Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
To what do you attribute the failures? Banks want more
money? Buyers give up due to long wait times?
Sk
Where do I begin there are so many factors. Yes Buyers give up in most cases. There are new protocols in place for a distressed home owner now. The bank must first try to modify and supposedly that is to take only 90 days and they are still taking months this is due to a distressed home owner having to resend in all the paper work and the bank because the bank keeps stating they didn't get the documents. Even after the seller may have called the next day to confirm the bank had received the documents so you always get names and document every word date and time.
I was told by a banker that banks can't write off the mortgages like everyone wants because the assets appear to be worth more than they really are and with over 8 million home owners under water you do the math. IN Vegas alone depending on the analyst 70 to 80% of the home owners are upside down. NOW you get the picture that would be allot of money to have to write down just in Vegas and the surrounding area's.
Most loan mods are rejected, then the bank has to offer the distressed seller either a short sale or deed in Leo of foreclosure. A negotiator is to be assigned to the sellers case.
Mind you there is a whole separate entity of the bank that is actually in charge of foreclosing and a listing agent generally only talks to the negotiator and if the negotiator isn't keeping in contact with the part of the bank that could foreclose there could be additional problems during the short sale like the bank foreclosing on the property even if it is in escrow, and the sale falls apart and the home is foreclosed on .
If there at two loans on the property makes a short sale almost impossible, getting the second to take far less or nothing at all isn't working now the seconds want more so they refuse to settle. The First may not want to settle unless the home owner signs to make payments on part of the deficiency and if the seller refuses the short sale goes side ways.
There are so many things that are going on with a short sale, the seller in most cases hasn't been paying the property taxes, hoa's, maybe even utility bills ( in this state the utility company can slap a lien on your property) and if there is any super liens as well, then the bank and the seller have to figure out who will be willing to pay any or all of the past due liens. And if the seller is also asked to pay for a part of the deficiency of the loan itself.
Also if you trying to purchase a short sale and you have to use a loan, if the bank takes months to get back to the buyer if they agree to the sale you may have to re-apply for a loan, or if the appraisal comes in less the value of the property then the buyer will have to pay for the second appraisal and even if it still comes in lower the bank may not agree to the lower price but offer to split the difference or not agree to the sale of the property at all.
This is just a simplified explanation there are even more variables that I haven't even covered, like the bank may look like they have the note but it's really an investor that lives in another country. That's another story, and even more.
I'm a cash buyer. In three cases, I offered at or just above asking price. The first, the seller accepted and the bank came back $20,000 over asking. I didn't counter. The second, I was beaten out by a higher offer on the same day. In both cases, I heard back pretty quickly. The short sale I hope to close on next month, the negotiator handled communications between the two mortgage holders and I didn't need to sweeten the pot. It also helped that and earlier offer had fallen through and that my broker and the listing agent worked for the same brokerage. However, it did take just under three months to get to this point.
The only one I offered less on had Kitek plumbing that hadn't been fixed --the seller had pocketed the settlement money. I offered $195,000/list price $209,000. Bank would not budge so I moved on.
Hope this is helpful.
It was very helpful. Thank you very much and kudos to "007 LTS" also.
How long do they typically give you to cough up the cash?
It was very helpful. Thank you very much and kudos to "007 LTS" also.
How long do they typically give you to cough up the cash?
Hi Coop:
Proof of available funds from my bank at the time of the offer. My earnest money was $2000, and the remainder is payable at closing -- about three weeks from acceptance of my offer.
It was very helpful. Thank you very much and kudos to "007 LTS" also.
How long do they typically give you to cough up the cash?
like kiwikate said, you have to have a proof of funds letter with your offer, or the seller won't even bother with your offer.
I deal mostly with out of state buyers and they are usually not here when we write the offer so when it comes to a earnest money deposit I put in the contract that the emd will be wired directly to title company upon acceptance.
Or if the client doesn't want to do and electronic wire then a emd check will be over nighted by mail directly to the title company.
Depending on when your close of escrow is, you should have the funds ready for the remaining balance.
Where do I begin there are so many factors. Yes Buyers give up in most cases. There are new protocols in place for a distressed home owner now. The bank must first try to modify and supposedly that is to take only 90 days and they are still taking months this is due to a distressed home owner having to resend in all the paper work and the bank because the bank keeps stating they didn't get the documents. Even after the seller may have called the next day to confirm the bank had received the documents so you always get names and document every word date and time.
I was told by a banker that banks can't write off the mortgages like everyone wants because the assets appear to be worth more than they really are and with over 8 million home owners under water you do the math. IN Vegas alone depending on the analyst 70 to 80% of the home owners are upside down. NOW you get the picture that would be allot of money to have to write down just in Vegas and the surrounding area's.
Most loan mods are rejected, then the bank has to offer the distressed seller either a short sale or deed in Leo of foreclosure. A negotiator is to be assigned to the sellers case.
Mind you there is a whole separate entity of the bank that is actually in charge of foreclosing and a listing agent generally only talks to the negotiator and if the negotiator isn't keeping in contact with the part of the bank that could foreclose there could be additional problems during the short sale like the bank foreclosing on the property even if it is in escrow, and the sale falls apart and the home is foreclosed on .
If there at two loans on the property makes a short sale almost impossible, getting the second to take far less or nothing at all isn't working now the seconds want more so they refuse to settle. The First may not want to settle unless the home owner signs to make payments on part of the deficiency and if the seller refuses the short sale goes side ways.
There are so many things that are going on with a short sale, the seller in most cases hasn't been paying the property taxes, hoa's, maybe even utility bills ( in this state the utility company can slap a lien on your property) and if there is any super liens as well, then the bank and the seller have to figure out who will be willing to pay any or all of the past due liens. And if the seller is also asked to pay for a part of the deficiency of the loan itself.
Also if you trying to purchase a short sale and you have to use a loan, if the bank takes months to get back to the buyer if they agree to the sale you may have to re-apply for a loan, or if the appraisal comes in less the value of the property then the buyer will have to pay for the second appraisal and even if it still comes in lower the bank may not agree to the lower price but offer to split the difference or not agree to the sale of the property at all.
This is just a simplified explanation there are even more variables that I haven't even covered, like the bank may look like they have the note but it's really an investor that lives in another country. That's another story, and even more.
Thanks 007. We have been waiting 6 months for the bank to accept our short sale offer (BOA). Went through several bank negotiators. Home prices appear to still be dropping and soon our offer will be more $ than the market value of the house.
sk
Thanks 007. We have been waiting 6 months for the bank to accept our short sale offer (BOA). Went through several bank negotiators. Home prices appear to still be dropping and soon our offer will be more $ than the market value of the house.
sk
Unfortunately what your going through is the normal, home prices are still dropping and depends which analyst you talk to home prices could go down another 5 to 10% this year, in and around Vegas. Until jobs come back in other states, our Vegas economy will still be struggling and the housing market right along with it.
As far as the possiblility of your offer being more than the current value may have already happened since it's been six months. It depends on what area your purchasing in but really all zip codes are still seeing depreciation.
The long decline in home prices may lighten the tax load for Las Vegas homeowners, but it's also left 75 percent of them...
I am including the a link to the mls zip code map this should be helpful in looking up the zip codes in relation to the map that shows the different percents of depreciation.
Just a note about short sales. In my opinion they are an excellent way to go for those looking for business opportunities. In the last 6 months I have successfully purchased 3 lower end properties with high rental yields under short sales. In my case the selling broker was accepting only the first offer over the asking prices which in my opinion were way low. Some of these short sale brokers can be very lazy and that is good for the buyers. Right time, right place but 3 wins out of 9 offers is not bad. Each short took between 9 and 14 weeks plus a ten day escrow period after acceptance which is very, very quick. Again, right time right place. That said I am presently in one short sale in Vegas that is going on 15 weeks with the lender noting there is still around 2 weeks before they make a decision but if I get it I will be miles ahead. Even with a reasonable counter offer from the bank I will take it as the deal is that good.
Contrary to popular belief for those willing to put the minimum required deposit into an account for 3 to 6 months short sales can be very, very profitable as it appears lenders are more apt to take the short sale offer than they were a year ago. I believe part of that is to show good faith to the government these lenders are actually trying to do right by main street. I do believe, however, the banks would much prefer to make other investments such as derivatives or other hedge bets which have been yielding them much higher returns with almost no down side risk than home loans especially in this still crazy real estate market. I am taking advantage of this dog and pony show being put on by the banks to purchase some amazing rental properties at prices even I never thought I would see again.
It is important to note I do believe the lower end market has stabilized and all of my properties have seen appreciation as well as double digit returns on my investments annually in the form of rent even before depreciation and other deductions. As I have noted for years on this site and others I always look at value based on return of investment rather than industry professionals... cough-cough supposed knowledgeable appraisals based on comps. One still has to look at rental trends making sure you are in an appreciating neighborhood based on short sales and reo's being purchased by investors. Those are the folks who are improving the properties to get either maximum rent or for fix and flipping purposes. Just like I, these same investors are paying cash and thus getting prices as much as 20 to 40% below what folks are paying who have to obtain loans. Being informed and aware of the timing ( usually 1 to 2 months) between the purchase and the flip of other properties in the area gives you a window for using the low sale price as a comp for your purchase knowing it will go up shortly. Watching for dumpsters and signs of work going on is always worth investigating what is happening by chatting with the sub contractors or contractors. They generally know what the intention of the owner is. Just part of your due diligence.
One of the great things about short sales vs. reo's is the short sale process eliminates many of these same cash buyers who want to get in and out or are just not familiar with the great deals possible under short sale conditions. These same investors do not want any monies tied up for extended periods of time so they have been sticking with REO's. This trend will undoubtedly change soon to more shorts as more folks become familiar with the Short sale process and the lenders start catching up with their huge backlogs of requests for shorts from the sellers. I believe this event will continue to strengthen the low end markets which have high positive rates of return on investment or flip potential.
Contrary to popular belief there are tons of opportunities to make money in this low end market.
What a new buyer or new investor needs to look at is the price breaks vs. the rental income potentials. There are definable brackets of pricing in relation to rents. For example, in one of my farming areas a $130,000 dollar twin home with about 6 thousand dollars in my installed upgrades yields a rent of $1550 to $1700.00 per month. However a single family dwelling in the same neighborhood which sells for $180,000 dollars and needs about the same in upgrades only rents for $1650 to $1850.00 per month. Just not justifiable to spend the extra 50 thousand dollars or so. No, these particular homes are not in Vegas but the idea is still the same. At this time I am only looking for sure win flippers in Vegas as the market is just too unpredictable there. As a note I have been doing this for over 35 years so my 6 thousand in repairs is equal to paying a contractor 15 to 20 thousand for the same repairs. For those with home repair and upgrade skills this is a big money savor as labor is cheap in this economy and deals are readily available on materials if one knows where to look.
Also of import for those looking at short sales once the bank accepts the short sale offer there is still a short window of time to withdraw your offer at no cost should you feel the deal is not good enough or you feel your home inspection reveals too many pitfalls.
One thing a potential buyer can look at is how many times the house has fallen out or the buyer failed to exercise the purchase. A bit of snooping around can reveal a ton. Though there cannot be any collusion between a seller and buyer there are still ways to find out what has occurred in the past especially if you have a good gift of gab with the sellers broker. A lender who has seen multiple buyers fall out is more apt to accept a much lower price from a very strong and able buyer.
I still believe all the other markets in Vegas, other than the low end markets (Under $100,000) may still have not stabilized with the above $175,000 price range and especially higher being really scary. Newer homes in Green Valley and other great family communities with incredible infrastructure such as schools, public pools, rec centers, shopping, etc. are below $170,000 for a newer 3 or 4 bedroom house sold under short sale conditions. Easily 50 - 70% below their peaks. With 6 - 10 thousand square foot homes selling at below the price of the raw materials and upgrades there are great deals to be had for those looking to establish long term residency in Vegas but not necessarily to make money.
In short (No pun intended) do not shy away from short sale opportunities just make sure you offer a price which you are more than comfortable with and only under market value. Do not let any industry professional tell you your price is too low and do not fall in love with anything upon which you are going to lose money. Just make sure you have done your own due diligence and are fully informed on your farming area as to market trends, who is moving in and how many are lower end rentals. Take a look at how clean the streets are and how the house and lawns are maintained in the newly sold homes. This can establish a direction for that particular area especially if the majority of homes have been purchased for flips or personal residences. You can also verify the rents for those homes which have been newly purchased for that income potential to determine the value of the home based on ROI.
In short sale conditions make sure your bid is low enough to have a buffer for more of a down side in the higher price ranges. This is where using the information a real estate agent can provide you will come in handy. Just remember you do not owe any agent anything as this is your money and your job is to spend it wisely and reward only those agents who bring you the right deals. Working with only one agent is a mistake in my book as there are tons of agents who are very hungry and are willing to work with you under your terms. Remember also many of these shorts will never make it to the multiples thus having an agent with an inside track who can let you know when a short is coming up prior to it hitting the multiples is imperative. Rules may be changing in this regard so time is of the essence.
The times have changed and agents commissions are fewer and further between. Only use the ones who are willing to work hard for those commissions and can quickly and willingly provide you all the information your require. No excuses should be tolerated. Remember, they work for you and not the other way around. As a note: an agent who does not show you exactly what you are looking for, in the price ranges you have outlined should be shown the door or politely explain if the agent has not reviewed the property to insure it meets your requirements prior to showing it to you there will be no deal and you do not want to waste your time. However, you do owe it to your agent to be informed and tell them exactly what you are looking for and the terms under which you are looking to purchase. If they still want to work with you hold them accountable for meeting your expectations but be willing to act immediately should they show you what you have described. If you are able, make multiple offers on shorts and never be upset should you be turned down or get a ridiculous counter offer from the lender. You can always re counter at the same or very slightly higher price and see what happens. Also, should you be accepted by more than one lender you can turn down the ones you do not want under the required contingency period. This is not unethical only good business practice in the short sale market. It is okay if you do not feel this is appropriate behavior as that is always up to you but playing the short game takes patience, a sharp business sense based on accumulation of knowledge and the ability to remove yourself from the emotions of purchasing a house. Personally, I follow through on every home I offer on but I have been at this a long time. Most are not in my position as I have been fortunate enough to follow my own advice but if you are smart you can be in this position in the future. This is a business and must be treated as such.
Good luck to everyone.
FOD
Last edited by fishordie; 09-29-2010 at 11:13 PM..
FOD, you mentioned you're a cash buyer. Given the current interest rates, do you ever think of financing? I was a cash buyer last summer in Vegas, though shortly thereafter, I started second guessing the decision. Not the decision to buy, but the decision to use cash. Money is just ridiculously cheap right now. Of course, cash has a number of advantages, but you don't reap a leveraged rate of return. I've been thinking of dipping my toe back in the RE market and continually flip-flop between the cash/finance issue. Any thoughts?
FOD, you mentioned you're a cash buyer. Given the current interest rates, do you ever think of financing? I was a cash buyer last summer in Vegas, though shortly thereafter, I started second guessing the decision. Not the decision to buy, but the decision to use cash. Money is just ridiculously cheap right now. Of course, cash has a number of advantages, but you don't reap a leveraged rate of return. I've been thinking of dipping my toe back in the RE market and continually flip-flop between the cash/finance issue. Any thoughts?
BTW, congrats on the recent successes.
Thank you Tony.
As I noted I have been doing this a long time. You and I were on the same wave length about the direction of this market several years ago when this thread first started. I noted I sold just about everything I had between 2005 and 2007 only retaining a few select properties so I could be in this position to pay cash. When I was younger and had less to lose I did use the leverage as I only had limited funds though I never had rates this low.
There are many investors in my position who pay cash to get a significantly lower sales price and then refinance when the banks allow them too at these historically low rates. They then take the newly acquired funds and buy more properties. In these times those investors have a great chance to make a fortune if things go according to Hoyle. Unfortunately, in these economic times I am still afraid Hoyle is going to be even more wrong than he has been in the last 3 or 4 years. The economic and social policies of the past and present, both on a state and federal level, are going to haunt us for the rest of our lives and the lives of our children. Therefore, by having no debt, the direction of the markets will not really affect me much as I believe my properties will continue to rent at more than reasonable rates and more than enough to support my life style with zero debt. At this point in my life "Risk" is not part of my equation as there is just no reward to offset it.
For me through real estate and lending I have enough income from my investments to pay for my life style for the rest of my days with no debt. I gave up trying to be a billionaire in my 30's. Though my hair is turning gray it no longer is falling out fearing the "What If" scenario should my investment decisions go south. For younger folks who are well informed
this IS as good a time to purchase in the right areas based on ROI. For those who have skills and know how and where to spend monies in repair and remodeling of their investment homes there are huge monies to be made on flippers and rentals yielding income for the rest of their lives. For those who keep in mind the cost and risk of trying to hit a home run rather than a series of singles, doubles and triples there is a ton of monies to be made from short term leveraging.
As I said, I am getting too old and too tired to do the work myself. Though I still am my own contractor and still have my connections I find I would much rather go fishing than deal with too many more real estate transactions which is why I do not mind sharing what I have learned. I will still make a few more transactions before I am done but I am very close to being done unless I get bored. Since I can fish 180 days a year and I consult in multiple businesses I do not see that happening.
Thus I leave it up to you and yours to continue the work and spread the good word about the truth of real estate and the potential for great deals of income for those who remain true to the basic principals of good investing and take time to learn how to work on their own properties.
I believe If I was starting out in this economy in my youth, with these interest rates, I might have been a billionaire in the next 10 or 20 years but I will never know if that is true.
At this point I really do not care one way or the other as I am more than happy with the results I have earned.
Again, thank you for the good words.
FOD
Last edited by fishordie; 09-29-2010 at 11:48 PM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Cash on closing
