A Complete Guide to Buying Foreclosures and Short Sales

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A Complete Guide to Buying Foreclosures and Short
Sales
Presented By ConnectRealty-ShortSales.com Present
er Beryl Gosney Contact Information Phone
425-344-2222 Info_at_ConnectRealty-ShortSales.com
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A Complete Guide to Buying Foreclosures and Short
Sales

• Topics We Will Cover In This Session
• Road Map to Home Ownership
• Terms and Definitions you should know
• Tips to Finding and Retaining a Real Estate
  Buyers Agent
• A Complete Explanation of Short Sales
• A Complete Explanation of Foreclosures
• Wrap up and Take Aways

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A Complete Guide to Buying Foreclosures and Short
Sales

• The Purpose and Goals of this Session
• To Create and Empower Home Owners
• Educate you about the current Washington Real
  Estate market and the home buying process
• Empower you with the ability to make educated
  decisions in the home buying process

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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, whats next?
• Becoming a home owner

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Common Terms and Definitions

• Get Approved for Financing
• Income and Asset Documentation
• Pay stubs / VOE / W2s / 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

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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

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Common Terms and Definitions

• Making an Offer on Your Dream Home
• Residential or Condominium P S Agreement
• Northwest Multiple Listing Service 8 pgs
• Addendum to Purchase Agreement common with short
  sales and foreclosures
• Good Faith Deposit Earnest Money Deposit
• Held by Agent up to 24 hrs 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

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Common Terms and Definitions

• Offer is Accepted, Whats 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!)

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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

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Congratulations! You are a Home Owner

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

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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
• Sellers Agent Represents sellers best
  interest
• Buyers Agent Represents buyers best interest
• How a Real Estate Agent is Paid
• Seller offers of sales price to Agent
• Sellers Agent offers to split this commission
  with any Agent that bring buyer that results in
  the sale of the home

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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

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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
• Dont be afraid to expect a high level of service
• You are not obligated to stay with one buyers
  agent avoid Buyers Agent Contracts
• Stick with an Agent that does a great job for you
• Do not allow anyone else to write up offer

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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

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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

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A Complete Explanation of Short Sales

• What to be aware of with Short Sales
• Sellers 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

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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

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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

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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

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Tips to Find the Best Deals and Make Strong Offers

• Work with a buyers agent Fiduciary duties
  require that your best interests are represented
• EXCEPTION Short Sale Sellers Agent
• Work with a Real Estate Agent that is familiar
  with making offers on short sales and
  foreclosures
• (Hint recommend Beryl Gosney, this is our
  specialty!)
• 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

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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 its
  worth Be aggressive if you like the home