Teri Pacitto, Broker Associate, CDPE, SFR, CHS/Shareholder with Aviara Real Estate and full time REALTOR in Southern California says...  "I wanted to share this timely article.   The housing market in the Greater Ventura County region of Souther California has come alive with Multiple Offers, Cash Buyers as well as home Buyers who are taking advantage of some of the lowest rates in over 40 years.  What is happening with this real estate market?  I think it is partly due to a limited supply and  high demand situation.  Will that change if more inventory comes on the market as we get into the selling season"?

Homebuilder confidence in the market for new single-family homes reached its highest level since 2007, according to the Home Builders/Wells Fargo Housing Market Index. At 29, the level is five points higher than last month’s downwardly revised numbers.

“Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April,” said Barry Rutenberg, chairman of the National Association of Home Builders and a homebuilder from Gainesville, Fla.

“It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase.”

Each of the index’s components rebounded from declines in the previous month. The component assessing current sales conditions and the component gauging traffic of prospective buyers each rose five points in May to 30 and 23, respectively, with the traffic component hitting its highest level since April of 2007. The component evaluating sales expectations in the next six months rose three points to 34.

“While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is an excellent sign that firming home values, improving employment and low mortgage rates are drawing consumers back,” said NAHB Chief Economist David Crowe, who said the recovery could be stronger if not for obstacles such as inaccurate appraisals and rising materials prices.

Three out of four regions registered improving builder sentiment in May. This included a six-point gain to 32 in the Northeast, and five-point gains to 27 and 28 in the Midwest and South, respectively. The West posted a two-point decline, to 29.

By jhuseman@housingwire.com
@JessicaHuseman

Do you owe more than your home is worth?

• Have your fallen behind on your mortgage?
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YES... There is a light at the end of the tunnel! There are dignified solutions to your financial situation!

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Don't let the possibility of loosing your home to foreclosure be a means for panic! There are better paths that you can take, and as a 24-year veteran of real estate, I can help you find the best path for you and for your family.

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Short sale, deed-In-lieu, or foreclosure keeping you up at night?

You don't need a simple real estate agent; you need a professional with 24 years experience with proven negotiator skills, one who  has helped many of  the areas homeowners with their short sales and financial situations.  

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Home Buyers are out in full force..even though it was Mother's Day weekend all my listings were busy with buyers.  Limited inventory, low interest rates and this gorgeous Southern California weather is the "Prefect Time for Sellers"....don't wait.. call us to get your home on the market and take advantage of this window of opportunity.   

With rising rents, more renters are being swayed into home ownership, even in pricey housing markets like New York.

For example, one New York renter said he started looking into owning a home when his landlord tried to increase his rent by 13 percent when his lease was up for renewal. He found that he could buy a home and get the same amount of space for cheaper than continuing to rent, plus he’d be building equity.

Other renters are starting to see that buying may be a better option for them, too.

Rents are increasing at about the same pace that home values are dropping, says Stan Humphries, Zillow’s chief economist, who says, according to their surveys, home prices have dropped 3.1 percent year-over-year whereas rents have increased 2.5 percent.

"Herein lie the seeds to eventually more interest in buying on the part of consumers, which will help put a floor under home prices," Humphries told Investors Business Daily. Recent housing surveys, including Zillow’s, are showing home prices are starting to rise in recent months.

Affordability in housing has been at record highs from the combination of falling home values and record-low mortgages. Humphries says that housing prices have rolled back to 2003 levels.

"That increased affordability in the face of rising rental prices will begin to get buyers off the fence this year,” Humphries says. "What's been keeping buyers on the fence is a crisis of confidence. People who don't have a job, or who are worried about losing their job, don't buy homes. They also don't want to buy an asset they think is rapidly depreciating.”

National Association of REALTORS®’ Chief Economist Lawrence Yun says the tighter restrictions from lenders are also preventing many potential buyers from securing financing in order to buy. But for those who are able to qualify, Yun says “it’s better to get in now” than wait. 

It seems that there is a significant amount of confusion when it comes to purchasing a short sale. There are many misconceptions when it comes to this type of transaction, so below I have provided some information to potential buyers of short sales. If you are looking to purchase a short sale, understand that it is not the same as a normal sale and the approach is very different. There could be several parties involved and issues that are unknown to the buyer and buyer’s agent that can affect the transaction. If you are looking to purchase a short sale here is some helpful information.

1. On average, to get a short sale approval, it can take 60-90 days.

There could be mortgage insurance and an end investor on the loan as well as the servicer, which means it has to go through three different processes. Bank of America could be the servicer on the loan but they do not actually own the loan, so, the short sale has to pass their guidelines, then go to the mortgage insurer if there is one, then to the end investor like Fannie Mae and Freddie Mac. If you are a buyer and can’t wait at least 60-90 days for an approval and then another 30 days to go to closing, then you need to look at other houses. The worst thing you can do is tie up a house that is in a short sale with no intention of being patient while waiting for a short sale approval. Approvals can come sooner than 60 days, but industry standard is at least 60 days to get an approval or denial.

2. There is a general assumption that you can purchase a short sale for 40-50% under its listed price. In a short sale the bank comes out and does a valuation of the property and will expect a slight discount, but will not accept a huge amount under the market value.

Hopefully, if the agent who is handling the sale is experienced, they will have already gotten an approved list price from the bank by the time you are interested in making an offer. The bank will usually be willing to negotiate on that price, but will not, in almost every case, take 40-50% off of that price. To that point, you may be able to get a reasonable deal on a short sale, though it will not be, in most cases, as much of a deal as you may be able to get on an REO (foreclosed property). Also to that point, most short sales will be in better condition than an REO. When you look at the potential repairs a comparable REO needs and the time and expense it can take to do those improvements vs. a short sale being sold at a slight market discount with improvements already made, the investment could even out. There are REO properties that can be picked up for a huge discount, but require massive repairs that a comparable short sale may not require.

3. Short sales are a very difficult process and it takes a qualified person to handle this type of transaction.

With this type of transaction it takes a very experienced agent on the listing side as well as the buying side. Make sure before you move forward on the transaction that the listing agent has ample experience dealing with these types of transactions, or you could be tied up in a contract for months that never goes to settlement. There are several different types of short sale processes and each bank’s process is somewhat different; it takes a professional who has had experience with all of these different types of short sales to help facilitate a successful transaction.

4. In most short sale transactions the properties are sold “as-is” and no repairs will be made.

Although there are some exceptions to this rule, speaking in general, short sales are sold “as-is” and no repairs will be made even if they are found during a home inspection. In most short sale transactions the bank will require both the buyer and the seller to sign an addendum that states the property is being sold “As-is” and no repairs will be made.

These are just a few short pointers for buyers who are looking to purchase a short sale as they are a reality in every market, and if you have the patience you may be able to get the home you are looking for at a discount!

In the greater Ventura County area that serves the cities of Westlake Village, Thousand Oaks, Newbury Park, Agoura Hills, Oak Park and into the surrounding cities of Moorpark, Simi Valley and Camarillo I am finding that more than half of the standing inventory are short sales.  

I personally have listed and sold a huge number of short sales and am seeing this process getting easier in dealing with the banks.   The problems that I am seeing that the banks as well as our local Multiple Listing Services need to address in addition to the Brokers of the real estate companies is the way that listing agents handle the listings on these homes.  

The short sales can be the best situation for the banks to mitigate their loss, however they need to know what is really going on behind the scenes.  

by The KCM Crew on May 7, 2012 ·

It seems that the banks have finally realized that a short sale is a better option than foreclosure for them, the homeowner and the neighborhood. It is for this reason we believe that 2012 will come to be known as the year of the short sale. CNN Money reported on this exact point:

“We believe 2012 could be a record year for short sales,” said Daren Blomquist, vice president at RealtyTrac.

Banks are showing signs of being more open and willing to approve the deals — even if it means accepting less money. The average sales price for a short sale was $174,120 in January, down 4% from December and 10% year-over-year.

Market Watch also addressed the short sale situation recently:

Fitch expects the increase in short sales to continue because of the potential benefits afforded to both lenders and borrowers. Some borrowers may prefer short sales because, though they cannot stay in the property, they often walk away with cash incentives from lenders and healthier credit reports unmarred by foreclosure. For lenders, short sales provide a more efficient and cheaper alternative to the increasingly lengthy and costly foreclosure process.

Why Are the Banks Now Leaning Towards Short Sales?

The simple answer is that the banks lose less money when doing a short sale. The CNN Money article mentioned above explains:

Typically, banks get about 20% less for a foreclosed home. Foreclosure can also take years to unload, during which expenses, like property taxes, insurance and other expenses, mount up.

The Market Watch report breaks it down further:

Short sales…are currently getting completed 20 months after the last payment made on the loan, approximately 10 months less than the average time to foreclose. Shorter timelines reduce lenders’ carrying costs (i.e. accrued loan interest and property taxes, insurance, and maintenance) and eliminate most of the legal expenses associated with foreclosure and liquidation. As a result, loss severities tend to be considerably lower. Historically, for loans with similar attributes, short sales have severities 10%-15% less than REO sales. As the proportion of short sales increases, we expect average loss severities to improve further.

How Many Short Sales Could Be Completed?

JPMorgan has projected that over 500,000 short sales will be done this year. Also, NECN.com recently reported:

RealtyTrac estimates that if the January numbers it found hold up, there would be about 105,000 “pre-foreclosure” sales of homes, most of them short sales, during the first quarter of this year, and at that rate something like 400,000 for the year.

How Long Will Short Sales Be a Major Part of the Market?

The NECN article shows us that short sales are here to stay for some time.

According to the Mortgage Bankers Association, there are nearly 3.5 million homeowners delinquent on their mortgages by at least one month, including 1.5 million who are 90 days or more behind on paying their mortgage. And there are 12.5 million homeowners still who are “underwater,” owing more on their mortgage than their home is worth. That suggests that at the current rates, barring some spectacular economic recovery, it would take years, even decades, for short sales alone to clean up the mortgage mess that remains.

Short sales are here to stay. We must accept this fact and work hard to learn the process and apply it where it makes sense.

For help or more information on Short Sales...contact Teri Pacitto, Broker Associate, REALTOR, CDPE,SFR, CHS      information can be found at The Short Sale Toolbox.com

The abundance of online buyer-centered housing information has re-shaped consumer buying behavior, which in turn has changed the traditional real estate shopping process. The results of NAR’s 2011 Profile of Home Buyers and Sellers confirm this trend, as 88 percent of homebuyers now utilize the Internet in their home search. A quick Google search reveals 708,000 online real estate marketplaces are vying for the attention of real estate buyers and sellers and the vertical market affiliated with the real estate industry.

Because real estate buyers demand the convenience of online shopping, hundreds of companies and thousands of real estate marketplace platforms are available to meet the need. Real estate professionals make the decision to list properties and promote their services on electronic marketplaces due to their increasing use by the cyber-savvy population.

Although today’s real estate purchasers still focus on the all-important location factor, buyers increasingly find their choice of locations via the cyber-world.

Buyers use the Internet to study the market, financing options, neighborhood preferences and available properties—then create a list of targeted homes. More and more, buyers choose to contact a real estate agent only after they have narrowed their options to a short list of targeted homes. And because prospective buyers find their agent via the Internet, electronic marketplaces that showcase local real estate professionals have become a popular technique for agents and brokers to market their services.

To get millions of eyes on the properties you have for sale and generate sales leads, the location of listings and your professional real estate information on online marketplaces has become an important marketing strategy for most agents and brokers. Pricing for use of electronic marketplaces is trending upward and they often offer a complicated menu of options and costs. It was reported from Borrell Associates. 2011 Report Findings that real estate companies spent over $8 billion to place online ads in 2011 and brokers and agents added another $5 billion in spend for online advertising.

The goal of most brokers and agents is to make the best decision about where to place their listings and where their online advertising dollars will have the most impact. They review online real estate marketplaces from the perspective of which site(s) will deliver the most benefit to their business and prospective buyers and sellers. To find the optimal cyber location to market your properties and your services, it’s imperative to understand the options offered on each site and choose a plan that fits your marketing strategy and budget. In comparing cyber locations for your listings and professional information, one size definitely does not fit all!

When reviewing options and costs, consider the advantages a site offers for your targeted market. Do you have the capability of providing local market expertise throughout an entire zip code so that purchase of one or more zip codes makes sense in growing your business? Do you expect more than one property photo to be included for your property? If so, be aware, as you are often required to pay a higher fee to include more than one property photo. If you are knowledgeable on the use of social media options such as Facebook, Twitter and Pinterest, you can avoid the cost of a bundled package that provides social media training and assists in utilizing these marketing advantages. Do you need assistance in creating an engaging website or is your company website appropriately linked and promoted to attract visitors and optimize search engines? Carefully review how each site handles listing agent information. Will your contact information as the listing agent be available on the property posting or hardly visible?

Also consider the benefits online offer management and negotiation can deliver to you and to buyers and sellers. Out of the 708,000 electronic real estate marketplaces only a handful offer the opportunity to place an offer online and fewer still are capable of conducting online negotiations in real time. Online offer capabilities allow real-time confirmation of offer receipt, and buyers enjoy the convenience of communicating in real time with the seller and their agent. Likewise, when a seller has multiple offers to evaluate and time is of the essence, online offer review and negotiation is a major benefit. It provides a level of convenience and the quick and accurate communication buyers have learned to expect from online purchasing, including offer placement and negotiations at any time.

The benefits of incorporating online transactions into residential real estate sales presents a substantial growth opportunity for real estate professionals choosing to leverage electronic marketplaces to accept, review and negotiate offers. With the overwhelming majority of homebuyers using online marketplaces as a strategic tool to find a home to purchase, online real estate transactions are expected to become one of the benefits agents, brokers and buyers demand as well as a competitive advantage in the real estate industry.

Lisa Barrentine is the president of HomeTelos, a First Preston HT Company. BidSelect.com is an offering of HomeTelos

​Teri Pacitto, Broker Associate DRE#00997649 is one of the areas top real estate agents.  Contact Teri and her team and find out more about Buying or Selling your home.   Teri Pacitto Group  

Teri Pacitto, Broker Associate with Aviara Real Estate in Westlake Village, CA is seeing a shortage of homes on the market and more pent up demand due to this lack of inventory.  As we go into the busy time of the year, I do think more homes will come on the market due to schools letting out for the Summer break and that is a time when there are more homes available due to companies relocating employees during this time also.  

It pays to still price your home for the market as Appraisals and the ability for Buyers to obtain loans is critical.  There are still a large number of bank owned homes that will be coming up as well as the increase of short sales that are still looming on the horizon. 

Pending home sales increased in March and are well above a year ago, another signal the housing market is recovering, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February and is 12.8 percent above March 2011 when it was 89.9. The data reflects contracts but not closings.

The index is now at the highest level since April 2010 when it reached 111.3.

Lawrence Yun, NAR chief economist, said 2012 is expected to be a year of recovery for housing. “First quarter sales closings were the highest first quarter sales in five years. The latest contract signing activity suggests the second quarter will be equally good,” he says.

“The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses,” Yun says.

The PHSI in the Northeast slipped 0.8 percent to 78.2 in March but is 21.1 percent above March 2011. In the Midwest the index declined 0.9 percent to 93.3 but is 16.9 percent higher than a year ago. Pending home sales in the South rose 5.9 percent to an index of 114.1 in March and are 10.6 percent above March 2011. In the West the index increased 8.7 percent in March to 108.0 and is 9.0 percent above a year ago.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

NOTE: Existing-home sales for April will be reported May 22, the next Pending Home Sales Index will be released May 30 and first quarter metro area home prices will be released May 9; release times are 10:00 a.m. EDT.

Posted from Realtor.org

"This is sure hitting home in our local real estate market right now.  Home buyers are finding that the supply is so limited that bidding wars are actually driving home prices up..says Teri Pacitto, Broker Associate with Aviara Real Estate in Westlake Village/Thousand Oaks, CA".   Is this the start of a Sellers Market? 

House hunters frustrated with the market’s supply of homes have shifted their search from the streets to underground.

More buyers are targeting homes that haven’t yet hit the market, a trend agents say will grow as inventory shrinks and the mismatch of what’s available and what’s desired continues.

Such back-pocket deals used to involve mostly luxury homes where buyers and sellers wanted to keep the sale hush-hush. But lower-priced houses are becoming a bigger part of the mix because even those are in short supply.

Working behind the scenes gives buyers access to the deep well of homeowners who would like to sell, but don’t think the market is healthy enough to list. Agents say they identify these sellers through referrals, as well as track those who listed their homes but backed out when they couldn’t sell. There are also buyers who work with agents to make unsolicited bids on homes they think fit their needs.

“There is a shadow market out there with a lot of people who want to sell,” says Joe Grunnet, a broker in Minneapolis. Homeowners “just don’t know they can sell in this market. They still think the world is coming to an end.”

Housing experts say there is a robust stash of homes that aren’t on the Multiple Listing Service. CoreLogic says that for every two houses available in the United States in January, there was one in the “shadow,” or not yet on the market. There’s also a deep overhang of prospective sellers who have already decided to rent their homes rather than sell.

Mike Blood, who struggled to find a $150,000 to $200,000 home in the northern suburbs, recently caught a break. He spotted a construction dumpster in front of a house in Blaine, Minn., that he saw during an earlier hunt.

After learning that it was being readied for resale, he and his agent made an offer even though the home was months from being listed.

“I was so frustrated,” says Blood, who expects to close on the home next month. “And felt like I didn’t have anything to lose.”

Blood didn’t disclose the purchase price. He said he looked at about 60 homes, but they needed too much work or he got outbid.

Grunnet, whose firm specializes in sales and rentals of urban condos, said the stock of available units downtown is so tight that he often runs down the list of owners who are renting out their units to see whether they would sell.

During the first four months of this year, he said his brokerage has already sold more off-market properties than in the previous three years combined.

For Alison and Fred Parks, the decision not to list was a way to test the market and avoid having strangers traipsing through their $1 million-plus condo near the Mississippi River in downtown Minneapolis.

“We’re private people, living in a popular neighborhood,” they said.

The Parkses contacted Cindy Froid, a local agent who says that, on average, 30 to 40 percent of her deals come together before a public listing.

The couple gave Froid three months to sell, and it ended up selling within days to someone who already lived in the neighborhood for the full list price of $1.4 million.

Unusually low inventory is forcing Froid to get more creative in her efforts to reach prospective sellers. “It is a function of necessity,” she said. “It’s hunting and gathering. If it’s not online, I’m going to try to find it for you.”

Graham Smith, the agent who helped Blood, said that in some ways these premarket deals are simply a return to the basics.

“It’s good old-fashioned networking, that’s all it is,” he said. “It’s just using the tools available today to make it easier and more efficient to sell houses.”

©2012 the Star Tribune (Minneapolis)
Distributed by MCT Information Services ^[2]

The short sale process could get a lot quicker starting this summer under new rules that will require lenders to respond to offers within a month.

Fannie Mae and Freddie Mac, the nation’s two largest mortgage backers, will implement the guidelines on June 15. The changes require mortgage servicers to make a decision within 30 days of receiving a short sale offer. They also must consider requests for pre-approved short sales within that same timeframe.

If the lender needs more than 30 days, it must give borrowers weekly status updates and a decision within 60 days of the initial application.This extension gives lenders more time to determine the value of the property or to get the approval of a mortgage insurer.

The moves are aimed at streamlining the short sale process, which often takes months to complete.

Such transactions can get so complicated that many prospective buyers won’t even consider making an offer on a short-sale property. And many of those who bid often walk away from the offer because lenders take so long to make a decision.

“Short sales are more complex than routine home sales since they may involve multiple parties and long-distance negotiating,” says Tracy Mooney, a Freddie Mac senior vice president. The new rules “are intended to help make the decision process more transparent and timely.”

Short sales involve homes that are sold at a price that’s lower than the balance owed.

There are many reasons why such deals are a better alternative to foreclosure, including fewer fees and faster transfer of ownership, eliminating all the problems that arise when a house is left vacant after foreclosure.

Because the lender and investors are being asked to take a loss, the process can get lengthy. All parties with a financial interest negotiate who will take what share of the sale proceeds.

So far, efforts to make that process easier have largely been unsuccessful, but the need has never been more critical.

Chris Willette, a short-sale expert in Edina, Minn., says that such rules are a critical step toward a housing recovery.

“We’re going to get rid of the inventory a lot more quickly,” he says. “And once you do that, you get your pricing back.”

But Willette remains skeptical. His primary concern is that the paperwork problems that currently plague the short sale process will only continue. He said getting all the forms together to complete such a transaction can be a major challenge.

Brad German, a Freddie Mac spokesperson in Virginia, says the organization will provide consistent reviews of lenders and will rank them monthly based on that performance. Those rankings are used to determine their compensation or penalties. Fannie and Freddie will continue to work on other avenues for enforcement.

©2012 the Star Tribune (Minneapolis)
Distributed by MCT Information Services 

​If you, or someone you know needs help with a Short Sale, contact us at The Short Sale Toolbox.

Welcome to the Bank of America
Short Sale Professional Locator

Teri Pacitto has been selected to be part of the new Bank of America short sale professional locator at  This public website helps homeowners connect with local real estate professionals who have previously transacted successful short sales with Bank of America using Equator.

​If you, or someone you know needs more information about how to obtain information or assistance with a Short Sale Teri Pacitto, Broker Associate, CDPE, SFR, CHS can help.  

Contact us: 

Teri Pacitto, Broker Associate DRE#00997649 

​805.444.7013 mobile

Email us or go to the Short Sale Toolbox for on line information

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The number of U.S. home short salessurpassed foreclosure deals for the first time as banks became more agreeable to selling houses for less than the amount owed on their mortgages, according to Lender Processing Services Inc. (LPS)

Short sales accounted for 23.9 percent of home purchases in January, the most recent month available, compared with 19.7 percent for sales of foreclosed homes, data compiled by the Jacksonville, Florida-based company show. A year earlier, 16.3 percent of transactions were short sales and 24.9 percent involved foreclosures.

 

Mark Elias/Bloomberg

April 17 (Bloomberg) -- U.S. housing starts in March dropped 5.8 percent to a 654,000 annual rate, less than the lowest estimate of economists surveyed by Bloomberg News and the least since October, Commerce Department figures showed today in Washington. Michael McKee and Betty Liu report on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

“It’s a fairly recent phenomenon that short sales have been increasing,” Jonathon Weiner, a vice president in the applied analytics division of Lender Processing Services, said in a telephone interview. “Short sales should be the dominant way of disposing of assets” in distress, he said.

Lenders are catching up to short sales after being slow to provide the staffing and incentives necessary to complete the deals, Weiner said. The transactions typically fetch a higher price for banks than sales of homes that have gone through foreclosure. In January, foreclosed homes sold for an average of 29 percent less than comparable non-distressed properties, compared with a 23 percent discount for short sales, according to Lender Processing Services. The gap has narrowed as short sales become more common, Weiner said.

The growing percentage of short sales, which don’t require going through the drawn-out foreclosure process, is a sign that the U.S. is making progress in working through its inventory of distressed properties, Weiner said. The increase in short sales also may help values find a floor quicker.

“Our baseline scenario is that home prices will hit a bottom at the end of this year,” he said.

Cash Incentives

Banks including Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM)last year began giving cash inducements as high as $35,000 to selected homeowners who agreed to a short sale as a way of speeding up the process.

Bank of America Corp. paid $19.9 million in the first two months of this year for 22,534 homeowners to relocate after short sales and deeds in lieu of foreclosure, when borrowers agree to return the property deed in exchange for debt forgiveness, the Charlotte, North Carolina-based company said March 16. Its short sales rose 31 percent in January and February from a year earlier.

Banks have struggled to reduce losses from delinquent mortgages. Almost 4.4 percent of homes with loans had received a notice of foreclosure sale at the end of 2011, the 11th consecutive quarter the rate has been higher than 4 percent, according to the Mortgage Bankers Association.

Falling Foreclosures

Foreclosure filings, including notices of defaults and bank repossessions, fell 16 percent in the first quarter from a year earlier after lenders under legal scrutiny slowed actions against delinquent homeowners, RealtyTrac Inc. reported April 12.

Lender Processing Services, a 2008 spinoff from title-insurance company Fidelity National Financial Inc. (FNF), counts short sales by tallying mortgage and property transfer documents filed with county recorders, Weiner said.

Other reports haven’t shown the same magnitude of short-sale growth. The National Association of Realtors reported that 13 percent of transactions were short sales and 22 percent were foreclosures in January. In February, short sales increased to 14 percent and foreclosure-related transactions declined to 20 percent, the group said March 21.

Showing an ‘Uptick’

The Realtors collect their data from transactions on the Multiple Listing Service, a database of homes on the market, and a survey of about 3,000 members, said Walter Molony, a spokesman for the association.

“The February data is showing a bit of an uptick,” he said in an e-mail from Washington. “We’re hearing the process is going a bit more smoothly now, so that comes as no surprise.”

The U.S. Department of Housing and Urban Development reported a preliminary 19,600 short sales in January, compared with the Lender Processing Services tally of 48,721. An April 6 HUD report showed that the number of short sales rose 4.3 percent from a year earlier as the number of real estate owned, or REO, sales -- another name for foreclosure sales -- fell 39 percent.

Before agreeing to accept a loss on a short sale, lenders usually require homeowners to show evidence of hardship, such as inability to afford their mortgage payments or the need to relocate for a job, said Weiner of Lender Processing Services.

California, Arizona

Short sales outnumbered foreclosures in states with some of the largest shares of homes facing foreclosure, such as Arizona, California, Florida, Nevada and New Jersey, Lender Processing Services reported.

In New Jersey, short sales have exceeded REO deals every month since June 2010. In January, short sales accounted for more than 15 percent of the 3,033 New Jersey homes sold, compared with 3.9 percent for foreclosures. It took 966 days for banks to repossess a home in New Jersey, second only to New York, according to RealtyTrac. Both states require judicial hearings for foreclosure approval.

In New York, where it takes 1,056 days to repossess a home, 7.9 percent of purchases in January were short sales while 2.3 percent involved bank-owned properties.

“In general, markets where larger incentives are provided usually have extended foreclosure timelines, such as Florida,”Tom Goyda, a spokesman for Wells Fargo, said in an e-mail from Ellisville, Missouri. Wells Fargo, which doesn’t disclose its short-sale totals, offers homeowners as much as $20,000 to relocate, he said.

For more information about Short Sales Visit Us  The Short Sale Toolbox

We have often advised buyers to look at the COST of purchasing a house more than the PRICE of the home. Obviously, price is part of the cost equation. The other piece, assuming you are not an all cash buyer, is the mortgage rate. The mortgage rate to finance a purchase can have a dramatic impact on the overall cost. Recently, there are more people talking about the possibility that mortgage rates could begin to increase.

HSH.com studies trends in mortgage rates. They explain:

“A better economic climate almost always brings higher rates, and a lessening of the troubles in Europe from massive central bank assistance adds to the movement of money from safe havens to more risky assets, driving rates upward."

Dan Green of The Daily Market Reports recently stated.

“The Fed sees growth coming faster than originally expected. There’s suddenly less chance that the Federal Reserve will intervene to help keep mortgage rates low. Absent Fed intervention, mortgage rates are apt to rise and Wall Street is now betting that the Fed has bowed out. With no stimulus, mortgage rates rise.

Lawrence Yun, chief economist for the National Association of Realtors, recently wrote:

“Mortgage rates will be starting to rise. From the 3.9 to 4.0 percent average rate in the past five months on a 30-year fixed mortgage, the new rates will soon be in the range of 4.3 to 4.6 percent”

Yun explains his logic here..

We do not attempt to predict future interest rates. We leave that up to the experts in the field. However, we want our readers to understand the potential impact on the cost of purchasing a home if they do rise. Here is a simple table that shows, even if the PRICE of a home softens, the COST of a home could increase.

Bottom Line

Many purchasers think they should wait until they are sure that prices have hit bottom. Deciding whether or not to wait should be determined by where the COST of a home is headed.

If you or someone you know are considering Buying a Home we can help.  

Visit The Teri Pacitto Group and see how we can help

Short Sale Listing Agents...If you can't answer these basic questions, refer your client to an agent who can. 

Home Owners...Hire a Real Estate Professional who has experience with Short Sales...you might only have one chance to get it right.  All real estate agents do not handle short sales.   We do...if you need assistance with your Short Sale Contact Us Here

By Bernice Ross, Monday, April 16, 2012.

Inman News®

How well are you representing your clients? Today's column has nine questions that at least one investor has found cannot be answered by 95 percent of the agents in his market. Are you part of the 5 percent who can answer these?

I recently interviewed Barry Cunningham who has a successful investment business purchasing and selling short sales. Cunningham is not a licensee and typically uses an agent in his transactions. What he has experienced is nothing less than shocking. Here are the questions that most of the agents in Cunningham's market are unable to answer:

1. Is the property still available?
There are four answers to this question. The property could be actively listed, sold, pended or expired. When Cunningham asks this question, many of the agents can't give him a simple answer. If the agent doesn't say that the property has sold, Cunningham responds by saying, "So we still have time to put in an offer." At this point, many agents start hemming and hawing. Again, the property is either available or it's not.

2. How many mortgages are there on the property?
While the sellers aren't always forthcoming about this issue, there are numerous ways to check this either through the public records, the title company, or by ordering a preliminary title report. If you don't know the number and the amount of the mortgages on the property, how do you plan on closing the transaction when the seller owes more than what the buyer is offering? Determining this upfront not only protects the principals in the transaction, but it can literally save you months of work. 

3. Are there any liens or judgments?
Sellers may be embarrassed to tell you that they haven't paid their homeowner dues or that there is an IRS tax lien against them. Again, it's important to see the number and the type of liens on the property.

For example, IRS tax liens are extraordinarily difficult to close in a short time period. City and state liens are often easier to resolve provided there is enough cash in the deal to pay them off. The question is: Do you want to list or sell a property that will require this level of work?

4. Are there any municipal or city fines on the property?
While municipal and city fines are often wiped out when there is a foreclosure, in Florida, for example, this is not the case. The fines transfer to the new owner of the property.

Cunningham cited one example where there was a $1,000-a-day fine (which can be for something such as a swimming pool infested with mosquitoes). The listing agent provided comparable sales information to the bank that owned the property. The comps were based upon other properties in the area that did not have this issue. Clearly, the fine greatly diminished what the property was worth. Furthermore, once the information was revealed to the listing agent, in most states that agent has an affirmative duty to disclose that information, not only to the bank selling the property, but to any future buyers as well.

5. Are the improvements permitted?
Your listing says that there is a new roof or kitchen. Where are the permits? Depending where you are in the country, some areas are relatively lax when it comes to obtaining permits. In places like Los Angeles, however, you have to pull a permit just to replace a dishwasher or a water heater.

In fact, there was a case in West L.A. where an owner did a major remodel on a $1 million home that included adding a substantial amount of square footage. The seller didn't pull permits. The city demanded that the improvements be removed.

Again, when you take a listing and the sellers say they have done work to the house, determine the nature of the work and whether a permit is required. If a permit is required and the sellers didn't obtain one, it's probably smart to pass on the listing, as you could be buying a lawsuit.

6. Who paid what taxes?
If there have been improvements and the sellers didn't pull permits, their upgrades will probably cause their property to be reassessed for property tax purposes. This means that the sellers may owe additional property taxes, even after the property has closed.

In terms of your obligation on a short sale or other distressed property sale, you need to know whether the homeowner paid the taxes or the bank did. If the bank paid the taxes, this means the payoff will be higher and it also must be disclosed on the HUD statement.

7. Where is that sewer hookup anyway?
Cunningham had a situation where a bank was taking back a property. When the city installed a sewer, the sellers never paid the sewer hookup fee. Instead, they were pulling water out of a pond. The bank didn't believe it until Cunningham shot a video showing this was the case.

8. The comparables are all at $72,000, $70,000 and $75,000, so why are you listed at $95,000?
There's only one answer to this question: The listing agent wasn't strong enough to persuade the seller to list the property at market value.

9. Did you tell the seller about the offer we submitted?
This is probably the most frustrating issue for competent agents and serious buyers. For whatever reason, some listing agents do not submit the offers to their sellers, or worse yet, don't even call back the agent who has the offer.

Because Cunningham is not licensed, he often sends his offers directly to the owners. The comments he hears are, "I haven't seen my agent in a month!" or "You mean I can sell my house on a short sale and avoid going through foreclosure?"

In Cunningham's area, there are about 1,600 sales per month. There are 27,000 agents. It's clear there's not enough business for all of them and that most simply don't have the experience to navigate the difficult waters in today's market.

If you aren't able to answer the basic questions outlined in this column, then there is no better time than now to start asking the questions you need to provide your clients with the best possible representation. If you are unable or unwilling to address these issues, refer the client to an agent who will get the job done. It's much better to earn a referral fee than to get zero when the transaction doesn't close. 

Contact Us Today -   Short Sale Listing Agent

Short sales have become the only way out for some sellers who owe more on their mortgage than their home is worth. For struggling borrowers, it's a chance to avoid foreclosure.

While helpful, short sales can be stressful and time-consuming, and they may lead to harsh consequences if not done properly.

Many sellers think the biggest challenge in a short sale is persuading the lender to allow the property to sell for less than the mortgage balance. That's only the first step.

Here are five tips you must know when short selling your home.

Choose an agent experienced in short sales

If you needed heart surgery, would you put your life in the hands of a surgeon whose first surgery would be on you? Probably not.

The same applies to your financial life. Hire a real-estate agent who is experienced in short sales, says Daniel Gomez, an agent and board member at Neighborhood Housing Services of the Inland Empire in San Bernardino, Calif.

Many agents claim to be short-sale specialists in their ads. But some have closed only a handful of short-sale deals, Gomez says. Many have taken short-sale courses and are certified in selling distressed properties. That's not enough; certifications help, but nothing counts more than experience, Gomez says.

"Interview agents, ask how many short sales they've closed and ask to talk to some of their clients," he says.

A short sale is a time-consuming transaction and can take months to close. You want an agent who will stay on top of the game until the deal is closed.

Understand potential consequences

Underwater sellers are so anxious to get rid of their mortgage payments that they often don't think about what comes after the sale. Then, months or even years later, they receive a collection letter for the difference between what the house sold for and what they owed on the mortgage.

Laws vary by state, but many states allow lenders to go after that balance once a short sale or foreclosure is completed. That's why it's crucial for borrowers to understand whether the lender agrees to waive the deficiency, or the balance left on the loan after the sale, says Howard Ullman, an attorney at Family Counseling Law Firm in Deerfield Beach, Fla.

"This needs to be discussed verbally and represented in documents," he says. "It shouldn't come as a surprise."

One way to avoid a deficiency judgment is to do the short sale through the Home Affordable Foreclosure Alternatives program. Lenders who approve short sales through this federal program must release the borrower from a potential deficiency judgment.

Lenders are not obligated to approve HAFA short sales, however. They may choose to do the short sale based on their own rules and guidelines that loan investors set. In that case, it's up to the lender to decide whether it will pursue the deficiency against the borrower.

You can negotiate your way out of deficiency

When negotiating a short sale, many lenders don't offer to release you of liability on the remaining loan balance— at least not for free. But you can ask to negotiate a waiver.

"I've never had a lender refuse to negotiate a settlement" to waive the borrower from deficiency, says Patty Da Silva, owner of Green Realty Properties in Davie, Fla., and a real-estate agent certified in distressed-property assets.

Some lenders may ask you to sign a promissory note for at least a small portion of the balance, usually cents on the dollar, or they may ask for a lump sum. Sellers often are outraged when they receive this settlement offer, Da Silva says.

"The sellers sometimes forget they actually borrowed that money," she says. In many cases, it is usually worth paying upfront to avoid future headaches.

"There is a price attached to the waiver of deficiency, but most of them are very tiny," she says.

Talk to a lawyer

Real-estate agents who are experienced in short sales can coordinate the transaction with the bank and tell you what to expect in the process. But remember: They are not lawyers.

"Most of the people who do short sales are doing it through the Realtors or people who claim to be short-sales specialists," Ullman says. "But there are many issues that borrowers need to discuss that cannot be discussed with a short-sale specialist."

Those issues range from potential tax implications to protecting other assets the borrower may own if the lender tries to collect the loan balance later.

If you don't understand the contract you are signing or the potential consequences of a short sale, consult a lawyer.

Keep up with HOA payments

If you are thinking about short selling your home, don't stop paying your homeowners-association dues. The fees can snowball and kill the sale, even if the buyer is willing to pay for the delinquent dues at closing.

"In short sales, there are a few problems that money cannot fix," Da Silva says. In a regular sale or even with foreclosures, the seller or the bank pays any past dues owed to the HOA at closing so the buyer gets clear title of the property. But in a short sale, the seller's lender wants to get every penny out of the transaction, Da Silva says.

She says it is so crucial for the seller to stay current on HOA and condo dues that she refuses to represent a seller who won't keep up with payments.

"Plus, you want to make sure the association is able to maintain the common areas so your house is salable," she says. "A short-sale property needs to be maintained. The power needs to be on; the grass needs to be cut. You don't want your home to look like a foreclosure."

Teri Pacitto, Broker is experienced in handling short sales.  If you or someone you know needs help, please contact us.  The Short Sale Toolbox

Some big banks are offering struggling homeowners incentives -- sometimes $30,000 or more -- to sell their homes for less than they owe.

This post comes from Marilyn Lewis of MSN Money.

Banks appear to be waking up and making efforts to rid themselves of troubled mortgages. And what's good for banks is also suddenly looking good for homeowners.

Banks are encouraging delinquent homeowners to sell their homes for less than they owe, letting them walk away from the debt. What's more, in some cases banks are offering delinquent homeowners cash -- typically $15,000 to $35,000 -- to do a short sale. It's not clear how widespread the practice is.

Banks are nudging potential sellers by preapproving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing large cash incentives, Bill Fricke, a senior credit officer for Moody's Investors Service in New York, tells Bloomberg.

Riverhead, N.Y., real-estate agent Kris Pilles said that in his work approaching delinquent homeowners to sell on behalf of banks, mortgage servicers and hedge funds, he saw a homeowner offered $92,500. In exchange, owners are expected to keep up the homes and yards while the properties are for sale.

Foreclosure is a big expense for banks. Consumers have long wondered why banks shun alternatives like short sales or forgiving a portion of the mortgage debt. Now, some banks -- in some cities for some homeowners -- appear to be coming around.

Bloomberg explains:

Losses for lenders are about 15% lower on the sales than on foreclosures, which can take years to complete while taxes and legal, maintenance and other costs accumulate, according to Moody's. The (short sale) deals accounted for 33% of financially distressed transactions in November, up from 24% a year earlier, said CoreLogic Inc., a Santa Ana, Calif.-based real-estate information company.

These cash payouts aren't common. Not yet, anyway. They may be just a tactic in isolated situations where banks believe they have few other options to extract a borrower from a home.

Still, the tales make compelling reading. Bloomberg tells of Karen Farley, 65, who was a year behind on her mortgage payments when her bank let her -- no, urged her to -- sell her home in San Marcos, Calif., for $592,000, about $200,000 less than her debt on the property.

"You could sell your home, owe nothing more on your mortgage and get $30,000," JPMorgan Chase wrote Farley in an Aug. 17 letter quoted by Bloomberg.

In addition to the $30,000 from Chase, Farley was also in line for a $3,000 federal incentive. HAFA, the federal Home Affordable Foreclosure Alternatives program, pays a "borrower relocation incentive payment" of $3,000 to qualifying homeowners in a short sale.

Banks offering cash

Several banks are using cash incentives.

CNNMoney tells of Angelique Pierce, Rancho Cordova, Calif., whom Chase Mortgage offered $25,000 to sell her home:

After Pierce became disabled a few years ago and had to stop working . . . she fell behind on payments on both her first and second mortgages, valued at $250,000 and $50,000, respectively.

Now, she's trying to sell her three-bedroom ranch for just $95,000 -- almost half of the $179,000 she paid for the place in late 2002.

Pierce found a buyer, but the holder of a second lien on the home wanted a share of the bank's incentive, CNN says. Chase "balked" and the sale fell through.

Bloomberg spoke with 12 real-estate agents in Arizona, Florida, New York, California and Washington and learned that JPMorgan Chase "generally" pays incentives of $10,000 to $35,000 at settlement for short sales.

Also:

• Bank of America ran a pilot program in Florida last autumn, according to CNNMoney. It paid $10,000 to $20,000 to certain homeowners to sell their homes. B of A may revive and expand the program.
• Wells Fargo offers homeowners $10,000 to $20,000 for short sales or deeds in lieu (in which the bank takes the home's title.) But the incentives are only in some states.
• Citigroup offers qualified borrowers about $3,000, a spokesman told CNNMoney. "Investor programs have different guidelines for relocation incentives, which we honor," the representative said by email.

As nice as a five-figure pile of cash sounds, it's not always the best strategy for a homeowner.

Explains Jeff Gelles in his Inquiring Consumer column in The Philadelphia Inquirer: "Homeowners who want to stay in their homes and can afford payments would be much better off with direct principal write-downs, of course, rather than the after-the-fact variety entailed in a short sale."

Switch in tactics

Banks aren't discussing their motives. But it's fun to speculate about why they're suddenly pulling out their checkbooks:

• A relatively quick short sale can help 

After all, as Bloomberg News points out (quoting RealtyTrac): "The U.S. housing market must digest more than 14 million distressed properties -- 1.5 million homes in the foreclosure process, 3.5 million with delinquent mortgages and at least 10 million 'underwater' properties, whose owners owe more than the homes are worth -- before the foreclosure crisis will subside."

Teri Pacitto says "I have recently had clients receive up to to $30,000 for Short Selling their homes".  Homeowners need to open their mail from their lenders as this is where the offers come from.  I have talked to many homeowners who are in distress who have a stack of unopened mail and are surprised to find that they have had offers of several thousand dollars sitting in their unopened mail.  

If you or someone you know is in jeopardy of loosing their home, contact us to see what your options are.   Teri Pacitto, CDPE is experienced in all aspects of short sales and can help.  The Short Sale Toolbox

This article caught my attention as I am seeing this happening in Thousand Oaks, Westlake Village areas.   How can we get the attention of banks to let them know specifics?   They are loosing a lot of money in the short sale transaction.

In 'flopping,' a home is purchased by insiders at a steep discount, then immediately sold for a big profit.

By Melinda Fulmer of MSN Real Estate

Real-estate agent Lynne Wright thought she had found the perfect home for her clients. The quiet house on a cul-de-sac in one of the most prestigious gated communities in Bakersfield, Calif., was offered in a short sale for $40,000 less than similar homes on the market.

Wright and the couple moved quickly and made an offer higher than the asking price, but were outmaneuvered by a husband-and-wife real-estate team in Wright's brokerage office who wanted to buy it for their own use. She didn't think much of it, until she saw that the property sold for $40,000 less than the $342,000 her clients had offered.

When she asked the listing agent why, she was told to "leave it alone."

Wright says she is still not sure if the servicer or owner of the property ever saw her clients' much higher offer. All she knows is that two agents picked up a luxury property for $80,000 less than market value, the banks took a big loss and the listing agent got both sides of the commission, representing his colleagues.

"It's just robbery," she says. "And I don't know how to stop the robbery."

Apparently the nation's mortgage servicers don't, either. Suspicious real-estate transactions have surged in the past two years, analysts say, along with the number of short sales, in which a house is sold for less than the amount of its remaining mortgage.

Short sales are supposed to be "arms length" transactions without any relationship or collusion among the parties, all of whom must sign affidavits to that effect. But the parties often are connected.

Many times, this fraud is committed through limited-liability companies to make it hard for servicers to see who is buying the property, says Robert Hagberg, associate director of mortgage-fraud investigations for Freddie Mac.

In some cases, this type of mortgage fraud involves buyers scooping up distressed properties for a portion of their value, either for themselves or to give back to a friend or relative.

The rest involve "flopping," where an investor – with the help of an agent or middleman – persuades the bank to agree to a much steeper discount than it should, and immediately resells the property to another buyer for a significant profit without having made any improvements. The FBI says it has found numerous instances in which organized-crime groups were involved in short-sale fraud.

According to a recent study by CoreLogic, short sales that were resold the same day averaged a 34% gain (or $54,947) between sale prices.

One in every 52 short-sale transactions in the first half of last year appeared to be one of these "suspicious" resales, CoreLogic said. This year, it expects lenders, servicers and investors to incur more than $375 million in unnecessary losses from these shady deals, as the number of short sales surges an additional 25%.

"Short-sale fraud and other servicing-related fraud is definitely the fraud du jour and our greatest area of focus at the moment," Hagberg says. In 2011, more than 50% of Freddie Mac's investigations were related to short sales.

Who are the perpetrators?
For the most part, these deals involve insiders, from the underwater borrowers themselves to investors, listing agents, brokers providing valuations and so-called "facilitators," or middlemen negotiating with the banks and buyers trying to flip the properties.

Banks, with a huge backlog of distressed properties, are under pressure to do a lot of transactions and to do them as quickly as possible, says Ann Fulmer (no relation to the reporter), vice president of industry relations for Interthinx, a company that helps lenders reduce their fraud risk.

Knowing this, these insiders are able to work the system and push through bogus valuations to set the price of the sale or fend off higher offers.

Fulmer has seen listing agents involved in these scams post properties in multiple-listing services in the wrong city to avoid competition. Some post pictures of a completely different, junk-filled property. Or they stipulate that only people from the real-estate office will take offers on the property, so they can control the transaction.

In Wright's case, which was reported to the state but has not been prosecuted, real-estate agents controlled every aspect of the deal. An agent in her office was the distressed borrower; the listing agent who represented the property and buyer sat just desks away, as did the real-estate team who eventually wound up with their own luxury property for a song.

"The thing that really bothered me was the lack of ethics," Wright says. "Sure I can find my clients another house; what I couldn't explain to them very well was how (something like this) can happen."

Gary Crabtree, an appraiser in the area, said he got calls from several agents whose offers were rebuffed for the rock-bottom inside bid.

"It set an all-time low for that neighborhood," he says.

If you or someone you know is in jeopardy of loosing their home contact us The Short Sale Toolbox

A short sale, in most instances, is a complex transaction. However, there are two very simplistic characteristics that every qualified short sale possesses:

1. The house must be valued at less than the homeowner owes on their mortgage debt obligation. In other words, the home must be “underwater”.
2. The homeowner must have a qualified hardship.

It is the second characteristic that we would like to touch upon in this blog post.

One question that we answer frequently is “My house is underwater. Is this an acceptable hardship?” Unfortunately, the answer is always “No.”

The simple fact that a homeowners mortgage obligation is in excess of their house value is not an acceptable hardship. A Short Selling bank will entertain a short sale when and only when there is a hardship that will, now or in the future, affect the borrower’s ability to pay their mortgage.

The following is a list of acceptable hardships that may be used when submitting a short sale package:

• Mortgage Rate Adjustments
• Loss of Employment or Reduction in Wages
• Business Failure
• Medical Hardship
• Death in the Family
• Divorce/Separation
• Military Service
• Overwhelming Debt Obligations
• Job Relocation

As always, should you have questions as to the acceptability of a hardship scenario, you should seek advice from an expert that has been trained in the short sale field.   By Christopher Reale, KCM Blog

If you or someone you know needs help with a Short Sale - Go to   The Short Sale Toolbox

Short sale success does not stop at educating the seller as to their loss of mitigation options and then successfully negotiating with the seller’s bank to accept a short payoff. Today’s complex real estate market warrants more. Having negotiated over 1000 successful short sales, we have found one aspect of the short sale process that needs serious attention: Educating the buyer regarding the proper short sale procedures.

Educating the buyer and setting the correct expectations is imperative to a successful short sale transaction. Nothing is more discouraging than successfully negotiating a short sale only to have the buyers walk from or not be able to close the transaction. The following are some precautionary and educational items to consider which would avoid such buyer fallout.

Patience is a Virtue

Not every buyer is a short sale buyer. However, one important characteristic a short sale buyer must have is patience. Setting the proper expectations regarding the time frame of a short sale plays a key role in bringing the short sale to the closing table. If a buyer is not willing to stay in the transaction for at least 90 days, they are not a short sale buyer. Of course we cannot speak for every circumstance. But, in most cases, the short sale process takes 60-90 days to complete. For their patience, the buyer will likely earn instant equity. The average short sale, according to the Realty Trac report dated 5/21/11, sells for 79 percent of market value. To that end, a buyer will earn “patience equity” (a term coined by Steve Harney).

Work with a Lender that Understands the Short Sale Process

The pre-approval process should be the same whether the buyer is being pre- approved to buy a short sale or pre-approved to buy a non-distressed property. This seems like simple advice doesn’t it? However, from our vast experience negotiating short sales, we have found that 35% of successfully negotiated short sales do not reach the closing table because the buyers financing falls through. We must educate buyers to work with the proper lender who will not only walk them through the mortgage process, but also understands the short sale process. Too many mortgage applications start at the time of short sale approval. Some short sale approvals expire in 10- 15 days from date of issue. In many cases, that is not enough time for a lender to underwrite the file, order title, order appraisal and fund the loan.

A proper pre-approved short sale buyer would be one who is brought through a complete underwriting analysis prior to the short sale offer. This includes full income analysis, full asset analysis and full credit analysis. The ideal lender is one who completes the underwriting procedure and has a credit decision pending clear title and appraisal. The lender should also help in keeping the buyer engaged throughout the process. In a lengthy short sale negotiation, the lender should be proactive in keeping the loan file up to date with recent paystubs, asset documentation etc. This will ensure the transaction closes on time and without extensions.

Complete Inspections Prior to the Short Sale Approval

This is a confrontational subject but each buyer should be educated to understand that in most cases any major deficiency regarding the condition of the property will not be cured prior to closing. However, in many instances, if the deficiencies are known prior to the start of the short sale negotiation, the short selling bank will be more willing to except a sale price that is discounted deeper to the current market value. It is a challenging task to go back to the bank and ask for a lower sales price when a home inspection that was done after short sale approval showed major deficiencies.

In addition to the home inspection, the lender appraisal can be done prior to the short sale approval. In most circumstances where the short selling bank’s broker price opinion shows a property value that is much higher than the buyer offer, the lender appraisal can be used to negotiate the value.

We should educate buyers as to the pros and cons of completing the inspections prior to short sale approval. We understand there is a monetary commitment that would have to be made. Having said that, having the inspections done can save allot of aggravation to the seller and buyer later in the process.

In closing, the above are just a few items to consider when educating the buyer regarding the proper short sale procedures. If we remember to keep the buyer engaged and walk them through the process every step of the way, we will ensure the buyer earns their “patience equity” and the short sale transaction closes.

by Christopher Reale, Director of Short Sale Operations at Lepizzera and Laprocina Title and Escrow Services

For information about short sales in Thousand Oaks, Westlake Village, Agoura Hills, Newbury Park, Moorpark and Simi Valley go to  The Short Sale Toolbox   

The forecast for the rest of 2012 shows mild increases building up to a stronger 1.2 percent by year end, according to the Home Data Index™ (HDI) Market Report, recently released by Clear Capital®, with data through March 2012. The HDI Market Report uses a broad array of public and proprietary data sources providing the most timely and relevant analysis available. Methodology details are on page eight of this report.

Report highlights shows that national home values dropped slightly in the rolling quarter-over-quarter analysis. Additionally, tegions posted mild quarterly gains, except the struggling Midwest, which continued its downward slide.

“With the exception of the Midwest, positive growth in rolling quarter-over-quarter prices is an encouraging sign that markets are rebounding from the winter slow down earlier than usual,” says Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “Even with the relatively modest declines seen over the last few months, markets have continued to show signs of bottoming out. The projections we made at the beginning of the year are playing out and we expect to see the nation gain just over 1 percent through the year’s end.

“We are continuing to see, overall short term home value strength against the rising REO saturation.” Villacorta adds. “This is an indication of market stability, and bodes well for the continued growth we’re expecting over the rest of the year.”

Quarter-Over-Quarter Results: Is No News Good News?

At the national level, home prices fell a modest-0.2 percent over the quarter. The West, South and Northeast posted gains of less than 1 percent, but the Midwest lost a significant -2.4 percent. REO saturation, which traditionally pushes down prices, continued to climb in all regions.

The nation held fast over the most recent quarter, and for the fifth time in six months, saw price changes of less than 1 percent. While the US lost -0.2 percent quarter-over-quarter, this decline is milder than last month’s decline of -0.6 percent. This positive trend may be attributed to the beginning of spring after a very mild winter, resulting in the start of an early buying season.

In looking at the quarter-over-quarter performance through March, the typically weak Western region squeezed out a minor 0.1 percent gain in prices over the quarter, which is a healthy improvement of over last month’s losses of -0.4 percent, and shows long awaited upward momentum in the region that posted losses over the past five months. The embattled Midwest region, hit hard over the past three months, continued sliding this month losing -2.4 percent, and was the only region to post losses in the quarter or mark any quarterly price movement more than 2 percent. This result shows how the stability seen by the rest of the nation has yet to embrace the region.

The stable Northeast held true to form and turned in a modest 0.3 percent increase in prices, which was a 0.4 percentage point improvement over the quarterly loss of -0.1 percent posted last month.

The South turned in the strongest short term gains across the nation, with prices climbing up by 0.6 percent, due in part to impressive results in Florida, Texas, and Virginia, all of which are well represented in the best performing MSAs listed later in the report. This gain was a healthy 0.8 percentage point improvement over the loss of -0.2 percent posted last month.

Year-over-Year Prices: Nation and Regions Catching Up to Short Term Gains

The year-over-year analysis found the nation lost -1.4 percent over the period, which is slightly better than February’s year-over-year results of -1.9 percent, indicating a positive trend in yearly numbers.

The yearly numbers across all regions show more significant losses than the quarter-over-quarter numbers, which indicates the nation has possibly hit the bottom of a pricing “valley,” with long term prices starting to reflecting the short term strength. This effect could be in play as all of the regions’ yearly numbers, while still weak, are better than February’s results. The consistent theme for the yearly numbers is that all regions are showing losses, with Northeast posting a small gain. This is similar to the condition seen over the past six months.

Interesting Trends in REO Saturation

For the second month in a row there have been increases in REO saturation for the nation and the regions, helping to confirm speculation the Attorneys General settlement has empowered the affected servicers to become more aggressive in moving their REO backlog onto the housing market.

In March, the national REO rate went up 1.2 points since last month and 1.8 points over the past quarter to hit 27 percent, pointing to an acceleration of REO sales. The Midwest contributed the most to the increase, jumping 3.8 points over the quarter to 34.3 percent, with the other regions all seeing softer increases.

Of particular interest this month is how these changes in REO saturation are affecting prices. In the past, there has been a consistent inverse relationship between changes in REO saturation and prices, but not this month.

While the nation and all regions saw increases in REO saturation over the most recent quarter, changes in prices over the same period were positive for the West, Northeast, and South, describing an unexpected direct relationship. The US and Midwest’s changes in prices over the same period were downward, describing the expected inverse relationship.

The geographies with direct relationships show a pricing resilience to REO saturation that has not been seen in previous HDI analysis. It could be powered by improvement in the jobs numbers recently, rapidly increasing investor activity in certain regions, and the general increase in consumer confidence.

Forecast for Remainder of 2012

The forecast models predict the nation’s prices to increase modestly over the next three months and increase to 1.2 percent growth by the end of the year. This shows the valley shape with current prices at the bottom and an upward trend from now (March) through December of 2012.

The strongest of the regions throughout much of 2011, the Northeast, is expected to gain a modest 0.3 percent over the next three months, but pick up momentum and grow prices by 1.3 percent to wrap up the year. The South is expected to perform the strongest in the short term, growing 0.5 percent over the next three months, and end the year with 1.6 percent growth, exceeding the national forecast by 0.4 percentage points.

The forecast shows the Western Region could be turning a corner. The three month numbers show the region gaining 0.2 percent, and pushing that to a positive 1 percent to end the year. The Midwest is expected to drop -0.6 percent over the next three months, but move into positive territory with a 0.7 percent gain by December.

By Clear Capital