A low-ball offer – generally 25 or more off the asking price – allows buyers to see if they can land a great deal, even if they’re willing to pay more. In a survey last year conducted by the National Association of Realtors® (NAR), one in 10 respondents cited low-ball offers as a concern. According to real estate columnist Kenneth Harney, a NAR survey conducted in March and not yet released found that almost no one complained about low offers.

When the number of listings outpaced the number of buyers, many potential homeowners submitted a shockingly low offer on the theory that they had nothing to lose. If the seller balked, most would still counter with something below their asking price. Today, however, offers close to the asking price – or even beating it – will probably come in fairly quickly from someone else if a home is priced correctly in the first place.

Even buyers who still want to low-ball an offer on a home many times switch tactics after they lose a property or two to a more aggressive buyer.

Florida Realtor Marnie Matarese works with J Wood Realty in Sarasota. She told Harney that fewer buyers want to low-ball an offer in her area, but they still come in – mainly from out-of-state or out-of-the-country people who have read about the state’s foreclosures and short sales. That news, however, is old – it has not kept up with reality in many areas.

Matarese says some people still insist on making a low-ball offer, but that she doesn’t mind. “You can’t blame a buyer for trying to get a good deal,” she says.

In some cases, a seller isn’t offended by a low-ball offer, but their counter-offer shaves only a little bit off their original asking price. An Olympia, Wash., real estate agent had a $150,000 offer for a $250,000 listing, according to Harney. But after the dust settled and the seller shook off his irritation, he and the buyer agreed to $230,000.

Harney closed his column with this advice: “Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment – at least in rebounding markets – it could be counterproductive if you truly want to buy.”

Source: Ken Harney. Distributed by Washington Post Writers Group.

© 2012 Florida Realtors®

While it is essential to hire an experienced Short Sale agent when listing homes, it is equally important when hiring a Certified Short Sale Buyer’s Agent who specializes in representing Buyers who are interested in purchasing a short sale….and it costs you NOTHING – we get paid our commission fee by the Seller’s lender.

The question that comes up quite often is why can’t any other agent help me in this Short Sale buying process? The Sarasota market is not overloaded with short sales in fact we have an abundance of homes for sale that are being marketed as traditional sales. Therefore, many regular Buyer’s Agents don’t want to deal with the long drawn-out process dealing with a short sale (the agent’s time involved and months later getting a commission) when there are plenty of other regular homes to show a Buyer. Many Buyers are looking for a real bargain, and that’s where we come into the picture! I have saved my Buyer’s thousands of dollars by helping them as their exclusive Short Sale Buyer’s Agent.

The first thing I do when a Buyer is calling or emailing me about acquiring a Short Sale home or investment property is to ask a lot of questions, because not all Buyers are ideal candidates for a Short Sale. They may not be a candidate if:
• Buyers need to sell their home first
• Buyers need to close quickly within 30-90 days
• Buyers with lots of contingencies – such as seller to pay closing costs, repairs, etc.

Working as a Short Sale Buyer’s Agent requires me to be proficient and knowledgeable about short sales overall. More importantly, educating my Buyers about the Short Sale process and knowing their expectations initially is the key to a smooth, successful and a less stressful transaction.
The next step would be making sure after providing a list of homes for sale that they are within my Buyer’s criteria, such as location, price range, size and amenities. Then, research the property and interviewing the listing agent.

There are 5 simple but essential questions to ask the listing agent before preparing an offer for you, the Buyer:

1. Has the required short sale package been completed – is it ready for submission to the Lender? On many occasions I have interviewed an agent and they would say that the seller was slow to respond or slow to submit all the required documents. A Sales & Purchase Contract will not be reviewed by the lender/servicer unless all documents are received. At that time it may be wise to move on to the next house. When there is more than one loan, every lender requires the completion of a short sale package in advance.

2. How many mortgages and other liens are on the property? If there is a home equity line of credit (HELOC) that could complicate matters because this lender has to approve the short sale as well. Most first mortgage lenders will only allow a certain amount payable to the second note holder. Negotiation skills on the part of the listing agent or attorney is essential in getting past any difficulties between the two servicers. When there is a junior lien on the property such as a Condo or Homeowner’s Association, the Association will likely demand payment as well.

3. Who are the lenders and/or loan servicers? Depending upon lenders such as Bank of America and SunTrust, a short sale transaction could take up to 6 months or more.

4. Are you negotiating the short sale for the seller? My next question would be how many have you successfully negotiated and completed. Dealing with agents that have not completed a short sale or who are not surrounded by a competent experienced team of negotiators and processors should send up a red flag.

5. How do you handle multiple offers? Short sales have been around now for many years and still the most common mistake listing agents do is sending multiple offers just to get the transaction started, ignoring the fact that they are wasting your time as the buyer and mine as your Short Sale Buyer’s Agent.

Interested in getting a great deal on a short sale? Then only hire a Certified Short Sale Buyer’s Agent, who does not shy away from the process. Call me direct at (941) 356-8947 or email me at Bill@PerinRealty.com . We primarily service the communities of Sarasota, North Port, Siesta Key, Nokomis, Lakewood Ranch, Bradenton, Palmetto, Venice, Port Charlotte, Osprey, Englewood, Placida, Cape Haze, Punta Gorda, Arcadia and all other areas of Central and Southwest Florida. In fact, we can represent you anywhere in the State of Florida!

Even though the current residential shadow inventory as of January was 1.6 million units — about a six-month supply — year-over-year the inventory was down from 1.8 million units in January 2011, about an eight-month supply.

“Almost half of the shadow inventory is not yet in the foreclosure process,” said Mark Fleming, chief economist for CoreLogic. Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines.

Other highlights from the report:

• Of the 1.6 million properties currently in the shadow inventory, 800,000 units are seriously delinquent (3.1-months’ supply), 410,000 are in some stage of foreclosure (1.6-months’ supply) and 400,000 are already in real estate owned by lenders (1.6-months’ supply).

• The top six states, which includes Florida, California, Illinois, New York, Texas and New Jersey, account for half of the shadow inventory.

• The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006.

• The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000.

CoreLogic estimates the current stock of properties in the shadow inventory by calculating the number of distressed properties not currently listed on multiple listing services that are seriously delinquent, in foreclosure and real estate owned by lenders. This inventory typically is not included in the official metrics of unsold houses.

Homeowners that qualify are those whose home values have fallen below what they owe on their mortgages. Bank of America will reduce the amount owed by the homeowners by as much as $100,000 in some cases. Only mortgages that are currently owned by Bank of America will qualify. Those that are owned by government entities Fannie Mae and Freddie Mac, or backed by the Federal Housing Administration will not be eligible.

The move will help the bank reduce the amount of penalties it owes to the government’s Housing & Urban Development agency by $850 million.

The penalties were part of a broader $25 billion settlement announced Feb. 9 by federal and state attorneys general and the largest mortgage lenders in the country to resolve investigations into abusive home lending and fraudulent foreclosure practices.

About 11 million American households are underwater on their mortgages, meaning they owe more than their homes are worth. The broader settlement with five mortgage lenders is expected reduce loans for only about 1 million of those Americans and send checks to others who were improperly foreclosed upon.

Of the five major lenders, Bank of America’s penalties were the highest: $11.8 billion.

The settlement ended a painful chapter of the financial crisis, when home values sank and millions edged toward foreclosure. Lender abuses exacerbated the crisis. Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures, a practice known as robo-signing.

In the fall of 2010, Bank of America along with other large lenders temporarily halted foreclosures after a furor over robo-signed documents.

Details of Bank of America’s and other mortgage lenders’ plans to help homeowners as part of the settlement will be contained in court documents that are expected to be filed Friday.

In a deficiency judgment, a lender goes after the borrower to collect the amount of loan that was “shorted” in a short sale or deed-in-lieu of foreclosure, even after the lender approved the short-pay agreement. State laws apply differently to the practice, but in some states a lender can go after a borrower several years after a transaction closes – sometimes to the surprise of the borrower.

The new language, says the company, reinforces “the requirement that the Servicer, for itself and on behalf of Freddie Mac, must waive all rights to seek deficiencies for short payoffs and deed-in-lieu of foreclosure transactions on Freddie Mac Mortgages that have closed in accordance with the Guide.”

You can find the updated language in Freddie Mac Bulletin 2012-5, dated February 15, 2012.

If you have any questions about the language, the company asks you to contact your Freddie Mac representative, if you have one, or call 800/FREDDIE and select “Servicing.”

Senators Lisa Murkowski (R-Alaska), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17. A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance with the lender’s approval.

The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.

The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer will be limited to one extension of no more than 21 days.

The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.

According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.

Starting on March 1, Fannie Mae will require mortgage servicers to extend the forbearance relief to qualified unemployed borrowers for six months – without any approval needed from Fannie Mae. The government-sponsored enterprise also says special consideration will be made for some borrowers in suspending mortgage payments or reducing them for up to a 12-month period.

Fannie’s announcement follows on the heels of Freddie Mac’s announcement earlier this week about similar changes to its mortgage relief program for the unemployed. Freddie Mac announced it would begin offering a 12-month forbearance period to qualified unemployed borrowers starting on Feb. 1.

To qualify, mortgage servicers will determine if the “borrower has less than 12 months worth of mortgage payments in reserves and has monthly housing expenses above 31 percent of their incomes before extending a forbearance plan,” HousingWire reports.

During the third quarter of 2011, the GSEs issued more than 7,000 forbearance plans, according to the Federal Housing Finance Agency.

Source: “Fannie Mae Unveils new Forbearance Program for Unemployed,” HousingWire (Jan. 11, 2012)

The Federal Housing Administration is extending its “anti-flipping” waiver through the end of 2012, which allows buyers to purchase homes that have already been sold in the last 90 days.

The waiver, which was soon set to expire, is “intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” Carol J. Galante, the acting Federal Housing Administration commissioner, said in a statement. “FHA remains a critical source of mortgage financing and stability and we must make every effort to promote recovery in every responsible way we can.”

An anti-flipping rule originally took effect in 2003 to stop a spike in home flipping that was being blamed on driving up home prices during the housing boom. The rule prevented FHA-backed loans from being used to purchase homes that had been owned by a seller for less than 90 days. But the U.S. Department of Housing and Urban Development decided to reconsider the 90-day limit in 2010 after skyrocketing foreclosures and abandoned homes were causing blight in neighborhoods across the country and hampering nearby property values.

The temporary waiver to the anti-flipping rule will allow buyers and investors to quickly resell refurbished homes and not have to wait 90 days to do so. Since the waiver took place in 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on homes resold within 90 days of the last purchase, according to HUD.

“It’s certainly an inducement to move real estate and reduce inventories,” says Don Cameron, a real estate investor who owns a franchise of We Buy Ugly Houses in South Florida. “Why wait 90 days before you can close on a home?”

The waiver, however, still prevents predatory flipping, and sellers must justify any increases in value if the sales price of the property is 20 percent more than what the seller had recently purchased it for (such as by providing extra documentation on renovation expenses). Sales also must be in “arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.”

Source: “Government Extends Waiver of Anti-Flipping Law, Allowing Homes to be Bought and then Sold in 90 Days,” McClatchy-Tribune Regional News (Dec. 29, 2011) and HUD.gov

On the face of it, the latest news doesn’t bode well for potential house buyers. House prices will steadily rise in 2012 but economists don’t see prices outpacing inflation over the next three years, according to a new survey. Typically, home prices bounce back after a prolonged recession and even help fuel a broader economic recovery. Not this time, according to that survey. The growth in house prices won’t even keep pace with that of a loaf of bread.

As real estate prices begin their slow crawl north, interest rates have only one way to go – up. “Whether you’re a 35-year-old looking to get on the property ladder or a retiree wanting to downsize, it’s still a good time to buy,” says Jay Tyner, president and founder of Semmax Financial Group in Greensboro, NC.

Current conditions are a win-win for both potential homeowners and long-term investors, others say. “For households, the priority should be on meeting their shelter needs at the best price — which may not entail ownership at all. – and appreciation, if any, should be viewed as a bonus,” says Patrick O’Keefe, director of economic research at J.H. Cohn LLP in Roseland, N.J. “For investors with longer-term staying power and property management capability, conditions are attractive — but property specific.”

What’s more, rents are also on the rise. Consumers are being hit by the rise in rents and the decrease in concessions being offered, according to a new survey by online apartment-lister Rent.com. Property managers predict that rents will rise between now and the third quarter of 2012 by 3%, above the 2.5% inflation rate between now and 2014 expected by most economists in a Wall Street Journal survey. Plus, the nation’s ratio of house prices to yearly rents is nearly back to its pre-bubble average.

For this reason, foreclosures, evictions, relocation assistance (cash for keys) or lockouts should not be scheduled or occur during the following Holiday Moratorium dates:

• Dec. 22-26, 2011, returning to business as usual on Dec. 27, 2011.
• For VA properties, the year-end dates are Dec. 22 through Jan. 2, returning to business as usual on January 3, 2012.

If you receive any tasking or communications related to foreclosure, eviction, relocation assistance or lockouts during these moratorium periods, you must place a clarification call to the eviction specialist at Bank of America before proceeding with the tasking or communication.