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Randi Bennett Part three: Foreclosures & Short Sales

Read Part one of the interview here
Read Part two of the interview here

About: Randi shares her experiences concerning the hot topic of short sales and foreclosures.

Note: This 3-part article is not meant to encompass all the details regarding the topics mentioned. 
Our hope is that through Randi's personal experiences we can all learn something new and hopefully aid us in our decision-making.

Tell us more about short sales?

The first things is that there are several conditions in line when you're doing a short sale.

The owner has to be a few months behind before the lender would even help  look into what they would have to deduct their payoff to be.  Then the house usually has to be listed for more than six months.  And they have to prove that. Whether  through a listing agreement  or newspaper article or a For Sale by owner, something to prove to the lender that they've been trying to sell it and they are still behind in their payment .

The bank won't even look at the short sale until the offer is on the table.  So again if you have surrounded yourself by a good Realtor.  The Realtor will put in the listing that it is subject to short sale approval because that at least let's the buyers know that it's going to be a longer escrow.  It's not a quick 30-day escrow. You can't do it in two weeks.

You submit a bunch of stuff, a letter of explanation of financial hardship .You submit the contract so they could take a look at the offer.  I'd put together a closing statement so the bank could look at how much they are going to lose, and all that gets submitted to the bank and you wait.

But You have to be careful because you border the short sale and foreclosure and so the two departments usually don't talk to each other so if you get close where you've missed six or seven payments now and they're in a foreclosure status but you've almost got the short sale approved, make sure you're talking to both departments because they can foreclose without letting the short sale department know and then the whole transaction is dead because now it has gone down to  the court house steps and somebody else can buy it. That is the number one problem with my short sales.

We get all the agreements coming up and we try to get everything all cleaned up and then we still lose it to the Court House steps because it went too far. Its been on the market for eighteen months. They haven't made a payment for six months. So as a seller it's important  that you communicate with the foreclosure department and let them know what's happening.  Try to get it all in writing, fax them information. Have them fax you information back so when it comes down to it you've got it all in writing. That seems to be huge problem as well.

 

Difference between short sale and foreclosure?

There are several things the seller could do. There is a short sale process, there is a deed in lieu of foreclosure then there is the actual foreclosure. 

 

Short sale process is basically you owe the bank $200,000 and the bank says, "ok you could pay me off at $190,000. " But what happens especially with a lot of people in this market, is that they have 1^st and 2^nd loans so you have to get short sale approval on both loans and some of them have different lenders and then if you don't pay off the loans completely they have the right to come to you after the escrow has closed and say "ok, now we need the remaining $15,000." and then they will lien you personally for that loan and then you have to make payments on it.  So the short sale even if you've sold your home and the mortgage has gone away you have to be aware that the lenders could still come back to you afterwards and ask you for that money.

Can you expound further on that point. I think some people have the idea that once we let go of that property our debt that came from that property is totally forgiven free of that debt.

 

Well,everything is a little different. In a short sale they could come to you for the deficiency. So let's say you have a first loan for a $100,000 and a second one for $50,000 and you sold your home for $125,000 so by the time you pay all your closing costs and those kinds of stuff the second probably won't get much at all. What you have to be aware of is that they could come back to you for the deficiency.  So that's the short sale process.

 

A Deed In lieu of foreclosure basically means the seller or the current owner deeds the property back to the bank.  But again if there's a first and a second (loan) you can't do that, if the second lender holds it up. If there's just one loan you can deed it back to the bank.  But when you have two lenders you can't, because you can't deed it to both banks.  Only one person can be an owner.  So when you deed it back to the first then the second loses interest and then of course,loses their mortgage.

 

Foreclosure

 

Is basically where you skipped all these payments.  They do the foreclosure process and they record a notice of default on the home and then they record a notice of sale showing on the County records,the sale date.   Then it goes to the Court House steps.  People then bid on it.  And if it's not a good bid, the bank takes the property.  The only thing is they could still come to you for the deficiency.  So then people have to be aware of that they would need to file bankruptcy to stop the lenders from coming after them.  So if they do a short sale, it's probably safe to file for bankruptcy.  So that the banks cannot come to you for the deficiency.

 

Tell us more about foreclosure sales. I've been hearing and seeing a lot about investing in foreclosure sales.  I mean you see a ton of signs, 'make money with foreclosed homes.'  How does foreclosures really work ? People have this idea that, “ oh I have money.  I want to be Robert Kiyosaki.  It's a down market.  Let's invest.  Let's get a foreclosure deal and get a $80,000 discount."  What do you think of this?

 

A foreclosure sale, if you've never experienced it is an amazing thing to watch.  There's a little tiny house on the courthouse steps and there's a judge and he's standing there and he goes, 'ok we start the bidding at $100,000.  So you start bidding at  $100,000. And the bidding starts .  I mean it's truly like buying art and its just absolutely amazing how it works. Well, you have to have cash on hand,  walk in with a cashier's check for a $125,000 or have your loan ready to go.

You don't know what you're buying.  You don't know if there are liens on the property.  You don't know if the walls are still standing in the property.  Because you can't view the property prior to foreclosure.  They lock the house.  So if you are on the courthouse steps,  you are buying the structure as is. You need to know what you're doing.  There are good things too, don't get me wrong.  You can get some great deals.  But you really have to be aware of what your doing. 

Randi began her career in 1994,right here in Reno.  With over thirteen years of experience in title and escrow.  And with her incomparable attention to detail, organizational skills and dedication to superior customer service.  She is truly one of the most successful in her field in Reno & Sparks.

Here's another post from Mark Graham.  He shares to us his opinion on foreclosures.

Here's What Wikipedia Says About Foreclosures

 

 Related reading:

• Why do banks take so long to approve a short sale?

• Confessions of a short sale expert

• Introducing a simple guide to short sale

• To short sale or foreclose? I share my experiences
  

 

 

 

 

 

Disclaimer:

The Authors and guest authors Of this weblog/blog try their very best to back the
articles with solid data and research, the information should not be
construed and relied upon as legal or financial advice. The
information presented in this blog (herein referred to as
"information"), is subject to change without notice and may
not always be accurate due to changing market conditions nationally
and locally. The information should not be construed and relied upon
as legal or financial advice. Except where prohibited by law, Joe
Salcedo, guest authors and associates does not accept any liability for any loss or
damage,caused, which may directly or indirectly result from any view,
opinion, information, representation admission or omission, whether
negligent or otherwise, contained on this site, including direct or
indirect, special, incidental or consequential damages. You assume
full responsibility for use of the information provided. 

Randi Bennett Part two: Nevada's Real Estate Market, Affordability of Homes In Reno & Troubled Sellers

Read Part One of the interview with Randi here.

About: I asked Randi what she thought about the severe real estate downturn that Nevada has been presently experiencing.   She also shares her thoughts on  the affordability of homes in Reno & Sparks.  Lastly, she gives her opinion on sellers who are struggling to keep/sell their homes.

Note: This 3-part article is not meant to encompass all the details regarding the topics mentioned. 
Our hope is that through Randi's personal experiences we can all learn something new and hopefully aid us in our decision-making.

What do you think happened with Nevada and its gigantic home foreclosure rate, what do you think went wrong and how can we avoid that from ever happening again?

My personal opinion on that is the majority of the foreclosures happened in Las Vegas, Being such a big place and having an unprecedented real estate boom.

But the other thing that was going on was everybody was making such great money.  The country itself was doing good and everybody was making great money but everybody was on stated income,  lenders didn't have to verify what they made or their employment.

Everybody got into adjustable loans and when their two,three and four interest ballooned, rates started to adjust right up in the end of the market.  The market just drops and the value of their home went way down from what they bought it for three years ago. 

So now they can't even refinance to put it in a better rate because they don't have enough equity in their home, it won't appraise now.

 

What do you think about the disparity of the prices of homes on the market versus the seemingly lower wages the locals earn? Do you think the prices of homes  would go down to the point where the average worker would be able to afford a home?

 

The hourly wage is still not priced for new home buyers.  I think some of them will. The biggest one that I talked about was the New homes.  The subdivision homes that are still building will bring their prices down even more and/or pay for the closing costs  to help people get into homes, especially first time home buyers.

I see the new homes dropping even more. Though I don't see the existing homes going too much lower. 

 

What's your opinion on sellers who are upside-down or will just break even if they decide on selling their home at the present time?

It really depends on  their financial situation .The homes  as you have also seen, some have been on the market  for a long time, I mean there are homes that has been in the market over a year trying to sell. 

Depends on how much you want to lose.  You can try and sell it today for the price to break even and ride out the market for say, a month, see if it sells. If it doesn't, then start bringing the price down. Bring it down where you think its going to sell to get it turned around but you might have to come up with the money to actually close escrow.

Continue on to Randi's interview Part Three

Related reading:

• Why do banks take so long to approve a short sale?

• Confessions of a short sale expert

• Introducing a simple guide to short sale

• Randi Bennett talks about short sales and foreclosures

Disclaimer:

The Authors and guest authors Of this weblog/blog try their very best to back the
articles with solid data and research, the information should not be
construed and relied upon as legal or financial advice. The
information presented in this blog (herein referred to as
"information"), is subject to change without notice and may
not always be accurate due to changing market conditions nationally
and locally. The information should not be construed and relied upon
as legal or financial advice. Except where prohibited by law, Joe
Salcedo, guest authors and associates does not accept any liability for any loss or
damage,caused, which may directly or indirectly result from any view,
opinion, information, representation admission or omission, whether
negligent or otherwise, contained on this site, including direct or
indirect, special, incidental or consequential damages. You assume
full responsibility for use of the information provided. 

 

Interview with Randi Bennett: Escrows,Lessons Learned & Advice to Home Buyers & Home Sellers

Randi began her career in 1994,right here in Reno.  With over thirteen years of experience in title and escrow.  And with her incomparable attention to detail, organizational skills and dedication to superior customer service.  She is truly one of the most successful in her field in Reno & Sparks.

Note: This 3-part article is not meant to encompass all the details regarding the topics mentioned. 
Our hope is that through Randi's personal experiences we can all learn something new and hopefully aid us in our decision-making.

About: Randi explains what an escrow is in a nutshell.  She also tells us based from her experience the common problems that occur in real estate transactions for both the buyer and seller side.  And lastly, Randi shares to us what she would tell every home buyer if she had two minutes with them.

What is an escrow?

The Process is different on the West coast and the East coast.  On the West coast a lot of the parties don't meet with each other, whereas on the East coast it's called a round table closing. The buyers,sellers and lender gets together at one time.  All parties then exchange keys and checks and all right there. 

Well, on the West coast buyers come in to sign their loan papers and sellers come in to sign their closing papers.  Then we would have to send everything back to the lenders separately for review of it all one more time.  The lender then sends their money to escrow so we can close the escrow.  And closing for us means that we actually record at the County.  On the East coast they don't do that.  They kind of just record whenever they get the chance.      

What is done here at the title companies in Nevada is that title and escrow are usually within the same company.  So I'm escrow.   And basically what we are is a
disinterested third party. We help everybody and everybody gives us their information. (Buyer,sellers,lenders & Realtors tells us everything) and we don't get to share it with anyone. So we know all the information about the whole transaction to make it as smooth as possible.  That's the whole concept in a nutshell.

Having thirteen years of experience in Title and Escrow, what are the most common problems you have seen happen?

The buyer's money for closing.  What happens 98% of the time is that the buyers come in with the idea of how much they need to close with and the dollar amount is always different.

I mean it's very rare when the buyer comes into my office and says, “oh! Thats exactly what I was thinking  I'd have to come up with.” that is very rare,  and usually it is more than what the buyers expect.

They have to keep in mind that the lenders only disclose to them the loan fees, they kind of have to keep it in the back of their mind that they have proration for taxes, sewer and all those little inspections.

And it could be upwards of a few thousand dollars. So if they're pretty close and they only have so much money to come in with and it comes in higher(than what they expected) at the last minute then that creates a problem. That is one of the biggest hiccups that happen in a transaction.

How about for the sellers side?

The seller's side is actually pretty easy.  Most sellers are pretty aware of the situation.  Most Realtors are very good in educating their clients.  They do a little net sheet form-letting them know how much  money they're going to get back.

The only shocker is their payoff. A lot of sellers think that the principal balance on their statements is the payoff, and it's not.

Interest always pays in the rear so if they made a November payment it only paid October's interest so you still have the entire month of November to pay the interest. So they're thinking their payoff is $199,000, well the payoff comes in at $202,000 That is a $3,000 difference.  That could make or break the deal. That's $3,000 they weren't expecting to pay out.

 

Always be aware that the payoff is little higher than whats written in the statement.

Between the two (buyer and seller) it's usually the payoff is underestimated and the buyer is under quoted.

Your advice for buyers:  if you had two minutes to spend on every home buyer, what would you tell them?

 

My first advice would probably be  to put yourself with a great Realtor, you really need to surround yourself with a Realtor that you can believe in, especially the first time home buyers. They've never been in that process before.

Buyers want to make sure that the Realtor is educated that he/she is going to empower them to understand how the whole process  works.  From looking up properties to showing properties, to viewing homes to writing a contract. All that kind of stuff could be overwhelming.

Once you find the house of your dreams then the rest is pretty much paper work.  You have to trust your Realtor to fill up the offer properly  to do it to the best of their abilities.   And that they can get the repairs taken 'care' of for you and making sure that the escrow goes through smoothly and that they've connected you to a good lender.  I think my best advise is, "to hire A great Realtor.”

Continue on to Interview with Randi Part Two

Related reading:

• Why do banks take so long to approve a short sale?

• Confessions of a short sale expert

• Introducing a simple guide to short sale

• Randi Bennett talks about short sales and foreclosures

 

Disclaimer:

The Authors and guest authors Of this weblog/blog try their very best to back the
articles with solid data and research, the information should not be
construed and relied upon as legal or financial advice. The
information presented in this blog (herein referred to as
"information"), is subject to change without notice and may
not always be accurate due to changing market conditions nationally
and locally. The information should not be construed and relied upon
as legal or financial advice. Except where prohibited by law, Joe
Salcedo, guest authors and associates does not accept any liability for any loss or
damage,caused, which may directly or indirectly result from any view,
opinion, information, representation admission or omission, whether
negligent or otherwise, contained on this site, including direct or
indirect, special, incidental or consequential damages. You assume
full responsibility for use of the information provided. 

 

NAR Report on The State Of The National Housing Market

Existing home sales trend from realtor.org

What's been happening in the national housing market? for almost two and a half hours this morning I surfed around briefing.com's economic calendar,  Realtor.org's housing report and even Census.gov's housing statistics.  I wanted to check some key housing factors to help us understand where the current national housing market is.

Here's what I found so far:

• NAR's Economic Indicators

       - Existing home sales
       - Pending home sales
       - New home sales
       - Housing starts
       - Housing affordability
       - Mortgage purchase application index
       - Fixed-rate mortgage rate

• Briefing.com's Economic Calendar

       - New home sales
       - Building permits
       - Housing starts
       - Existing home sales

• Census.gov defines and compares Existing home sales & New home sales.
  

 

The Real Estate Research Website that Found Me

http://altosresearch.com

The power of the Internet has yet again blown me away.

Somebody gave me a gracious comment about this blog and in passing mentioned a website that researches on the different real estate areas in major cities (Las Vegas, Dallas, Detroit etc.)  Appreciate the tip  Dean!

This is the story of the website:

               

The Altos Research Story

            

".. we simply wanted to know what was happening to property values. But any research we could find at the time was based on old data and tended to be only regionally visible. Years later we can look back and see that property values in Los Altos sank by 20% during 2001 and that they didn't reach their past peak until 2005. But in the middle of '02, who knew? There had to be a better way..."

This is great role model for our us as Joe and I continue to traverse the path of understanding our real estate market just a little bit better.  As you have noticed we have started putting put some real estate statistics (Reno & Sparks Supply & Demand) to help us better understand what is really happening in the Reno-Sparks real estate market.  This we believe is much better way than listening to the 'experts' opinion on our real estate market.

Now the challenge for me is how to communicate the market truths in such a way that people will give it a chance and not readily dismiss it as too complicated.  We passionately believe that studying our real estate market to make better informed investment decisions is not as hard at it may seem. 

Don't give up if you don't understand it at first, understanding the Reno real estate market is very much worth it.  And really, it's not that hard. 

Here's a great report by the Altos Research group.  This report was created with the help of Stephen Bedikian  who  does a marvelous job explaining point by point of what is happening in the major U.S cities:

Altos Research- Real IQ
HOUSING MARKET UPDATE

Waking up in Reno

There are few things in life more uplifting than waking up to a whole new world of blissful white.  This is the feeling you get when dozing off the night before with the often times dull brown surroundings ( Reno is in a high desert altitude ) and waking up amidst a completely different, joyous chorus of snow covering everything the eye can see- makes you feel exhilaratingly calm for some reason.   Maybe its the color, or the complete  transformation of the character of your surrounding.  Almost makes you feel like a new born- makes you feel renewed.  Forgiven. 

That's what so delightful about living here.    Having four seasons makes this place feel like  a Mecca of flavorful dishes.  It gives us something to look forward to.  Four different seasons giving birth to four completely different activities. 

I was having dinner with a couple of friends from Northern California.  Having just conquered the mountains of Tahoe with their snowboards and skis I asked them how often they would go to the mountains in the winter season, "seven to ten" they replied, and quickly added,"when the snow comes late.."  ohh ok.  "but in a winter season like this (apparently we had an early  snowfall) we'll be coming here at least fifteen times. 

I began to do the math.  15 times  3.5 hours= 52.5 hours of travel (via land).

And for us 'Reno-ites'? an hour of drive times fifteen.  I now understand what they were ranting about: 'Man-you're-one-hour-away-from-Tahoe-what-aren't-you-here-everyday!'

'I am more of summer guy.' I silently replied.

That's the beauty of living here.  Reno is like an unfettered father equally loving his twelve kids.      

      

(Part 2) Lessons in Real Estate: Rebel With A Cause

Courtesy of Jamesdeangallery.com

Read Part 1 Here.

But I smell hope.   Few people have  successfully crossed the path of the road less traveled.  I remember reading  an article in the Investors Business Daily. It talked about the 80 million people who lost 7 trillion dollars in the stock market crash of March of 2000.   If 7 trillion dollars were lost.  Where did all that money go?  Maybe somehow, somewhere along the way  a few people  decided to  go against the tide.  The minority decided to doubt the stock market's seemingly never ending  profits.  A few figured  something was up, they didn't really care what they felt about the market they just knew they had to sell.   And sell they did- Reaping generational profits.   

To relate it to real estate.  Would it be possible to do the same in the real estate market?
I think it's worth a  shot.  But we need to consider some things:

1.  We need to recognize that being different- 'a rebel with a cause' is easier said than done.  You will rarely feel like James Dean, more of Peewee Herman.  It is the Road Less Traveled after all.

     Instead of forsaking our past; how we were brought up- the way we saw our own worlds.  The better alternative is we need to be honest about our mistakes and our tendencies to repeat it (" that's half the battle").   And innovate  our way of thinking based on more objective information-  what the market is telling us.

2. We need to acknowledge that going-against-the-herd mentality requires much more than bravado.  I am appalled at how many people misuse the wisdom of investing against the herd mentality for their own gain. 'The most potent lies stem from potent truths'
"hey the market is down, this is the time to make money!" It's not as simple as they would want you to believe. I see it almost everyday being advertised.  And I think it's baloney. 

Just because some really good salesman tells you that using your current skillet can cause cancer, doesn't mean that you have to buy the $3,000 salad master set.

3. Balancing your instinct and what the market is telling you (based on wide ranging statistics).
     Notice I didn't mention emotions.   Following  your heart I realized is not such a  great untouchable idea after all, often times it can even break it.   On the other hand I am also  beginning to see the power of our instincts.  Especially the intuition of women.  It's a beautiful balance of numbers and feel.

Lessons In Real Estate Investing: Rebel with A Cause

 Courtesy of Jamesdeangallery.com

I was on my way for  dinner at a friend's house.  On my way there I began to notice (I'm not exactly sure why just now) the numerous street signs that I passed by.  We all do almost every day. You had the 65 MPH speed limit.  The  no U-turn signs.  The stop sign of course.  The yield signs.  The you-are-1/4 mile- away from your exit warning and all sorts of other warnings and signs.  All these rules and guidelines I have no qualms are what makes our travel possible and un-chaotic.  And our society surely cannot afford not to have it.

But I couldn't help but wonder.  As we were born into this  world of rules and guidelines, one inevitable truth I could not escape; from our street signs to our school system to our friends growing up (and to our present friends for that matter), to the expectations of people of us- aren't majority of us influenced one way or another to follow the norm? to bask in uniformity? To follow the herd.

The question I dare myself to pose is this: could this 'set of rules' that one way or another urges us to all act the same-be uniformed in our ways.  Could this be the foundation for our inclination  to almost always  go the way to what is  already well-accepted?To take the road most traveled? why it's always easier to do what everyone else is doing.  And on the other hand why it is so difficult to do something when everyone is doing the opposite.

And being under that umbrella for most of our lives, could it be that we have adopted this way of doing things with the way we invest? It seems to me that it has.

History is the star witness; from the California real estate recession in the late 80's to the tech bubble of 2000 to our current real estate depression-like status to the great depression of 1929.  To quote the painfully true cliche,'history has repeated itself'.

Would it be fair to conclude that human nature hasn't changed even after seeing all these financial tragedies?  And if so, it does not make sense to me to expect a result other than what we've had...

' your system is perfectly designed to produce that result that you are getting'. 

How then can we expect to do otherwise? to make smarter,courageous investment decisions? after all we were already born into this world  that has unceasingly told us to be this way- to think the same.  Pardon me for I do not have a a one size fits all solution.  But being aware of our current situation, the tendencies of our human nature, being aware of this and being honest enough to acknowledge it is I believe winning half the battle...

to be cont..

Read Part 2 here