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Yesterday we spoke about existing market data and how we believe that the market will continue going down. So, we would like to talk about what occurs when there is a sharp growth in active inventory and a sharp decrease in sold houses.

Having been in the short sale business for three years, we have seen modest rises with tax credit extensions and additional programs. What we have watched is when inventory goes up and sales go down, lenders do not respond to that data swiftly. Normally, they draw their information for BPO’s and appraisals from as much as 6 months ago. The trouble with this method is that the BPO is deeply weighted on sold costs. So when you pull sales from contracts that were authored in January, February and March, the tax credits impacted the market. Those comps are not taking into account that sales are going down and amount of active listings are going up. When you see this transpire, you will have to begin pricing your houses more aggresively. The market is tumbling once more but the lender is extremely slow to react to that data. They don’t want to be the first to act on the lower price. You can be expecting that they will counteroffer with other prices of houses sold months ago when the marketplace was not the same.

For example, we had a listing with an offer price of $245,000. We believed it was a stout offer because the market was going down. We received a counteroffer with the BPO figure at $265,000. We were given a day to rebuild the offer or the folder would be closed.

Kevin disagreed and had to demonstrate to the negotiator that the BPO price was sour. He discovered a comp that was the matching floor plan listed at $235,000. This was sent to the negotiator and along with a note that explained the situation. The alternative to the lender counter offer was to foreclose on the property and relist it in ninety days at a lesser price than the offer.

Be informed that there will be BPO disputes in your future. With listings rising and sold houses decreasing, you will have added disputes on your hands to prevail over.

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A very crucial matter that has come up in the last couple weeks is our focal point today. We’ve seen this crisis pop up over the last few weeks and we want you to be able to sidestep it.

Make certain that the bank you are working with on a short sale is not the lender where the house owner has a checking account. We have currently had numerous people over the course of the previous few weeks that have approached us on this subject. Both present customers and soon to be customers have been telling us that the have missed payments and the lender has taken the money out of their bank account without their authorization.

We suppose that the note you signed for the mortgage is only secured to the home. It is not secured to the checking account. However, we assume that the lenders have revised or applied their checking account terms of service to acquire their money. Essentially, they are saying that if you are deliquent on other accounts they can obtain the cash from one account to apply it to another account. They are thieving it without any authorization.

We don’t know if this is right or illegal, but it is occuring. So, there is a path around this. Ask your property owner up front where their checking and savings accounts are presently held. Make certain that if they are not held in the lender that you will be doing a short sale with. Without delay have them shut down those accounts and get the cash out. It is extremely vital that you know this as short sale realtors and that you share this information with your clients.

Get the word out to other agents and your clients. Do not let this become a predicament for the people that you are trying to help through the short sale procedure. Also, please comment below if you have seen this take place already. Let us know what banks are using this policy.

One extra thing to note, we will be in Las Vegas on August 25th with our Crush It short sales lecture. So, acquire your ticket today!

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Kevin is flying solo at the moment. He’d like to chat about a few different things today. To begin with, we would like to re-examine yesterday’s blog concerning HAFA. We talked concerning the lack of impact that HAFA, or anything with four letters, has on the short sale market. With concerning 15 different people responding yesterday, we discovered exactly zero closed HAFA short sales. So, as we declared yesterday, HAFA is just not a game changer. We even got a commentary that declared that a realtor was on day 67 of their 15 day HAFA route. That was hilarious. It has not been impactful to the short sale market in spite of what others may have claimed.

The second thing that we would like to speak regarding is a little inside form that we were given from a representative of Bank of America. I don’t believe that this is a Bank of America specific document. I think it is an investor specific document. This form is an impact analysis. We wanted to share a few things at you from this impact analysis. It has the borrowers details, how much the loan amount is, the origination amount, the home worth today, and the bid amount. This form also shows what they suppose the home would sell for as an REO. Nevertheless, here is the bombshell. The anticipated marketing costs on this $271,000 home is almost $34,000.

You want to keep this stuff in mind when you are told by your negotiators that they will take the house to foreclosure. The lender will never get added money from an REO. It costs them too much cash to take a house to foreclosure sale.

One final reminder for our Crush It Short Sale Seminar. Friday, August 13th we are hosting our lecture. You definitely do not want to miss this seminar. It is being taught by guys that are in the trenches completing short sales. So, if you are a Phoenix area realtor or even someone who understands the value of this session and is willing to fly on a plane to get some great education in the short sale business, you will not want to miss this seminar.

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Get powered up by Kevin and Fred at Short Sale Power Hour by the Short Sale Specialists of Arizona

Kevin and Fred are hanging out at Taco Surf in Pacific Beach, California. Fred actually held his wedding reception at Taco Surf. If you are ever in the San Diego neighborhood, you must check out Taco Surf. The reason Fred is having such a last-minute lunch today is because he has exhausted quite a lot of hours this morning babysitting foreclosure auction dates.

The first file, serviced by Metlife for Freddiemac, has been a nuisance during the total process. The first time we attempted to close this folder, MetLife sought to foreclose. So, we went to Freddiemac and they happily postponed the auction date. Nonetheless, the purchaser on that deal fell through following inspections. Currently we have another purchaser and we submitted that contract at the conclusion of June. We have been dealing with Metlife to get them all of the papers that they needed until last week. Last week they notified us that they could not reschedule the foreclosure auction date because it was very late. So, this morning, Fred had to phone Freddiemac again to get the foreclosure auction date deferred. Freddiemac, once again, cheerfully postponed the sale date and sent Metlife an email asking them to push back the auction date for an extra 60 days because the proposal on this home is more than the BPO. It surely makes you wonder what Metlife is doing in the short auction business.

The second folder, working with Chase, has been very testing. Fred was told last week that the sale date has been deferred and everything is good. Fred has talked to a couple of people that have been very obliging and pleasant, but the trustee has already told Fred that the home is going to foreclosure auction tomorrow. Fred called the trustee for the second time today and he confirmed that it is positively going to sale.

Finally, the Chase worker called Fred back and confirmed that the sale had not been postponed. Actually, Chase deferred the auction internally, but Chase forgot to get consent from the investor. So, Chase had to go to the investor and request that they auction date be deferred.

We aren’t picking on any servicers or investors, but we would like other agents to understand that you must confirm foreclosure auction dates with the trustee. Trust no one in the banks and confirm everything.

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We are embarking on day two with Trent Chapman and we are taken aback by the number of appearances Trent has had on shortsalepowerhour.com. We asked Trent to come back to speak about the Short Sale Genius Designation course. Everyone understands that we are not big fans of designations. We have contributed on our own designation in recent times, but we stole that from Trent. However, Trent has decided to do a real designation. The designation is for agents who work with troubled homes.

The designation is dissimilar from other designations. With other designations, you go to a session and take an exam and receive your designation. With the Short Sale Genius designation, there are unique levels based on how many short sales you have completed.

If you take the class you will get a general designation, but it will also document how many short sales you have completed. Trent merely figured that taking a class and passing a examination didn’t make any person an expert. So, he decided to insert a little bit of common sense and integrity into the procedure.

On a different note, software is something that lots of other realtors ask about. Trent offers software that is state of the art with features that aid the realtor that is doing a few transactions or hundreds. His system actually coaches you along in the short sale procedure. There are red flags that let you know if a file is out of compliance or taking overly long. There is also a feature that allows the home owner to log in and see the status of their folder. It was particularly created for short sales. Check out the theshortsalegenius.com

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Get powered up by Kevin and Fred at Short Sale Power Hour by the Short Sale Specialists of Arizona

Today we are talking about house sales, in particular nationwide figures. We do not regularly care too much about nationwide figures. It is vital that you go glance at your local figures because real estate is a local industry. However, sometimes the figures are so unbelievable that they need to be brought to your focus.

According to the National Association of Realtors, pending property sales fell 30% in May from where they were in April. Granted, April was the conclusion of the tax credit deadline. So that had a little effect on the circumstances. We do not quite know what has happened from May to June.

Kevin and Fred were foretelling that this would occur as much as a year ago. In essence, we have been borrowing buyers from the future. With the incentive tax credit presented by the gov’t, plenty of people decided to purchase houses earlier than they would have.

This is just like what occurred in the first half of the decade. The banks were lending money to about anyone that sought it. Buyers that were not necessarily qualified or were not prepared to buy a property stepped forward and bought houses. So, in both cases, there is going to be a lag time before home sales catch up.

The largest parts of this dilemma are inventory and home prices. Because sales are despondent and inventory is going to amplify, prices will absolutely dive.

With adjustable rate mortgages and their pending resets, house owners will be taking a closer look at their mortgage and the home value. For a few the payment will go down, but so will the value of their property. There is a clear potential for an increase in strategic default. We haven’t seen the worst of defaults, unemployment and short sales. The nastiest is yet to come.

We’ve had all of this feel good news with the last few months of sales and pulling buyers from the future. We will be in a poorer position from a nationwide point of view than we ever were in 2007.

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Last Friday we talked about a commission disagreement with Condor Capital. They are not actually a servicer of loans. They are actually a purchaser of loans. They identify themselves a scratch and dent lender. It turns out that Condor Capital goes out and purchases up the most awful loans out there for a particular proportion of the unpaid balance. Then they pass them off to their loss mitigation squad and try to turn a profit. They do this through completing short sales and other techniques.

The loss mitigator that we talked with last week was keyed up about the agreement with Fred because he knew his business was going to make a profit. Still, the real catch here is that the loss mitigator gets a fraction of Condor Capital’s earnings on the deal. He’s not simply getting a bonus for closing folders, but essentially getting a percent of the profit.

So, when you are working with Condor Capital, remember that the negotiator is making a commission on the contract. This almost certainly leads to some additional encouragement for the negotiator. You may want to reconsider some of the techniques that you use when negotiating a short sale with Condor Captial. Take a little atypical slant with Condor Capital because they are getting a profit and you are making a profit. So do your best to deal with them.

There will be a lot of visitors coming up in the next couple episodes. So be sure to check out the next several days of videos for several extremely unique guests.

Also, a reminder, that August 13th we will be hosting another Crush It Short Sale seminar in Phoenix. It does not matter if you have seen us live previously, we have so much new matter to share with you. If you can’t make it, send your negotiator or transaction executive. We will blow your mind and blow up your production!

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Get powered up by Kevin and Fred at Short Sale Power Hour by the Short Sale Specialists of Arizona

Kevin and Fred are lounging on Mission Beach in the San Diego area. It is a tad overcast on the coast, but that is not keeping Kevin and Fred from enjoying the sand. Seeing as relaxing is more critical to them than talking regarding HAFA, they have determined to make this one of the shortest short sale power hour videos ever.

HAFA has demonstrated to be a non issue in the short sale business. Dave Sutherland with Bank of America pronounces it HOFFA, like Jimmy Hoffa, who is not anywhere to be found. That is a great deal like HAFA, which is not anywhere to be found. Back in March, there was a four letter title out there and other companies advertising their qualifications and telling real estate agents that they need to get licensed for HAFA because it was going to be a game changer.

HAFA has not mattered at all. At this point we are on July 21st, and HAFA was rolled out on April 5th. So far, of the few hundred agents that Kevin has spoken to in that timeframe, not a single one has reported completing a HAFA short sale.

We are not saying that no HAFA Short sales have been completed. We are only saying that we have not experienced it or recognize any agents that have experienced it. So, at this time is what we would like from our spectators today. We are requesting your comments beneath the video in at least the form of 2 records. Firstly, how many HAFA short sales do you control in the system. And secondly, how many HAFA short sales have you closed.

The initial month that HAFA was rolled out there were heaps of trainings to be taught about HAFA. Now those education courses are CE credit courses. It seems that all of the classes that do not really matter goes to a CE credit course since you would only go to it if you might actually get credit for it.

We are hosting a Crush It Short Sale Lecture in the Phoenix locale on Friday, August 13th. It’s a real life, in the trenches, information you can make use of, lecture. Get registered today!

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Another extraordinary guest graces the pages of Short Sale Power Hour. Derek Gilbert runs a business in the Phoenix area as well as in Colorado. Derek has been with Keller Williams for about six years now. Last year, Derek and his family moved to Colorado and joined Keller Williams doing REO and Short sale in both Arizona and Colorado.

Derek has been doing REO for a time now, but he jumped into short sales for a number of reasons. Firstly, you can run your company much better with short sales than with REOs. There is a elevated profitability in short sales that comes with that control. The regular commission on REOs for Derek has only been around 1.5-2% with all of the overhead involved. Yet, Derek enjoys making more cash earning 3% with short sales.

Derek is a go getter. He can complete any transaction and has demonstrated that over his time as a short sale agent. There are so many diverse resources that you can use to fight your way through a short sale. Lots of lenders will tell you that their guidelines is to not pay full commission to real estate agents. Still, those rules can always be adjusted.

For example, many lenders will try to slash the commission if the agents are from the same broker. Bear in mind that the lenders are not in the real estate industry. So, they do not necessarily comprehend the real estate business. You, as an agent, need to help them recognize the real estate trade now and then to get the commission that you deserve.

With REOs, the bank will always pay six percent. They will disburse for a whole host of fees with an REO. So, why would you as an agent let them to pay a discounted commission with a short sale. Remember that they can attempt to reduce your commission by one percent or they can incur an extra 10-12% from taking a property to foreclosure.

Don’t permit the bank to slash your commission. Escalate up the chain of command if you need to. Sometimes you have to help the bank recognize the real estate business and the banking industry.

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Get powered up by Kevin and Fred at Short Sale Power Hour by the Short Sale Specialists of Arizona

Last week we spoke about the waning house sales in America. They fell 30% from May to June. Those videos were filmed on Monday, July 5th and since that time there have been a lot of articles supporting what we are saying.

First, if you took our videos last week to think that you should run and hide from this state of affairs, you are completely wrong. We disclose this information with you so that you can be in front of this market head on. We’re merely trying to be realists and move our approach as the market changes.

One piece of writing remarks that the US economy appears to be in turmoil as the effects of gov’t incentive are already wearing off. Also worth noting is that a double dip recession is extremely doubtful due to past precedents. Yet, Kevin wonders aloud how we can have a double dip recession if our market never improved. The financial system has consistently been horrific. Also mentioned in other articles was the national mortgage deliquency rate. It grew to 9.2% in May, up 2.3% from a month earlier and up 7.9% from a year before. This makes you speculate how mortage deliquencies are going up, but there was a rise in our economy.

When we interpret writings like this, recognize that there is an opening to help people out. Do not run and be frightened. There will at all times be purchasers and there will always be sellers. People have to have a space to live in. Each home is saleable at the appropriate price.

It is significant to note that the non-current mortages are really at a 12.4%. That is terrible, because the historical normal is close to 1%. One other distinguished statistic to note is that the average amount of days elapsing between when a mortgage becomes 30 days deliquent to foreclosure sale reached a record high of 449 days. So, from the instant that a home owner is a month late in payments, they are not losing their home for 14 months on average.

We will also be teaching a Short Sale Crush It seminar that continues to get better. Preregister for that August 13th lecture at shortsalepowerhour.com

Short sale FAQs and more.

Get powered up by Kevin and Fred at Short Sale Power Hour by the Short Sale Specialists of Arizona