Around 600 area REALTORS® registered for the KCRAR-sponsored program Keys to Understanding Short Sales held on November 18, 2009. A panel of experts discussed various aspects of the short sale puzzle and helped enlighten many struggling agents.
However, the total KCRAR membership is over 7,400, which means thousands of area REALTORS® might yet be clueless about how to handle a short sale, either from the listing side or the buying side. Clueless leads to a homeowner being forced into foreclosure. Without question, foreclosures are the absolute worst outcome for those homeowners – and remember those homeowners are your neighbors, your relatives and your friends. A short sale is far better when it comes to saving someone’s financial future, family stability and self-esteem. Plus, it’s a far better alternative for keeping our neighborhoods vibrant, too. But do you know what to do?
The National Association of REALTORS® reports that nearly 50% of all transactions today are either foreclosures or short sales. Are you ready to deal with all these specialized transactions? If not, follow these recommendations from KCRAR's Education Director, Jan Pringle:
1) Refer short sale listings or short sale buyers to an experienced agent.
a. Hang out with them during the process and start learning.
b. Get them to help you when you’re ready to venture out on your own.
2) Listen to the audio presentation from the short sale panel (see below).
3) Attend KCRAR classes on both short sales and foreclosures.
4) Pursue the SFR certification from the National Association of REALTORS® (Short Sale & Foreclosure Resource Certification). Do this online at www.realtorSFR.org.
5) Don’t blunder into these transactions without adequate knowledge and assistance.
Access the short sale program recordings HERE:
Intro from Jan Pringle, KCRAR's Education Director
Russ Bouknight with Reece & Nichols Liberty, a veteran of 100+ short sale transactions
Eileen Pritchett with GenWorth Financial, area Sales Manager
Tameka Bryant with The Real Estate House, Freddie Mac Master Listing Broker and CreditSmart certified instructor
Paul Surles with Realty Resource of KC, veteran of short sale transactions for both investment properties and personal residences
Gwen Oberg, VP Default Liquidation Operations at Wells Fargo Home Loans
Follow-up with Russ
Closing from Jan
Q&A from after the program:
1. There are LLC Cash buyers (some from out of town) who are presenting offers on short sale listings with addenda which state, among other things: buyer gets to negotiate directly with the bank instead of the seller’s agent; disclose they (the buyers) intend to are-sell at a profit; negotiator doesn’t represent seller; there’s a 2% fee to the negotiator.
From Jan Pringle: Before engaging in something that could interfere with the performance of fiduciary duties to your seller client, always discuss the situation with your broker and legal counsel. Your broker can access the state REALTOR® Association Legal Hotline.
2. Will lenders agree to take less than fair market value?
From Paul Surles: How much a lender or servicer accepts oftentimes depends on what parameters they have, whether they are internal guidelines or external from their investors, mortgage insurance provider, etc. Fair market value as determined from a broker price opinion (BPO) is usually where everyone starts and then work from that point. I have found that lenders/servicers will either agree on a certain percentage of fair market value or the net proceeds listed on the estimated HUD-1. Another point to note I have found local lenders often time have more flexibility about what they can accept and are faster to approve an offer than the larger institutions.
From Russ Bouknight: Investors have a tolerance ratio for a certain amount of loss against fair market value. That would be offer price minus the commission and the allowed seller-paid closing costs, and any buyer concessions. If the loss tolerance falls within the allowed ‘percentage ratio to fair market value’ then it is likely to be accepted. But there is no rule that you can count on from one investor to another.
3. What if seller’s loan is an FHA, is the process different than a conventional loan?
From Russ Bouknight: FHA has a similar process as a conventional lender. They may require a seller to do more preliminary paperwork.
Short Sale Resources from KCRAR/Heartland MLS
Resources from NAR, particularly these helpful tools and tips:
NAR has also posted several Webinars which are worth an investment of your time: