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MechelleSellsHomes Readers
To my MechelleSellsHomes readers, yes, you really are in the right spot. In an effort to enhance the features that I offer my readers and clients I am in the process of changing over systems. I believe once everything is complete you will have a better home search experience. In the meantime, take a look around and read some of my blog posts.
I hope to have the new system up and running within 10 days.
If you need a home search set up for you, please let me know and I can set one up for you.
Traditional Home Sellers Should Not Act Like A Foreclosed Home
Traditional home sellers have some great advantages for buyers looking to purchase a home. They are real sellers who can respond and communicate in a timely fashion. Typically there is more give and take when you are dealing with a traditional seller. Foreclosed and even short sale homes typically have to be done exactly as the bank dictates. You either do it their way, or you don’t buy the home.
Recently I have come across a few agents representing traditional sellers that are treating the offers and contract terms like they are a foreclosed or short sale property.
Examples include inspection and loan contingencies short time frame. For inspections 17 days is standard, 10 days is ok, 7 is very tight if buyers work or are out of town. Loan contingencies typically are also 17 days, anything less is hard to do. I am seeing 7 day time frames for inspections and 12-15 days for loans. These listing agents are requiring the buyers to sign an amendment stating the contingencies are automatically removed on day 7 for inspections and 15 days for loans. Standard for this area, contingencies have to be removed by written documentation. (written is always best in my opinion so there is no misunderstanding)
Another example is where the listing agent requires the potential buyer to be “qualified through the agent’s preferred lender” prior to making an offer. Even if the buyer has a well known lender approval! I think the listing agent does not want to take the time to call the buyer’s lender to confirm with a conversation that the buyer is qualified.
In my opinion to treat the negotiations on your home just like the foreclosures and short sales is the wrong strategy. I can tell you from experience there are buyers who are out there who do not want to deal with buying a foreclosed home. You are alienating a whole group of buyers who would want your home, but because an agent recommends these “tightened” restrictions, and treat the negotiations like it is their way or no way, will not make an offer or will not move forward during the counter process.
In this Folsom real estate market, with so many short sales and foreclosures, if you are selling your home as a traditional seller, you should negotiate terms like a traditional seller. You will have more interested buyers.
California Short Sale Law Changes For Second Loans
A new law went into affect July 15 of this year, SB 458, concerning short sales, and the junior loans (seconds, thirds) on those short sales. Since 2010, if a bank who had the first agreed to the short sale, they could not come after the seller after the closing for a deficiency judgement(SB 931). SB 458 is almost the same law, except for junior loans.
New California Short Sale Law
Typically, in a short sale with 2 loans, the first usually offers $1000-$3000 to the second to agree to the short sale. The second, unless there was settlement language that included that the loan was paid in full, and there would be no deficiency judgement, would reserve the right to come after the seller later for the remaining money owed. Sometimes they would require a seller to sign a promissory note for the difference of what they were getting and what was owed. The second loans are almost always the hardest part of a short sale. Most sellers will not agree to additional monies owed, when they won’t even own the home.
SB 458 now extends the law towards junior lien holders. If the junior lien approves the short sale, they can not come after the seller for a deficiency judgement or a promissory note.
Now before everyone gets all excited about this new law, in my opinion there are some possible side effects to this law. I think the banks that have junior liens, may just decide not to do short sales. If the home they have a second on, is foreclosed on, they can still go after the owner for the money owed. If they agree to the short sale, they get the $1000 – $3000 and that is it. If sellers are lucky, the first will decide it is worth it to offer more than they have in the past to the junior lien holders. It is too soon to see how the banks are going to react. I have heard of two short sale approvals that were approved, were pulled because of the new law.
Whether you are a buyer or a seller, if you are dealing with a short sale junior lien, I advise patience. This will probably slow down and stall the process for a while, during which time the banks will be deciding how to deal with the new law.
6 Short Sale Marketing Mistakes
If you are a homeowner and you are considering putting your home on the market as a short sale, you know you are not getting any money from the sale. Because you are not getting any profit out of the sale of the home, you might not care how your home is marketed, but you should. The better marketing of your short sale home, the better position you are in when negotiating with the bank for approval of the sale.
Short sale mistakes:
1. One or two pictures of the home. – Don’t only have one or two pictures on the MLS. Buyers always equate little or no pictures to poor condition of the home. Short sales should have as many pictures as regular sales, you really need at least 12.
2. No lockbox on the home.-All home sellers need to make it as easy as possible for buyers to see the home. This is true even if your homes is a short sale.
3. No sign on the home.-Buyers are driving neighborhoods that they want to live in, if they don’t see a sign, they may never know that your home is for sale.
4. Low commission.-Your short sale home should be offering the same or more commission than the regular sales in your area. If you are offering .25% or more less than all the other homes in the area, you will greatly reduce the amount of showings.
5. FSBO.-Doing a short sale as a For Sale By Owner is just crazy. You are not saving any money! The banks understand that they will need to pay a standard commission, and they would have to if they foreclosed and sold the home.
6. Charge a “short sale processing fee” for a short sale processor. I am seeing some agents charge the buyer or the buyer’s agent a “short sale processing fee” of on average 1% of the purchase price! Then they try to make it ok by saying just reduce your offer by that amount. But the buyers don’t know whether the bank will take their offer or not. Charging a processing fee for something your real estate agent is supposed to be doing is another mistake that will decrease your showings.
The best marketing you can do for your home, when it is a short sale, is to treat it just like a normal sale. Marketing your home completely to compete with regular sales, gives the bank one more reason to accept an offer. Typically a foreclosed home has no marketing, and if you can show the bank all that was done to get the highest and best offer, it gives you a higher chance of acceptance.
Last Day For Garage Sale Signups!
Just a reminder tomorrow is the last day to sign up (and get your address listed in marketing) for the Annual Prairie Oaks Neighborhood Garage Sale!
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