Short Sale Myths- Top 3 Short Short Sale Buying Myths- Low Ball Offers

There are a lot of myths about buying and selling short sales. Last week we focused on the myth of the earnest money deposits accompanying short sale offers. ( link to article)

The second myth is the low ball offer. 

Whether you are watching late night TV informercials where the guy is selling you his program on how to buy real estate for fifty cents on the dollar or you are listening to your uncle who claims he just bought a short sale dirt cheep- take it all with a grain of salt. Listen to your experienced real estate agent who is short sale specialist.

When you are in the market to buy short sales choose your real estate agent wisely. Make sure that your agent has a proven track record of successfully closing short sale transactions. Your agent should not be an order taker but rather an expert on your local market conditions and values.

Insisting on making low ball offers on short sales is most often wasting your time. In most areas of the country the market is contracting. We get multiple offers on our short sale listings. The most recent short sale listing we put on the market had mulitple offers on it within 7 hours. This is not an anomoly. It is most common place.

Are you making offers just for the sake of making offers or do you want to make an offer that is going to get you the property? That is the big question. Why are you making offers on short sales? 

The strategy of offering a low ball price for the home of your dreams is the fastest way to kill your dream.

When we get multiple offers on our short sale listings the sellers are looking at what is the highest and best offer first, then they look at which offer is most likely going to be able to close. There are many factors to look at. But for now, we will look at price. The seller is most often going to take the highest priced offer.

Many people are under the erroneous assumption that the seller does not care about the offer because he or she is doing a short sale.  The reality is that sellers are going to be affected by the price.

The seller’s lender is going to get a BPO ( brokers price opinion) or appraisal on the property before they approve a short sale. They will base the value of the property on that BPO or appraisal. The counter offer will be a fair market value. In the case of Fannie Mae being the investor on the note you may even see a higher than market value counter offer coming back to you.

If the seller is in the foreclosure process time is of the essence. They are playing a game or racing the court house clock and hoping to close on their short sale before the date of the final judgment. It would not be wise for the seller to accept an offer that is not going to end up in a closing before he or she loses the house. The foreclosure process does not stop just because there is an offer on the table.

The best strategy for getting a short sale property is to make a fair market value offer. 

Short Sale Myths- Top 3 Short Sale Buying Myths- Earnest Money Deposits

If you are in the market to buy a Florida short sale especially in the South Florida market it is a sellers’ market right now.

Earnest money deposits are one of the reasons you may not be the winning bid on a short sale. 

Buyers who listen to well-meaning family and friends may lose out on the home they have their heart set on by not offering an earnest money deposit up front.  Most of the time their real estate agent is not experienced in negotiating short sales. The inexperience leads to a misconception about earnest money deposits. Buyers agents tend to think that not putting their buyers’ money at risk is working in their buyer’s best interest. Usually that sounds like common best practices. But short sales are  different than traditional real estate transactions. Buyers in this market also make the common error of thinking that they should make an offer without an earnest money deposit until the short sale lender approves the sellers’ request to do a short sale.

In the current market the short sale seller will often receive multiple offers to consider. When we list short sales we require all offers to have an earnest money deposit upon ratifying the contract between the buyer and the seller. We would not encourage a seller to accept an offer that does not have earnest money up front. The earnest money shows the seller that you are likely to stay in the deal until the short sale lender approves the short sale or the contract expires.

The strongest offers are those with a healthy earnest deposit that are effective on the day that the contract is signed by both The buyer and the seller.

The strongest offer is in the best interest of both the buyer and the seller. The seller is taking a chance with the buyer that he chooses. The seller is up against a foreclosure most of the time if the house is listed as a short sale. Most brokers are required by their MLS ( the Multiple Listing Service) to change the status of the listing from “active” to “contingent” as soon as the seller accepts an offer. Not many agents want to show properties that have an offer on them (CTG status) so the seller is trusting that the buyer will stay in the deal for the long haul. Having your property listed in the MLS as CTG is almost like it being listed as a pending sale. Sometimes short sales take a long time to close and the seller runs the risk (if he or she is not making his or her mortgage payments) of losing their home to foreclosure. If this happens, neither the buyer nor the seller gain anything.

The buyer who wants the property for an investment or for a principle residence is in a much better position to have their offer accepted if it accompanies a good and fair earnest money deposit.

Remember that short sales can take a long time to close. The seller will want to know that you, the buyer are in this for as long as it takes to get approved. If you are not able to wait, you should not make offers on Florida short sales.

authored by Katerina Gasset 

Attention Florida Residents – Floridians Get Mortgage Help 

The state of Florida will give out about $60 million in mortgage help announced Atty. Gen. Pam Bondi. This is part of a national settlement over foreclosure abuse that totaled $25 billion.

Florida will use this money to help people with down payment assistance, housing counseling, legal aid and  better funded courts for foreclosure related issues.

It was also approved that $35 million of this will go to down payment assistance which is what Pam Bondi had asked for.

$10 million will be used for housing counseling and $5 million will be used for the state courts to help them process foreclosure related issues another $5 million will go to the attorneys general office to help fund legal aid programs and $5 million will go to the attorney general’s office to reimburse them for their efforts to stop the abuses in the foreclosure process.

There is also another $200 million that the state has received to distribute as part of the settlement. The Florida State house decided that they would allocate those monies during the legislative session session this spring.

Florida will end up getting an estimated $84 billion in funds from the national settlement. Mortgage servicers GMAC, Bank of America, Citi, J.P. Morgan Chase and Wells Fargo have agreed to pay $25 billion to settle allegations of home owner abuse against struggling homeowners.

So far $3.6 billion in mortgage relief including loan reductions has been given out to Florida homeowners as part of the settlement.

There is also an allocated $170 million in relief to Floridians who lost their homes to foreclosure between 2008 and 2011. The deadline has now passed but you can still file a claim if you missed that deadline.You are not not guaranteed to get a check because you missed the deadline. For more information if you were foreclosed on between the years of 2008 and 2011 you can go to http://nationalmortgagesettlements.com to apply.

authored by Katerina Gasset

Fannie Mae and Freddie Mac Stop Evictions for the Holidays 

Fannie and Freddie announced that they will provide a break for those homeowners facing foreclosure who are having a hard time making their mortgage payments. They will not be evicting people from their homes over the holidays. 

This is called an “eviction moratorium”. The eviction moratorium applies to single-family homes and two-four unit properties. 

Fannie Mae’s  time period is from December 19,2012 through January 2, 2013. 

Freddie Mac’s time period is from December 17,2012 through January 2, 2013. 

The foreclosure process is NOT put on hold during this time, only the eviction process is. 

Fannie and Freddie are the the two largest sources of U.S. housing money and were taken over by the government in September 2008 at the peak of the financial crisis. 

Stop foreclosure today. In most situations, a Florida short sale is better than a foreclosure. Contact Nestor Gasset and Katerina Gasset at 561-753-0135 today for a confidential phone interview to go over your foreclosure options. Don’t delay. The closer you get to your final judgment date the harder it is to stop your foreclosure. 

Authored by Katerina Gasset

Florida Foreclosure Rescue Company Guilty of Fraud and Foreclosure Rescue Schemes- Homeowners Beware! 

Foreclosure Solutions Specialists ran their operation from 2006 to 2009. This was all before the new law was passed that you could not take money upfront from homeowners to do loan modifications or foreclosure rescue services. 

BEWARE! If a company claiming to be there to help you with your loan modification or help you avoid foreclosure is asking you for money up front and they are NOT an licensed attorney DO NOT GIVE THEM YOUR MONEY!!! This is against the law. 

A jury in West Palm Beach Florida convicted Cathy Saffer of Pompano Beach and Barrington Coombs who is a certified public accountant of conspiracy and fraud charges of a foreclosure rescue rescue scheme. 

They promised to help distressed homeowners but swindled them out of the equity in their homes. This is from the U.S Attorney’s office. 

Another person pleaded guilty in March on the same charges. 

The women targeted distressed homeowners who were facing foreclosure. They advertised that their company could make is so that the homeowners could stay in their homes. They also told the homeowners that they would sell the homes to investors. This was a lie. 

The also promised the homeowners that they could buy back their homes from the investors. So these homeowners trusted these people to save their homes. They believed that these people had investor connections. They would then get to keep living in their homes, the company was supposed to keep them out of foreclosure and then one day buy back their home. 

This is one of the biggest scams out there! DON’T FALL FOR THIS SCAM!!!! If it sounds too good to be true… 

But what these people really did was sell the houses to straw buyers. They also lied on loan applications about the straw buyers’ income, net worth, employment histories to manipulate the lenders into approving these loans. They paid the public accountant to sign falsified statements that the information was correct. This is called Fraud. 

The women then pocketed the equity and then of course, they allowed those new loans to go into foreclosure. Most of the homeowners were forced to move out of their homes. 

BE CAREFUL OUT THERE!!!!! 

If you are in foreclosure or are facing the danger of going into foreclosure contact Florida Licensed Realtors®, Nestor Gasset and Katerina Gasset for a confidential phone conversation about your situation at 561-753-0135. We will go over your legal foreclosure and short sale options. We are not attorneys and don’t play them on TV. We are Wellington Short Sale Agents who may be able to help you with a short sale in Florida. 

Florida Short Sale Update: Banks Will Now Have ‘Living Wills’. 

New regulations are now in effect for the largest banks. They are calling this new regulation “living wills”. The largest banks are now required to submit to the government their break up plans so that the government can safely shut them down if they become in danger of collapsing. 

This regulation is part of the Dodd- Frank financial reform law. This is to try to keep the issues that happened  to the financial systems when Lehman Brothers failed in 2008. 

The regulation covers banks that have more than $250 billion in nonbank assets. Their plans must be submitted to the Federal Reserve and the Federal Deposit Insurance Corp. 

There are public and confidential parts to the forms that the banks submitted starting about a week ago. 

Regulators released the public parts of the “living wills” of: 

  • Bank of America
  • Barclays
  • Citibank
  • Credit Suisse
  • Deutsche Bank 
  • Goldman Sachs
  • JP Morgan Chase
  • Morgan Stanley 
  • UBS

The submissions reveal what each bank is going to do in the case they get near bankruptcy.