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Okay folks-what is the scoop here? This home is north of the square - campo bello area... It's got a 'castle' round thingy - a gorgeous pool (googlemapped) - 4 bedrooms 2 baths ... says a short sale - then says a trustee sale in August... Can you teach me what all of that means? Built just 5 years ago...granite counters - the hgtv home type... So is it that someone just threw out there a listing price to get the ball rolling...low price perhaps to coax offers? Next comes? Who determines the fair market value of this short sale - as is... Does the listing agent 'know' the fair market value - so will collect offers until that 'value' done through an official appraisal is met - or a certain percentage of that market value is offered...88+ percent? If no one bites then does trustee mean foreclosure? Is the current owner of house or mortgage - presented with offers - and gets to choose which one? After the process begins with one select buyer - that buyer only surmised a good 'offer' - what if that offer turns out to be way over the appraised value ... can he then tell the bank -- no way ... sorry -- you need to accept my new offer of this current appraisal my own lender got? Then I wondered - okay if it goes into foreclosure ... if that's what trustee means - does the home then go off the market for a time- and then re-appears as a bank owned (REO?) with a new listing price? Do the short sale activities save the people from the dreaded foreclosure - even if people walk away and new people come -- indefinitely? Thanks .... ahead of time.... maybe I should just get my license
Find a good Realtor who works your area of interest, and s/he will provide you with the proper information and guide you through the entire process. That's a part of what they get paid for.
Trying to sort out the good information from the misinformation that you'll get on the forum can be very confusing.
I agree with Bill that you should find a good Realtor to help you. I'll try to address at least some of your questions:
Quote:
Originally Posted by SloCoChef
... says a short sale - then says a trustee sale in August... Can you teach me what all of that means?
Short sale - seller owes more on the home than it is worth and needs their mortgage holders (could be more than one) to agree to take less than owed.
Trustee Sale - basically the foreclosure auction. Someone will either buy it at the auction, or the bank will take it back and resell later as bank owned. Google Trustee Sale Arizona for details.
... So is it that someone just threw out there a listing price to get the ball rolling...low price perhaps to coax offers?
Possibly. There are many pricing strategies to bring in offers. You should always check comparable pricing to determine a fair offer. Your agent can help with this.
Next comes? Who determines the fair market value of this short sale - as is... Does the listing agent 'know' the fair market value -
The listing agent likely has done their own analysis and has a handle on market value. They may price it lower, usually not higher for a short sale.
so will collect offers until that 'value' done through an official appraisal is met - or a certain percentage of that market value is offered...88+ percent?
It's likely they will accept the first offer they get if not too far off market value and submit to the bank for review. The bank will then conduct their own market value analysis to determine if the price is fair, along with determining if they will otherwise approve a short sale for this seller.
If no one bites then does trustee mean foreclosure?
See above re Trustee Sale. The seller could also try to work out another solution with their lenders, such as mortgage modification, or catching up on payments.
Is the current owner of house or mortgage - presented with offers - and gets to choose which one?
Yes.
After the process begins with one select buyer - that buyer only surmised a good 'offer' - what if that offer turns out to be way over the appraised value ... can he then tell the bank -- no way ... sorry -- you need to accept my new offer of this current appraisal my own lender got?
There should be contingencies in your offer that allow you to cancel if the offer is higher than appraised value. Your lender will also not finance a loan if the appraisal is lower.
Then I wondered - okay if it goes into foreclosure ... if that's what trustee means - does the home then go off the market for a time- and then re-appears as a bank owned (REO?) with a new listing price?
Very likely.
Do the short sale activities save the people from the dreaded foreclosure - even if people walk away and new people come -- indefinitely? Thanks .... ahead of time.... maybe I should just get my license
Their liability after the short sale depends on their settlement terms with their lender.
Okay folks-what is the scoop here? This home is north of the square - campo bello area... It's got a 'castle' round thingy - a gorgeous pool (googlemapped) - 4 bedrooms 2 baths ... says a short sale - then says a trustee sale in August... Can you teach me what all of that means? Built just 5 years ago...granite counters - the hgtv home type... So is it that someone just threw out there a listing price to get the ball rolling...low price perhaps to coax offers? Next comes? Who determines the fair market value of this short sale - as is... Does the listing agent 'know' the fair market value - so will collect offers until that 'value' done through an official appraisal is met - or a certain percentage of that market value is offered...88+ percent? If no one bites then does trustee mean foreclosure? Is the current owner of house or mortgage - presented with offers - and gets to choose which one? After the process begins with one select buyer - that buyer only surmised a good 'offer' - what if that offer turns out to be way over the appraised value ... can he then tell the bank -- no way ... sorry -- you need to accept my new offer of this current appraisal my own lender got? Then I wondered - okay if it goes into foreclosure ... if that's what trustee means - does the home then go off the market for a time- and then re-appears as a bank owned (REO?) with a new listing price? Do the short sale activities save the people from the dreaded foreclosure - even if people walk away and new people come -- indefinitely? Thanks .... ahead of time.... maybe I should just get my license
A couple of years ago, short-sale listings were about half of the MLS, but 90% of those listings never closed. Now, the latest statistics show many more short-sale listings do close, but often with a different buyer than the guy who wrote the first offer.
An agent can write a short-sale listing for any price their heart desires - you can take $1 million homes and post them up for $50k if you want. The list price is just a starting off point, and with some agents they'll do whatever it takes to get an offer... any offer at all - remember, the seller's agent doesn't represent you, they represent the seller.
Even if the listing agent doesn't get a price that works for you, by going through the process, they get the bank to "show their cards", and perhaps they can then know what the bank will accept, so they can sell the house to someone else. <--- the listing agent does not represent you.
After a few months, if the packet is submitted properly, the lender will order an appraisal (often a drive-by), then they'll frequently counter with a price they'll accept. That price may be above market value, it may be below market value, and it may all be a waste of time if there's a second lender involved, because a short-sale can't happen without the approval of the second lender.
Some second-lenders hold out for full price, even if that means the property will end up going to trustee's sale, and the second-lender gets nothing. Second-lenders are often very ignorant - you know that because they wrote loans in second-position in a non-recourse state. Second-lenders are the "bottom of the barrel", the lowest of the low in the financial world, only slightly above "payday-lenders" and "car-title" lenders in their opportunism and greed. They learned very little in the financial explosion of a couple years ago, because most were gobbled up by bigger banks - WaMu was taken over by the FDIC, and the "assets" were sold to Chase. Countrywide was taken over by B of A, etc. The CEO's of both companies lied often and publicly about how great those companies were - right up until the day they were taken over. Second-lenders produced the most "toxic" of the "toxic mortgages" everyone writes about.
As for advantages to the seller -
the #1 benefit is "free rent" for at least 6 months, possibly over a year if the lender is slow to process the sale...
The #2 "benefit", is the possibility that they could buy another house with a mortgage in a slightly shorter period of time than if they had let the home foreclose normally... the caveat to that, is that if the owner stops making the payments for 6-12 months, their credit will be so smeared that they won't realistically be able to do so. And that new mortgage won't be at the current rates, it'll be much more expensive & involve jumping through a LOT of hoops.
At best, in 2-5 years (if the "rules" don't change) - they'll be able to get financing using a FHA or VA loan - They'll be in the same position you are in as a buyer - except, they'll have bad credit, which will limit the loan options they have. FHA and VA pretty much require a "perfect" home, that appraises at or above the purchase price - seen many of those lately? As a seller, would you take an offer from someone with credit issues over one from a qualified buyer?
That bad credit also means that if they get into a car wreck & "total out" their car,or if it wears out in the foreseeable future, they'll be paying 18%+ interest on the new one, just like that guy from the "free credit report" commercial...
Benefits for the buyer - might be a lower purchase price, maybe not though if the bank counters that initial offer... another benefit might be getting a house without as much competition - if it's something you really want, if you can wait... indefinitely ... any agent who promises you a "quick close" on a short-sale is either lying or misinformed, it's possible, but not anything that can be "guaranteed".
Personally, I think short-sales are great for investors, but I wouldn't (couldn't!) handle the suspense of waiting months for an answer on a home I planned to live in.
Once you get personally attached to a home - (picking a spot for your gas-grill, thinking about how "great" that park would be for your dog, thinking about how your furniture would "fit" the home, etc), you lose the "edge" and the "disconnect" you need to have to purchase a short-sale. Purchasing a short-sale is like getting on a roller coaster that might not stop for months, or a year, or maybe never...
I'd highly recommend taking the RE class, even if you never get your license - it's good info, and at least you'll have an idea of what you don't know in a deal. You'll be rubbing elbows in class with lawyers, property managers, investors, hard-money lenders, contractors, and other people that it doesn't hurt to know.
You can complete the classroom requirements in as short as nine days & realistically get licensed in about 3 weeks if your days are free, pm if you want the info on where I went...
...You can complete the classroom requirements in as short as nine days & realistically get licensed in about 3 weeks if your days are free, pm if you want the info on where I went...
Just keep in mind that your basic RE license courses do not go into any detail, if at all on short sales/distressed properties, negotiation tactics, or most other aspects of actually conducting RE transactions and running an RE business. Their goal is for you to pass the licensing exams. All the other practical stuff comes from follow on specialty classes, on the job training, and mentoring by your broker and other agents.
Just keep in mind that your basic RE license courses do not go into any detail, if at all on short sales/distressed properties, negotiation tactics, or most other aspects of actually conducting RE transactions and running an RE business. Their goal is for you to pass the licensing exams. All the other practical stuff comes from follow on specialty classes, on the job training, and mentoring by your broker and other agents.
Partially true, however the OP has posted previously that his agent is as green as a cucumber. (and by the tone of his current questions, his agent has written offers on short-sales without explaining anything about the process). In that situation, it's hard to think he could do a worse job of representing himself.
"Mentoring?" -
meh...
Casey Serin had some "mentors"... didn't seem to help much...
"The book project, named The Foreclosure Code: My Bubble Burst! How I Purchased and Lost $2.2 MILLION in Real Estate, was originally scheduled for release in Fall 2007."
I'd rather spend the $40 bucks on the CE class that covers foreclosures & shorts...
I know it isn't what you meant, rjrcm, but "mentoring" in the RE business, especially on the investment side of things is a very popular scam.
"Fresh Meat" with an RE license, looking for a "mentor" is likely to draw a herd of sharks, not those with the best of intentions.
When I got my RE license, the brokers that spoke of "mentoring" also wanted 80% of my first 3 commission checks...
that's $10k for "mentoring"...
I didn't need any help with "negotiating skills"... - and I doubt the "mentoring" would have given me the ability to recover the $10k in lost commissions...
No one is going to look out for your dollars like you are.....
...I'd rather spend the $40 bucks on the CE class that covers foreclosures & shorts...
No one is going to look out for your dollars like you are.....
Very true. That's the type of specialty classes I was referring to. Like anything, to be good you have to have motivation, a drive to learn, and ability to make good choices.
Very true. That's the type of specialty classes I was referring to. Like anything, to be good you have to have motivation, a drive to learn, and ability to make good choices.
FWIW, you don't need an agent's license to attend CE classes... there's usually a "Q&A" at the end of the class where you can ask whatever questions weren't covered during the class.
These were great posts -- (yikes I'm a 'gal' not guy - sry for any confusion there - girl chef's rock the culinary world too lol)
Okay - In a few very clear and concise posts - you explained (to me anyway) the 'stuff' and 'nature' of the short sale today ...big thank you! Yes my 'green' realtor ... he is so perfect for the biz imho by his nature and people skills, patience etc... I think he'll be great for Phoenix biz once his transactions by volume increase.... But the thought occured to me the other day - he might benefit by those classes that get you all those initials after your name that instruct you on the fine points of complicated home sales - he does enough - but not enough to instill confidence --- then that's when I thought about doing what he said in getting licensed (he finds my due diligence astounding lol - poor guy!) - so I can take all those other classes etc..
To be going out with a fair amount of confidence - albeit rookie confidence. I wouldn't mind partnering with someone else because with more people comes more talent - simply no body has it all imho - and together people gifted this way could be viable even with all the competition? Out of the blue a new acquaintance told me she was a referral agent - so I read and got up to speed on that end of the deal - never even knew people got money for that sort of thing! It sounds like going into realty now is something some people would never even be inclined to think of today - too many headaches comparatively - to the old days - and some realtors I've spoke with casually (grocery stores, hospitals - they're everywhere!) said that they are glad their careers are winding down toward retirement - they actually have to work now and work very hard! (<--- they actually said this - no implication from me however!) Not to mention the 'emotional' climate with foreclosure/short sale things over and above emotions of buyers and sellers 'regularly'..
To start now when the complicated transactions can be the norm would be not as daunting as things just shifting to that way from some years of normalcy...perhaps.
I'll think it over ... all of what you said - takes some time to digest it all - & in the meantime a new listing came up --- so hoping to see the place right today - cuz I know if it's not today = it's gone, gone, gone and I have a hunch this place is a perfect match for me.... it's NOT a short sale too! Bank owned yes - but no short sale - that's exciting stuff to this one day buyer!
These were great posts -- (yikes I'm a 'gal' not guy - sry for any confusion there - girl chef's rock the culinary world too lol)
Okay - In a few very clear and concise posts - you explained (to me anyway) the 'stuff' and 'nature' of the short sale today ...big thank you! Yes my 'green' realtor ... he is so perfect for the biz imho by his nature and people skills, patience etc... I think he'll be great for Phoenix biz once his transactions by volume increase.... But the thought occured to me the other day - he might benefit by those classes that get you all those initials after your name that instruct you on the fine points of complicated home sales - he does enough - but not enough to instill confidence --- then that's when I thought about doing what he said in getting licensed (he finds my due diligence astounding lol - poor guy!) - so I can take all those other classes etc..
To be going out with a fair amount of confidence - albeit rookie confidence. I wouldn't mind partnering with someone else because with more people comes more talent - simply no body has it all imho - and together people gifted this way could be viable even with all the competition? Out of the blue a new acquaintance told me she was a referral agent - so I read and got up to speed on that end of the deal - never even knew people got money for that sort of thing! It sounds like going into realty now is something some people would never even be inclined to think of today - too many headaches comparatively - to the old days - and some realtors I've spoke with casually (grocery stores, hospitals - they're everywhere!) said that they are glad their careers are winding down toward retirement - they actually have to work now and work very hard! (<--- they actually said this - no implication from me however!) Not to mention the 'emotional' climate with foreclosure/short sale things over and above emotions of buyers and sellers 'regularly'..
To start now when the complicated transactions can be the norm would be not as daunting as things just shifting to that way from some years of normalcy...perhaps.
I'll think it over ... all of what you said - takes some time to digest it all - & in the meantime a new listing came up --- so hoping to see the place right today - cuz I know if it's not today = it's gone, gone, gone and I have a hunch this place is a perfect match for me.... it's NOT a short sale too! Bank owned yes - but no short sale - that's exciting stuff to this one day buyer!
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Second-lenders are the "bottom of the barrel", the lowest of the low in the financial world, only slightly above "payday-lenders" and "car-title" lenders in their opportunism and greed. They learned very little in the financial explosion of a couple years ago, because most were gobbled up by bigger banks - WaMu was taken over by the FDIC, and the "assets" were sold to Chase. Countrywide was taken over by B of A, etc. The CEO's of both companies lied often and publicly about how great those companies were - right up until the day they were taken over. Second-lenders produced the most "toxic" of the "toxic mortgages" everyone writes about. 
