Archive for April, 2011
HOMESMART REAL ESTATE HIRES NEW CEO
By: Maria Hass*
My broker HomeSmart Real Estate hired a new CEO in an effort to expand internationally and nationally. Currently, Homesmart is a home to almost 4,000 agents with 8 offices in metro-Phoenix and 2 offices in Tucson. This week HomeSmart attracted 12 new agents.
Many seasoned and successful Realtors find HomeSmart’s education program, high tech resources, broker support at affordable fees valuable in staying in the business at today’s real estate market.
HomeSmart International hired Chuck Lemire as its new president and CEO. Founder Matt Widdows is now the company’s chairman. Lemire comes from Vienna, Austria, where he was the chief operating officer and executive vice president of Re/Max Europe.
For a full story visit http://www.bizjournals.com/phoenix/news/2011/04/13/homesmart-hires-chuck-lemire-as-ceo.html?surround=etf&ana=e_article
QUESTIONS TO ASK BEFORE MAKING AN OFFER ON A SHORT SALE
by: Maria Hass
1. How many loans does the seller have? Usually two loans will take longer and harder to negotiate. It is also two times the work compared to just one loan. If there are three loans, do not bother to make an offer.
2. Who is/are the seller’s banks? Some banks are quicker to process the short sales than others. Bank of America, EMC, SunTrust Mortgage, HSBC Bank are among my favorites. Beware of PNC as the 2nd lienholder. This bank is illogical and ask for an outrageous amount to settle.
3. Is there a PMI? Private Mortgage Insurance (PMI) are insurance for the lenders. Some are nicer than others. They could make or break the deal.
4. Who will negotiate the short sale? – In some cases the listing Realtor hires a third party negotiator such as a law firm, another Realtor or mortgage broker to negotiate the file. This arrangement leaves no room for the listing agent to have control over the file and many times is not aware of what is going on with the negotiations with the seller’s lender. The third party negotiator is in many cases overwhelmed with the number of short sales at their desk and is not directly accountable to the seller who they have not met. Short sale is a game of strategy, the negotiator could strategize the short sale to approval. And it is hard to strategize a transaction if the negotiator does not have ownership of the file. I do not encourage making an offer on a short sale that is negotiated by a third party. I view this as a “red flag” and a waste of time.
5. Is there a foreclosure date scheduled? It is always best to start the short sale process when the sellers missed their first payment or is thinking of missing payments. However, if there is one, two things could happen 1- The bank will work quickly to avoid foreclosure or 2- If the foreclosure has been extended many times, the seller’s lender may choose not to grant another sale date extension. Which means, the Realtor can spend countless hours toward getting an approval only to find out that the seller’s lender will no longer extend the foreclosure date and your approval letter means “nothing”.
6. Where are you in the short sale process? The answer to this question will give you an idea as to the time frame of completing the short sale. Usually short sales are from 3 months to a year depending on the circumstances of the buyer, seller, price value of the home. If all these factors are in place, the short sale could close within three months. However, if the buyer cancels or the bank disapproves the offer or the bank counters with terms that the parties cannot agree on, then it will delay the closing considerably.
Why are Home Values Declining Despite Strong Buying and Low Inventory?
By: Maria Hass
On April 2, 2011, the Chander edition of The Arizona Republic reported that Chandler’s home supply has decreased sharply.
But many area home values are still declining. Except for Sun Lakes, where the median rose 10 percent and for ZIP Code 85248, the article said the majority of the city’s home prices fell by an average of 6 to 11 percent from 2009-2010.
It usually follows that when demand is up and supply goes down, prices go up. In this situation, the demand for homes has increased but the prices fell. Why is that?
1. Investor Buying: Most houses are bought by investors who are price driven and looking for a “steal deal”.
2. Distressed Homes: A majority of the homes on the market are foreclosures and short sales. Foreclosed homes are repossessed by the banks, who are in a hurry to sell. These homes are listed at “buy now” pricing levels and are being sold below market value. There is a significant inventory of foreclosed homes, which is expected to continue — with many short sales declined by banks eventually becoming foreclosures.
3. New Listings are Old: On the flip side, some lender-owned homes are priced ridiculously high and do not show well when they first go on the market. The price ends up being reduced many times and the listing becomes stale and unattractive. The home eventually sells for a lot less than what it would have had it been priced right at the beginning.
4. Loan Requirements: FHA, VA and other loans require home repairs before loan approval. In some cases, these repairs are extensive, time consuming and either the buyer sometimes cancels because of a lack of time or money to complete the required repairs. The property goes back on the market and sells for a much lower price.
5. Appraisal: Lower appraisals end up reducing sale prices.
6. Short Sales are Long Sales: Many short sales take forever to get approval. As the time drags on, the prices come down.
Unless the real estate market is dominated by traditional sales, it will be difficult to see a “true appreciation” of home values. Unlike distressed homes, the homeowner of a traditional sale cares about pricing the home at the highest possible value. Most of these homes sold by homeowners are well-maintained and show well.