday is next, but I do know we will find a wonderful place to go!