Fourth Post

REO vs. Short Sale

I will briefly explain the SHORT SALE process and the REO (real estate owned) process to you.
A SHORT SALE is when the lender has a mortgage on the property for more money than the home is worth at today’s value.   The seller owes the mortgage amount and cannot pay the amount in full because they cannot sell the home for what is owed.  The seller is still the legal owner and has not been foreclosed upon.
The lender has to evaluate the property to see how much it will sell for at today’s value and then agree to reduce the existing mortgage amount to facilitate the sale of the property, thereby agreeing to accept the loss incurred between the current mortgage and the new sales price along with all the costs associated with the transfer of the property.
The lender has a choice of reducing the mortgage amount to facilitate the sale of the property or to begin the foreclosure process.  Unfortunately, it is not uncommon that a lender refuses to agree to the mortgage reduction that is reflected in the list price of the property.
A real estate agent usually lists the property for sale without having an agreed-upon sale price from the lender.  The list price that the agent uses is oftentimes at a much lower price than the bank will agree to allow the home to be sold.  This process is cumbersome and lengthy.
The reason for the lengthy process is that the number of foreclosures and short sales are at a record high, and the lenders literally have hundreds of files on their desks to evaluate and respond to.  Lenders will tell you to expect a four- to five-month wait time for a response to an offer to purchase.   Only occasionally is the lender able to respond in a timely manner.
So when a buyer makes an offer on a home that is in a “short sale” situation, they do not know how long the process will take for them to get a response to their offer, and they do not know if the lender will accept their offer, counteroffer it at a much higher price, or accept another offer that is likely to be on the table at the same time.
On the other hand, REO, BANK OWNED or LENDER OWNED are synonymous terms and carry a much different status than the SHORT SALE.  This status is when the lender has foreclosed on the property, evaluated the property, is the legal owner of the property and therefore able to make all decisions regarding an offer to purchase in a timely manner.  The buyer should have a response to their offer within several days.
Right now, the REO properties present a very good opportunity to purchase a home below market value, due to the fact that the lenders holding these properties are anxious to have them sold quickly to reduce the inventory of foreclosed homes they are carrying.
Please call or email me with any questions you may have.

Third Post

Buying and Closing Process

PURCHASE AGREEMENT & CLOSING CHECKLIST

Once we have located the home you are ready to purchase, I will busy with the following:

_____ Have purchase contract, addendum, and/or counter offer, SPDS, estimated cost sheets, etc. been signed and initialed?
_____ Verify escrow is opened and have Title Company give you a copy of earnest money check and receipt.
_____ If new financing, verify that the buyers have scheduled loan application within the time period stated on the contract.
_____ Verify that the buyers have scheduled the inspection. When does it have to be completed?
_____ Verify that the seller has the utilities on for the inspection.
_____ Deliver to the seller written notice of deficiencies from buyers (as per report) and obtain seller’s approval or agreement to correct deficiencies by ___________ date.
_____ Verify that deed restrictions, status of Flood Plain, Legal Access, financial documents, SPDS, Homeowner’s Association documents, CC&R’s, etc., have been ordered and delivered to buyers. Have buyers sign a statement approving same.
_____ Write a letter to the client or customer reiterating important dates and facts in the contract.
_____ Verify if Home Warranty is being obtained and that the title company has received a copy.
_____ If new financing is involved, deliver the Preliminary Loan Approval letter to Title Company.
_____ What are the contingencies? Has written contingency removal been signed and delivered to Title Company?
_____ Verify schools, zoning, flood plain, assessments, sewer, and fire protection, taxes.
_____ If property is on septic system make sure that septic certification is placed in escrow before closing. If on sewer, verify. Does it need a dye test?
_____ If square footage is different from what the listing package or pubic record indicates, determine why. If addition has been made, verify that a building permit was issued. If there was no permit issued, a disclosure must be drawn up and signed by all parties.
_____ Check the Preliminary Title Report for any problems. Consult with escrow officer to see if everything necessary to close has been completed.
_____ Have seller order termite inspection before close of escrow.
_____ Follow up that buyers requested repairs have been completed and obtain a written satisfaction of work done.
_____ Verify any lender required repairs were completed and have appropriate lender or government agency approve said repairs.
_____ Contact lender and escrow officer to eliminate problems.
_____ Check estimate of funds due seller against your estimated cost sheet.
_____ Confirm recordation of deed with the County Recorder’s Office.
_____ Arrange for key delivery as per occupancy status in contract.
_____ Have purchaser Coordinate turn off/turn on of utilities.

Second Post

Current Phoenix Real Estate Conditions

Current Phoenix Real Estate Conditions:

Here is something the news media will not tell you.  The housing market in the Phoenix metroplex has depreciated 44% since the height of the market in late 2005 and early 2006.

Naturally certain cities within the metroplex have not depreciated so drastically, however these are statistics across the board.

Sales were averaging 3000 – 4000 per month for the past year.  Within the past two months sales have doubled and almost tripled to over 11,000 per month.

The news media will not tell the public things are changing until after they have changed.

I say all of this to say this, you should do what you are considering now, while the rates are the best they have been in 40 years and the prices are the lowest they have been in three years.

You are not the only ones looking for a great deal.  When one pops up there are multiple offers on it very quickly.  Homes in the entry level are selling faster than they have in the last three years.

So as a buyer you will need to be prepared to write an offer when you see the one you like, or it most likely will not wait for you.

The first step is to have your LSR (loan status report) signed by a mortgage broker or loan officer or your personal banker.  If you would be paying cash, you will need to provide the seller or seller’s agent with proof of funds before your offer will be accepted.  Same goes for the LSR, an offer will not be accepted without it.

The news media has been telling everybody how bad the market is and the savvy people are really out there taking advantage of what is happening.

I have been selling real estate for 30 years and learned of a cycle years ago that I have been watching over the years and that is this;  That every decade there is a 3 year down cycle and a 3 year stabilizing period and then a 3 year appreciating period.  We are just finishing the 3 year down cycle and are just beginning the stabilizing period now.

So your timing cannot be better to be buying at the very bottom of the down cycle.

I look forward to working with you and helping you find a great investment property.

Blake Randleman
Designated Broker
Price Point Realty
Chandler, AZ

First Post

A Few Good Reasons to Buy

• There is still a good selection of homes, however inventory is starting to dwindle.
  
• The market is showing encouraging signs of a turn-around.  Market dynamics still favors buyers but the longer you wait the more opportunities you will miss.
  
• Prices have been reduced to historically low levels.  The greatest values are on finished homes with prices below the cost to build new.
  
• Mortgage financing is downright compelling with rates at all time lows.
  
• Purchasing and closing now will have you settled before the school year begins again.
  
• The recently enacted stimulus package includes a tax credit worth up to $8,000 for first-time homebuyers who purchase a primary residence before the end of the year.

• The timing of low rates and prices combined with tax credits create an excellent opportunity to save money monthly.