complete guide to short sales and foreclosures - revised 11-15
DESCRIPTION
Power point of informative class for first time home buyers. Topics include home buying terms and definitions, overview of buying process, how to buy short sales and foreclosuresTRANSCRIPT
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
A Complete Guide to Buying Foreclosures and Short Sales
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
A Complete Guide to Buying Foreclosures and Short Sales
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
A Complete Guide to Buying Foreclosures and Short Sales
• 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
Common Terms and Definitions
• 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
Common Terms and Definitions
• 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
Common Terms and Definitions
• 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!)
Common Terms and Definitions
• 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 Finding and Retaining A Real Estate Agent
• 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 Finding and Retaining A Real Estate Agent
• 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
A Complete Explanation of Short Sales
• 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
A Complete Explanation of Short Sales
• 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
A Complete Explanation of Short Sales
• 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
Wrap up and Take Aways
– 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
Wrap up and Take Aways
– 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