I got a call before Christmas from someone I used to work with - before I made real estate my career. She is a talented, energetic person, married to a great guy who can do pretty much anything - and like zillions of others, they've been hurt by circumstances that they didn't see coming. He's experienced an injury that has created big medical bills and limited the type and amount of work he can do - which translates to big decrease in income.
They have a lovely home in a very desirable retirement community - and their goal had been to enjoy it, watch it increase in value and then downsize, take their equity and reinvest in something a little more modest so they'd have freedom to enjoy their retirement years. The increase in value didn't happen - instead, it decreased, thanks to circumstances outside our control. And with less income, and more expenses, their lovely home is something they can't afford any longer. New goal: make the house go away. And that's where I come in.
They have two loans. Long story as to why - with nothing good to say about how they came to get the second loan and what type of loan it turned out to be. Both loans together don't amount to much more than the value of their property, but enough that it creates a short sale condition.
We put the house on the market at Christmas, then had to drop the price a couple of times. Then we got an offer which reflects current value and is a good deal for the buyer. It took three and a half months, a lot of disclosure, a little negotiation, and we received bank approval of the short sale. Buyer completed inspection this week. Now if buyer's appraisal comes in at or above the sales price, in another month buyer will have a new home and sellers can get on with the next chapter of their lives - somewhere else.
Maybe it's too much to expect everybody to be happy with a sale like this one. It truly is a distress sale. Sellers are only a little upside down - but enough that a short sale is the best choice they can make. Their credit will suffer - at least for a couple of years. Their hearts hurt to leave their home. But their bank would not work with them, a bankruptcy is not in their best interests, and foreclosure is absolutely not what they want to do. So they are packing up and getting ready for the next chapter of their lives, and they are saddened. And so am I.
Sometimes dreams die hard.
Thursday, July 28, 2011
Wednesday, July 27, 2011
Short Sale - New Job Out-of-State
In July 2010 I listed a home for sale in Tolleson. Cute little place - a little too small for the young family living there but they loved it. It was the couple's first home and their two babies were born there. This is a short sale - the economy has been rough on the couple. They went from two incomes to one, and then for awhile from one to none. Thank goodness for family - they kept thinking life would get better and during the bleakest period their parents helped financially.
After some months, husband landed a new job - in California. The little family packed up in a hurry, turned off the utilities and moved into a rental near his work. We got a buyer for the Tolleson house - offered what I'd listed it for. And after a couple of months, the bank decided it was worth another $10K.
Buyer was willing to increase the purchase price by $2K - but the market simply did not support the $10K the bank wanted. The buyer hit his limit, and the bank declined to budge.
So - back on the market it went. And time passed. And more time passed. Not only no offers, no lookers. Not one. Empty house. No power on. Prices in the neighborhood continue to decline.
In the spring, we got another offer - $13K lower than our original offer. I submitted it - and we waited and waited. And waited some more. About a month ago - that would be 11 months into the process - the bank countered asking for an additional $4K - which the buyer agreed to.
That means we have an agreement for $11K less than what had been offered a year ago. We're still waiting for the short sale approval letter.
If the approval letter comes before the buyer changes his mind, and if no deal-killers turn up at inspection, this old old transaction may have a happy ending yet. Great young family - it'll be good for them to get this experience behind them. And a good deal for the buyer too - he has resources to clean up and attend to the last year of neglect. I am hoping for a good outcome and we should know very soon. A year is a long time to wait.
After some months, husband landed a new job - in California. The little family packed up in a hurry, turned off the utilities and moved into a rental near his work. We got a buyer for the Tolleson house - offered what I'd listed it for. And after a couple of months, the bank decided it was worth another $10K.
Buyer was willing to increase the purchase price by $2K - but the market simply did not support the $10K the bank wanted. The buyer hit his limit, and the bank declined to budge.
So - back on the market it went. And time passed. And more time passed. Not only no offers, no lookers. Not one. Empty house. No power on. Prices in the neighborhood continue to decline.
In the spring, we got another offer - $13K lower than our original offer. I submitted it - and we waited and waited. And waited some more. About a month ago - that would be 11 months into the process - the bank countered asking for an additional $4K - which the buyer agreed to.
That means we have an agreement for $11K less than what had been offered a year ago. We're still waiting for the short sale approval letter.
If the approval letter comes before the buyer changes his mind, and if no deal-killers turn up at inspection, this old old transaction may have a happy ending yet. Great young family - it'll be good for them to get this experience behind them. And a good deal for the buyer too - he has resources to clean up and attend to the last year of neglect. I am hoping for a good outcome and we should know very soon. A year is a long time to wait.
Tuesday, July 5, 2011
Pricing It Right
I love working with a seller who becomes knowledgeable about the local market when pricing his property for sale.
It doesn't matter what a seller paid for the property. Or what he put into it. Or what his neighbor sold his house for a year ago. Or what he needs out of it.
What matters is what similar properties are selling for now. Two operative words: similar and now.
To set a price we need to find a property that is close in age and size and features. Usually in a subdivision, that's not difficult. Reaching outside the subdivision is more of a challenge - but not so much.
We're looking for what has sold within the past three months. What is distressing - no pun intended - is that most of what is selling are short sales and bank-owned foreclosures. Those are distressed properties. Sometimes the condition of a distressed property is very poor and the price reflects the condition. Sometimes not. Sometimes a bank-owned property has been painted and newly carpeted and spruced up. Sometimes a short sale has been occupied and maintained by the homeowner up until the time of the sale. But in either instance, the sales price reflects that it is a distress sale - meaning that if bank-owned, the bank needs to sell it and if a short sale, the seller's lender has agreed to sell it usually at a price some percentage lower than market value.
So what that means is that the seller, when pricing his property, must price it where the recently sold properties in his neighborhood have sold, whether those are distress sales or not.
What happens if he doesn't?
If he gets a cash buyer, great - if the cash buyer finds something about the property that appeals to him enough to ignore prices of recent solds in the neighborhood.
If he gets a buyer who is borrowing in order to purchase, the buyer's lender will require an appraisal - and the appraisal is determined by recent solds. Like it or not.
Or no buyer steps up at all because the price is higher than the neighborhood.
Sellers who are just hoping for a cash buyer to come along may be in for a big disappointment, even as the inventory shrinks. Buyers - either those with cash or those who are qualified to get a loan - are very seldom willing to make an offer that looks like they are paying too much.
It doesn't matter what a seller paid for the property. Or what he put into it. Or what his neighbor sold his house for a year ago. Or what he needs out of it.
What matters is what similar properties are selling for now. Two operative words: similar and now.
To set a price we need to find a property that is close in age and size and features. Usually in a subdivision, that's not difficult. Reaching outside the subdivision is more of a challenge - but not so much.
We're looking for what has sold within the past three months. What is distressing - no pun intended - is that most of what is selling are short sales and bank-owned foreclosures. Those are distressed properties. Sometimes the condition of a distressed property is very poor and the price reflects the condition. Sometimes not. Sometimes a bank-owned property has been painted and newly carpeted and spruced up. Sometimes a short sale has been occupied and maintained by the homeowner up until the time of the sale. But in either instance, the sales price reflects that it is a distress sale - meaning that if bank-owned, the bank needs to sell it and if a short sale, the seller's lender has agreed to sell it usually at a price some percentage lower than market value.
So what that means is that the seller, when pricing his property, must price it where the recently sold properties in his neighborhood have sold, whether those are distress sales or not.
What happens if he doesn't?
If he gets a cash buyer, great - if the cash buyer finds something about the property that appeals to him enough to ignore prices of recent solds in the neighborhood.
If he gets a buyer who is borrowing in order to purchase, the buyer's lender will require an appraisal - and the appraisal is determined by recent solds. Like it or not.
Or no buyer steps up at all because the price is higher than the neighborhood.
Sellers who are just hoping for a cash buyer to come along may be in for a big disappointment, even as the inventory shrinks. Buyers - either those with cash or those who are qualified to get a loan - are very seldom willing to make an offer that looks like they are paying too much.
Almost a For Sale By Owner
I was blessed with a transaction not long ago where the buyer found the house on his own - and the seller owned the property outright. Wow.
The buyer lives down the street - and had been watching as the seller went about doing some remodeling. The seller had bought the house at auction, took on the job of deferred maintenance, replaced tile and carpet, painted - and took a neglected property up a few levels.
Buyer wanted the property for a family member who was willing to do a little of the repair work himself.
Long story short, seller engaged the agent who had helped him find the house in the first place. I represented the buyer. We negotiated price down a little in exchange for seller not doing some of the work he'd planned to do - and closed. Seller made a little money. Buyer spent a little less than he'd planned in exchange for a property that more than met his requirements - within a block of where he lives.
Another happy ending - or beginning, depending on your point of view.
The buyer lives down the street - and had been watching as the seller went about doing some remodeling. The seller had bought the house at auction, took on the job of deferred maintenance, replaced tile and carpet, painted - and took a neglected property up a few levels.
Buyer wanted the property for a family member who was willing to do a little of the repair work himself.
Long story short, seller engaged the agent who had helped him find the house in the first place. I represented the buyer. We negotiated price down a little in exchange for seller not doing some of the work he'd planned to do - and closed. Seller made a little money. Buyer spent a little less than he'd planned in exchange for a property that more than met his requirements - within a block of where he lives.
Another happy ending - or beginning, depending on your point of view.
Your Call is Very Important to Us
Don't you think if it were true - that my call was really important to them - that they WOULD PICK UP THE PHONE!
Saying What You Mean
I recently worked with a great guy. Good job. Nice person. Soft-spoken. Nice house. But something came up, he couldn't afford to continue the payments or the upkeep of his home, and the value of his home was less than he owed on it. That spells short sale.
We got an offer quickly - for a good price. Willing buyer. Willing seller. And seller's lender said no - seller isn't behind on payments and without loan deficiency, it doesn't look like there is a hardship.
Lenders don't look favorably at "strategic short sales" - and while this wasn't one, we couldn't convince them of that. This was a seller who made his house payments but at the expense of paying his taxes. So who would you rather have mad at you - your lender or the federal government?
Seller continued to struggle to get bills paid - fell behind on house payments. Got an offer from another buyer - still a good price, but $15,000 less than first offer. We submit paperwork all over again, and seller's lender again says no - not a hardship. Was the hardship letter not clear? Would a foreclosure be better for anyone than approving a short sale?
Many phone calls and emails later - many, many - we got the seller's lender to take another look at the situation. This time, in addition to the hardship letter, we provided copies of demand letters from the IRS (which we should have provided earlier) - and eventually got short sale approval.
Seller is now out from under that obligation. Buyer has the house he wanted. And eventually the government will get theirs - I'm sure.
We got an offer quickly - for a good price. Willing buyer. Willing seller. And seller's lender said no - seller isn't behind on payments and without loan deficiency, it doesn't look like there is a hardship.
Lenders don't look favorably at "strategic short sales" - and while this wasn't one, we couldn't convince them of that. This was a seller who made his house payments but at the expense of paying his taxes. So who would you rather have mad at you - your lender or the federal government?
Seller continued to struggle to get bills paid - fell behind on house payments. Got an offer from another buyer - still a good price, but $15,000 less than first offer. We submit paperwork all over again, and seller's lender again says no - not a hardship. Was the hardship letter not clear? Would a foreclosure be better for anyone than approving a short sale?
Many phone calls and emails later - many, many - we got the seller's lender to take another look at the situation. This time, in addition to the hardship letter, we provided copies of demand letters from the IRS (which we should have provided earlier) - and eventually got short sale approval.
Seller is now out from under that obligation. Buyer has the house he wanted. And eventually the government will get theirs - I'm sure.
Golf Course Property
I love working with a buyer who knows what she wants yet keeps her mind open, knowing that she can't know everything. Even when it turns out she knows more than her realtor.
I had the privilege of working with a woman whose brother and his wife live in Sun City in a very nice condo that they have remodeled. Golf is important to them, and to her, so - even though she's not ready to retire yet, she decided to look for a property similar to theirs.
She lives on the East Coast and scheduled a buying trip. We looked at some properties on line before she got here. She gave herself a few days - building time into each day to enjoy herself playing golf and visiting with family and checking out the community. And we spent about three days - a couple of hours a day - looking as she narrowed down the possibilities.
On the last day before she got ready to go back home, we wrote an offer. The offer was for a very well cared for house, on a golf course - owned by a couple who still lived there. The house had been on the market only a few days, and she asked what I thought of the price. I told her - and suggested a lower number. Her offer was well below the number I suggested.
Seller countered - and buyer said forget it. Oh, well.
A few weeks later, seller's agent contacted me - would buyer still be interested at original offer price? Hey - how many times does that happen? What do you think buyer said?
No, she wasn't interested - but she might be for less. So - long story short - she bought her golf course house for a lot less than it was listed for. Furnished. Knew what she wanted. Knew what she was willing to pay. Read the seller's motivation. Got what she wanted.
I had the privilege of working with a woman whose brother and his wife live in Sun City in a very nice condo that they have remodeled. Golf is important to them, and to her, so - even though she's not ready to retire yet, she decided to look for a property similar to theirs.
She lives on the East Coast and scheduled a buying trip. We looked at some properties on line before she got here. She gave herself a few days - building time into each day to enjoy herself playing golf and visiting with family and checking out the community. And we spent about three days - a couple of hours a day - looking as she narrowed down the possibilities.
On the last day before she got ready to go back home, we wrote an offer. The offer was for a very well cared for house, on a golf course - owned by a couple who still lived there. The house had been on the market only a few days, and she asked what I thought of the price. I told her - and suggested a lower number. Her offer was well below the number I suggested.
Seller countered - and buyer said forget it. Oh, well.
A few weeks later, seller's agent contacted me - would buyer still be interested at original offer price? Hey - how many times does that happen? What do you think buyer said?
No, she wasn't interested - but she might be for less. So - long story short - she bought her golf course house for a lot less than it was listed for. Furnished. Knew what she wanted. Knew what she was willing to pay. Read the seller's motivation. Got what she wanted.
Love and the First-Time Buyer
It's a great experience, helping a first-time buyer find a "worthy" first-time home. My client and her finance knew what they wanted - sort of.
The first one we looked (and they saw possibilities) looked like a crime scene. I wasn't sure if what I was seeing on the floor (cement) was blood or paint.
Then we got a little more serious. Found a charming house - but it was a little too small. Found another prospect - but decided that the neighborhood might not be the best for them over time. Found another - but somebody got there before we did. And so on and so forth - again and again. A day late and a dollar short.
Then we found a bank-owned property - needed a little work but not much. Looked good. Went to see another in a different neighborhood before we made an offer - and liked the looks of that one too. While we were going back and forth, make an offer or don't - the PERFECT house came back on the market.
Great location. Great price. A short sale back on the market after losing buyer #1 - and one of those where you can plug in the next buyer and keep on moving forward (I love that kind). Absolutely charming home - good floorplan, all appliances included, nice paint colors, more for the money than anything else we'd seen. Sellers had taken great care of the property so any maintenance issues were minor. And no wait to speak of.
And we got it. Sweet couple - in love with each other and with their first home together. Took a little more elbow grease to clean up than it looked like at first - but that's typical. Happy beginning for young love.
The first one we looked (and they saw possibilities) looked like a crime scene. I wasn't sure if what I was seeing on the floor (cement) was blood or paint.
Then we got a little more serious. Found a charming house - but it was a little too small. Found another prospect - but decided that the neighborhood might not be the best for them over time. Found another - but somebody got there before we did. And so on and so forth - again and again. A day late and a dollar short.
Then we found a bank-owned property - needed a little work but not much. Looked good. Went to see another in a different neighborhood before we made an offer - and liked the looks of that one too. While we were going back and forth, make an offer or don't - the PERFECT house came back on the market.
Great location. Great price. A short sale back on the market after losing buyer #1 - and one of those where you can plug in the next buyer and keep on moving forward (I love that kind). Absolutely charming home - good floorplan, all appliances included, nice paint colors, more for the money than anything else we'd seen. Sellers had taken great care of the property so any maintenance issues were minor. And no wait to speak of.
And we got it. Sweet couple - in love with each other and with their first home together. Took a little more elbow grease to clean up than it looked like at first - but that's typical. Happy beginning for young love.
If You Can't Sell It, Lease It
I have a friend who has lived in Glendale for years - she and her husband raised their two now-grown children in their home. Plus assorted cats and turtles etc. It's a lovely home - and I mean home as compared to house. Clean. Freshly painted. In excellent repair. Beautifully manicured yard. Nice neighborhood. And, like many of us, even though they've lived there for a long, long time, there is a mortgage. And - the mortgage is greater than the market says the house is worth.
The time came for my friend to move - her husband had a great job opportunity in another AZ city. They tried to sell - pricing it where they'd not have to write a check to their lender. After awhile they understood that their price was unrealistic, that even if they found a buyer who loved it, it couldn't appraise high enough for the buyer to borrow what he needed to borrow to obtain financing.
So - I found them a tenant. Great tenant - but hard to place because she's a cat-lover. Where she goes, so do her cats. And while cats and landlords often are not a good mix, in this instance the cats (and their person) were most welcome.
Good solution for both parties (and the cats).
The time came for my friend to move - her husband had a great job opportunity in another AZ city. They tried to sell - pricing it where they'd not have to write a check to their lender. After awhile they understood that their price was unrealistic, that even if they found a buyer who loved it, it couldn't appraise high enough for the buyer to borrow what he needed to borrow to obtain financing.
So - I found them a tenant. Great tenant - but hard to place because she's a cat-lover. Where she goes, so do her cats. And while cats and landlords often are not a good mix, in this instance the cats (and their person) were most welcome.
Good solution for both parties (and the cats).
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