complete guide to short sales and foreclosures - revised 11-15

A Complete Guide to Buying Foreclosures and Short Sales

Thank you for joining

We will begin in a momentScheduled start time: 10:00am

Presented By:Broadview Mortgage Corporation

Presenter:Scott Schang

Contact Information:Phone: 866-667-6724

[email protected]


Topics We Will Cover In This Class

• Road Map to Home Ownership

• Terms and Definitions you should know

• Tips to Finding and Retaining a Real Estate Buyer’s Agent

• A Complete Explanation of Short Sales

• A Complete Explanation of Foreclosures

• Wrap up and Take Aways


The Purpose and Goals of this Class

• To Create and Empower Home Owners

• Educate you about the current California Real Estate market and the home buying process

• Empower you with the ability to make educated decisions in the home buying process


• Questions and Answers

– You may type questions in at any time during the presentation – Questions and Answers Box

– I will answer questions live at end of webinar

– The only dumb question the one you don’t ask

Let’s Get Started!

Following the Road map to Home Ownership

• The Road Map to Home Ownership is often paved with “fear of the unknown”– The unlearned can be learned– Misinformation can avoided if you ask enough of

the right questions

• A Simplified Overview of the Process– Get approved for financing– Finding your dream home– Making an offer on your dream home– Offer accepted, what’s next? – Becoming a home owner

Common Terms and Definitions

• Get Approved for Financing– Income and Asset Documentation

• Pay stubs / VOE / W2’s / Tax Returns• Statements / VOD / Paper Trail

– DTI – Debt to Income• Front end / Housing expenses• Back end / Total expenses• Includes property taxes, insurance, HOA, MI

– LTV – Loan to Value– CLTV – Combined Loan to Value

• Maximum purchase price based on maximum allowable DTI


• Finding Your Dream Home – The Search– Searching the Internet for Home Listings vs

Searching the MLS– Syndicated Listing Sites

• Realtor.com• Zillow.com• Trulia

– MLS – Multiple Listing Service• Client Gateway• Listingbook• Agent supplied site

– Private remarks contain important info• Only your Agent can see private remarks


• Making an Offer on Your Dream Home– Residential Purchase Agreement

• California Association of Realtors – 8 pgs• Addendum to Purchase Agreement common

with short sales and foreclosures– Good Faith Deposit – Earnest Money Deposit

• Held by Agent until 3 days after acceptance – Seller Concessions

• Credit from seller to be used to cover closing costs only – not down payment

• Based on sales price not loan amounts• Net (actual offer) is less concessions

– Common to ask Seller to pay Home Warranty


• Offer is Accepted, What’s Next?– Counter Offer

• Seller accepts offer with conditions– Fully executed purchase contract

• Both seller and buyer agree on terms– Escrow Company

• Third party that mediates entire transaction and the transferring of all monies involved

– Title Company• Insures title against pre-existing liens

– Appraisal and Home Inspection• Appraisal required by lender• Home Inspection is optional (Get One!)


• Becoming A Home Owner– Escrow Period

• Establishes closing date• 30 days is normal

– Contingency Period• 17 days for financing / inspections is default• Can cancel if financing or inspections fail• Have good faith deposit returned if cancelled • Complete all inspections and complete

financing– Close of Escrow – Transaction Complete

• Sign loan documents• Fund loan – 24-48 hours• Record loan – Next day usually

Congratulations! You are a Home Owner

• Once escrow has confirmation that your loan has recorded………..You get your Keys!

Tips to Finding and Retaining A Real Estate Agent

• The role of a Real Estate Agent– Third party Agent negotiates and facilitates the

purchase of Real Estate– Seller’s Agent – Represents seller’s best interest– Buyer’s Agent – Represents buyer’s best interest

• How a Real Estate Agent is Paid– Seller offers % of sales price to Agent

• 5 to 6% is normal– Seller’s Agent offers to split this commission with

any Agent that bring buyer that results in the sale of the home

• 50/50 split is normal


• Tips to find and hire a Real Estate Agent– Friends and Family rule

• Firing a friend or family is not an option– Business referrals are a good place to start

• Lender – experience working through sale• Escrow companies• Insurance Agents

– Looking for and Agent on the Internet• Accessibility and communication

– Text, chat, email, cell phone, IM• Websites vs. Blogs

– The social media phenomenon– Who are they as opposed to What they do


• Tips to find and hire a Real Estate Agent– Ask for references of recent clients

• Call one to threes of their most recent clients– Were they easy to reach / communicate– Did they give good advice during process– Were there any challenges during sale– Would you use them again

• Real Estate Agents work for YOU– Don’t be afraid to expect a high level of service– You are not obligated to stay with one buyer’s

agent – avoid Buyer’s Agent Contracts– Stick with an Agent that does a great job for you

• Do not allow anyone else to write up offer

A Complete Explanation of Short Sales

• The Basics about Short Sales

– Seller is current home owner

– Seller is usually behind on payments

– Seller owes more than home is worth

– Seller attempts to sell home to avoid foreclosure

– Foreclosure process can be suspended or

postponed if an offer has been submitted

– Seller is not always motivated to sell

– Motivation may be to stay in home as long as

possible


• What to be aware of with Short Sales

– Sales Price - What you see is NOT what you get

– Once an offer is submitted –process starts

– Lenders were not prepared for volume

• Approval process takes 3-6 months or more

– Lender will appraise and approve sales price

– Lender will appraise and approve terms

– Low ball offers are not worth the effort


• What to be aware of with Short Sales

– Seller’s agent has most influence in process

• Third party negotiators working on behalf of

selling agent is optimal scenario

– Subordinate lenders can prevent short sale

• 2nd lien holder has to cooperate

• Can “hold out” for more money

– Sellers are not usually willing or able to pay for

repairs to property


• New short sale opportunity to watch for

• Approved short sales – Approval process complete– Original buyer long gone– Want to close FAST– Negotiators are accessible and ready to deal

• What to offer on a Short Sale– Have your agent complete a market analysis– Offer approved short sale price for quick sale– Costs $60,000 to $70,000 to foreclose - liability

A Complete Explanation of Foreclosures

• What you need to know if you want to buy a bank owned foreclosure

– Foreclosure = REO (Real Estate Owned)– Burden of bank owned real estate is great

• Banks make money by lending money• Banks are responsible for property taxes• Banks may be responsible for upkeep

– Damage to property is very common• Health and safety issues = No Financing• Most REO is sold in “as-is” condition

– No warranty or repairs– Not required to provide known defects disclosures

A Complete Explanation of Foreclosures

• What you need to know if you want to buy a bank owned foreclosure

– Banks listing homes very low to stimulate activity– Multiple offers – 25 to 30 offers in first week– Some banks requiring homes on market for 7

days before looking at offers– Make your highest and best offer regardless of

“listing price” – Eliminate the competition– Less down payment = more aggressive offers– Banks ARE paying closing costs– Banks MAY pay for some repairs– Be aware of your “Net” offer

Tips to Find the Best Deals and Make Strong Offers

– Work with a buyer’s agent – Fiduciary duties

require that your best interests are represented

• EXCEPTION: Short Sale Seller’s Agent

– Work with a Real Estate Agent that is familiar with

making offers on short sales and foreclosures

– Get pre-approved for the maximum you can

qualify for – Be prepared for competition

– Actively search the MLS supplied to you by your

Agent – not syndicated sites

Tips to Find the Best Deals and Make Strong Offers

– Move quickly on approved short sales and REOs

– Have your agent do a comparative market

analysis on homes you make offers on

– Make your highest and best offer on REOs

– You can not pay more for a home than what it’s

worth – Be aggressive if you like the home

Wrap up and Take Aways

– Home prices have dropped 20-50%+ and homes are twice as affordable as they were 2 or 3 years ago - Right place and the right time to buy

– Short Sales are typically not what they seem and can be a great opportunity if you find approved.

– Be cognizant of damage to distressed properties– Make your highest and best offer on REOs– Work with an experienced and qualified buyer’s

agent – Someone on your side!– Get Pre-Approved for financing– Know the maximum you can qualify for – Be

prepared for competition


– We are the Lender for all CalSTRS, CalPERS,

CalHFA, FHA & VA, Conventional and Jumbo

Loans.

– We can Refer you to a qualified Real Estate

Agent in your area

– We are more than happy to be your “second

opinion” if you are already working with someone

– We are committed to educating and empowering

homeowners


– You will receive a “Thank You” email that will include all of our contact information for questions

– Valuable links to get you started and in this market, fully prepared with a good team

• Secure online application for loan approval• Qualified Real Estate Agent referral request• Dream home finder

– Links to Education and Web Classes Pages

– Check back often for updates to Education page and YouTube videos

Schedule a Live or Private Home Buyer Workshop

• Live or private on-line classes available

• Call me to schedule time / place

• No minimum for on-line classes

• Open and Extensive Q & A

• Expanded topics – create your own– Choose loan programs– Choose topics

Thank you for Attending

Please make suggestions and recommendations for future on-line class topics

Presented By:Broadview Mortgage Corporation

Presenter:Scott Schang

Contact Information:Phone: 866-667-6724

[email protected]