<?xml version="1.0" encoding="UTF-8" ?>
<rss version="2.0">
    <channel>
        <title>Chicago Suburb Real Estate &amp; Area Guide</title>
        <link>http://www.cook-county-real-estate.net/blog/short-sales/</link>
        <description>New real estate listings, entertainment, recreation, news and things to do in Chicago and surrounding suburbs.</description>
        <item>
            <guid>http://www.cook-county-real-estate.net/blog/reviewing-2010.html</guid>
            <link>http://www.cook-county-real-estate.net/blog/reviewing-2010.html</link>
            <author>judyorr@gmail.com (Judy Orr)</author>
            <title>Reviewing 2010</title>
            <description> <![CDATA[ 
It's been an interesting year and I'm looking forward to year-end sales statistics this year more than any other.  We keep losing agents that can no longer earn a living selling real estate.  However, 2010 has been one of my best years.  It hasn't been easy and I've had to make some changes, but I've done well in a challenging market.


I Moved to a New Home


I moved to the Orland Park/Homer Glen area and sold my Oak Lawn home.  I'm glad I had my own home for sale as it helps me explain the market to my other sellers.  I sold my Oak Lawn home for less than what we paid for it in 2003.  Add the new windows, two new bathrooms, remodeled family room, new carpet, hardwood floors, interior &amp; exterior paint, etc., and we lost a lot of money.  


However, we had happy times in that home for seven years and we enjoyed the changes we made.  And we made up for it since we purchased a foreclosed Homer Glen home (with an Orland Park address) and we are making it our own.  So in our minds, our loss made up for the great deal we got.


Getting Used to Today's Decreasing Prices


It took me a while during the Seller's Market to get used to those ever increasing prices.  It was sometimes difficult setting a price because they kept increasing and we didn't want to short change our sellers.  As long as a home wasn't listed way too high over market value, the property usually sold, and quite quickly.


Now I'm amazed at how low prices are going.  It's a great market for buyers since interest rates are still quite low and prices keep going down.  When will we hit bottom?  Click the link for predictions I've read.


The problem I'm running into is having a listing that seems priced correctly "on paper" based on a Comparative Market Analysis, but there are no offers being made.  Buyers have so much to choose from, they can pick the cream of the crop.  It could be the difference of one property having granite countertops compared to another that doesn't, and if the buyer wants granite, then the property without gets bypassed.  Even if that property is a few thousand less, buyers want the house that has it done already.  This goes with any upgrade/update that is most important to that particular buyer.  


It's simple supply and demand.  Mortgage changes make it ever more difficult to qualify, leaving few buyers and too much available inventory.  There aren't enough buyers to go around.


Therefore, the homes that are selling are the best in their price range.  They're the cleanest, have the most updates and amenities and show the best in their price range.  Sellers are left with having to make updates or reducing price so their property is the best in their price range.  Simple to write down, not so easy for a seller to do or even understand.


The Tax Credit Ended in 2010


At this point in time, there is nothing similar to that tax credit.  No special financing that I am aware of.  Just ever tightening mortgage qualifications with interest rates inching up.


I am Working with More Buyers Than Ever Before


I've always considered myself as a "listing agent."  That's where I focus on listings and I don't work with many buyers.  I have been working with more buyers than marketing for listings because it's been so difficult getting listings sold.  It's not fun having to keep telling my sellers to reduce price, over and over.  


I have sold most of my listings and the ones still on the market are where the sellers aren't understanding the current market, although I keep working on them as nicely as I can.  When I do go on listing appointments, I am much more adamant about pricing the property correctly.  If a seller doesn't agree then I won't take an overpriced listing, at least not unless I get some kind of automatic price reduction paperwork signed.


If a seller doesn't price their property at market value they are simply adding more market time to their listing.  The longer the property sits on the market, the more stale that listing gets.  Many times, the sellers end up getting less than what they could have received if they had listed at the recommended price in the beginning.  I see it all the time.


Short Sales, Foreclosures and Auctions - Oh My!


A regular seller is more likely to be in competition with a distressed sale.  These kinds of sales are normally priced at a discount because the seller/bank wants a quick sale.  Sometimes, it is priced even lower to overcome damage.  As I mentioned above, we got a great deal on our new Homer Glen home, which required mostly cosmetic updates.  We were also up against 8 other buyers and we offered higher than list price to give us the best chance.  It was still a good deal.


In some areas, specific subdivisions have so many distressed sales that they are bringing the value down in the area.  If there is one regular sale and a handful or so of distressed sales priced much lower, it's difficult to get that regular property sold.  Depending on recent past sales, the regular sale might not appraise because of recent distressed sales that have recently sold and closed.  





I've written several blog posts about short sales and foreclosures.  I'm still hearing about shadow inventory and I also wrote a post about short sales and sellers.


I am seeing more and more listings going to auction.  This will be a new learning curve and from what I've studied, there are different auction services with different operating methods.  Some auctions need to be attended in person and some are online only.


It's Still a Good Market for Buyers - Not so Good for Sellers


 If you're qualified to purchase a property, you might not want to wait for that elusive bottom.  We never know we hit bottom until prices go up, so only a few lucky ones hit the timing.  We do expect interest rates to go up, possibly to 6%.  A higher interest rate can make a bigger difference than a lower price, so those rate hikes can make a difference in your affordability.


If you're a seller that needs to sell whether it is to upgrade or downgrade, you have a couple of choices.  Make your home as appealing as possible (within reason, and I give my opinion on what will give the most bank for the buck) and price it right.  Keep abreast of the changing market and be prepared to make price reductions. 


Your choice is to get your house sold (and not just up for sale) or hold onto it and rent it out.  Some sellers are making strategic walk-aways, letting their homes go into foreclosure with the plan to start over again whenever they can (when their credit recovers).  However, in states like IL, the lien holder can come after you later on, so you have to be very careful of doing a short sale, deed in lieu or foreclosure.  There could be future consequences and you might not have the chance to clean up your credit.


If you're ready to buy or sell in the southwest suburbs, give Judy Orr a call at 708-536-8200 or use the Contact Form.
 ]]> </description>
            <pubDate>Tue, 04 Jan 2011 13:51:44 -0600</pubDate>
                    </item>
        <item>
            <guid>http://www.cook-county-real-estate.net/blog/short-sales-and-sellers.html</guid>
            <link>http://www.cook-county-real-estate.net/blog/short-sales-and-sellers.html</link>
            <author>judyorr@gmail.com (Judy Orr)</author>
            <title>Short Sales and Sellers</title>
            <description> <![CDATA[ 
Short Sales and Sellers - An Explanation


Why would a seller want to do a short sale?  If they have attempted to get a loan modification (which rarely goes through), and want to hopefully be able to buy another home as soon as possible (could be as soon as two years after the short sale is closed) depending on down payment, attempting a short sale would probably be the way to go.  However, here is my disclaimer:  a seller needs to speak to their attorney and possibly a CPA to see what the best thing is for them to do.


OK, disclaimer aside, a seller does have other options.  If a seller cannot afford their current mortgage and cannot sell their property to cover the current mortgage balance along with closing costs and would not be able to rent out the property to cover the entire mortgage, there are other options:




loan modification - these rarely go through


short sale - I've read that about 50% get approved although I've had better luck


deed in lieu - banks don't usually opt to do this as they then forgive you for any deficiency


foreclose




Since loan mods and deeds in lieu rarely happen, a seller is usually left with trying a short sale or letting the property foreclose.  What are the pros and cons of selling short, or why bother with a short sale?


Short Sale Pros




There is a possibility you can purchase another property sooner than if you foreclose


Depending on the lien holder and negotiations, you could possibly get the deficiency waived


If the deficiency is not waived, a short sale normally sells for more than a foreclosure, so there would be less of a deficiency


If you are emotional about your current property, you will know it has been purchased and will not be sitting vacant and start to deteriorate


You will hopefully not bring the value of your neighborhood down as much with a short sale vs. a foreclosure




Short Sale Cons




It can be an emotional roller coaster 


You must provide the lender with a lot of mandatory paperwork and must disclose all assets and reasons for your hardship


You will possibly have a long wait after accepting an offer


Your agent/attorney will only have so much control of the process and some banks are notoriously bad in handling short sales


You could wait months just to get "no" for an answer, either because of price, your financial situation or whatever excuse the bank has


You need to learn to step back from your emotions to your home during the short sale


The short sale might be approved but the lien holder will not waive any deficiency


You might be required to come up with cash to close if the bank requires it (usually due to having too many assets, according to the lien holder)


The bank could foreclose on you even if you have a buyer and/or a closing date set!  I've never seen this happen but I have read about it happening to others.




You need to balance the pros and cons, along with professional advice of your attorney and CPA.  Please note, when you foreclose the deficiency is not forgiven and they could come back after you.  I will write another post regarding foreclosures.  You also need to find a REALTOR experienced in short sales and even though I am experienced I only use an attorney that is also very experienced in short sales.  


If you decide to sell your home "short" and you are in my service area, give me, Judy Orr, a call at 708-536-8200 or use my Contact Form.
 ]]> </description>
            <pubDate>Tue, 02 Nov 2010 12:41:44 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.cook-county-real-estate.net/blog/short-sales-and-buyers.html</guid>
            <link>http://www.cook-county-real-estate.net/blog/short-sales-and-buyers.html</link>
            <author>judyorr@gmail.com (Judy Orr)</author>
            <title>Short Sales and Buyers</title>
            <description> <![CDATA[ 
I still meet buyers that don't really know what a short sale is.  A short sale listing is a property the seller is trying to sell for less than what is owed on the mortgage.  A short sale can actually take a very long time, the "short" is referring to the fact that there will be less money to the mortgage provider than what is owed, not the length of time from contract acceptance to closing.  Short sales are available in every town and every price range.


Data suggests that only about 50% of short sale offers ever make it to closing.  Agents, buyers and sellers don't understand why a mortgage provider would rather foreclose than sell short, especially when it seems like most closed short sales sell for higher prices than foreclosures.  Not to mention the cost of foreclosing, holding onto a vacant property and keeping it up and having to offer it at a real discount.


I just attended a short sale seminar and the speaker explained that the banks and mortgage providers just don't have the staff to handle the lengthy process of short sales.  Too bad they can't hire and train more employees to help with this backlog to get homes sold "short" rather than foreclose.  In many short sale listings, the sellers still reside in the home and are taking some type of care with it.  Many short sales are in very good to excellent condition.


Short Sale Buyers Need to Know




Your offer is first accepted by the seller, but the short sale and monetary amount must be approved by the mortgage provider


Getting mortgage provider approval can take up to a year or more


Only around 50% of short sales make it to closing


You will probably have to bring in earnest money once the seller accepts the offer 


You could lose your earnest money if you walk away


You might be expected to complete your home inspection once the seller signs the contract (per contract dates)


Short sales are sold in "as-in" condition


Your agent has no control over the communication between the listing agent, seller and mortgage provider


Your agent cannot contact the mortgage provider or seller


You could get approval, a counter-offer (sometimes higher) or a rejection


You must be ready to close - sometimes once approval is made you are expected to close very quickly


If you aren't ready to close, the mortgage provider could close your file and you've lost the property


The property could foreclose even after short sale approval has been made


Some short sales have fallen apart at the closing table




So Why Would You Want to Buy a Short Sale?




Many mortgage providers are attempting to streamline the process so it doesn't take so long


The properties are usually in better condition than foreclosures


You can get a good deal - most short sales sell for under market value


You might have less buyer competition on short sales since many are not interested in them




Understand the Process


As has been mentioned, you write up a normal offer on our approved purchase contracts.  The offer is presented to the seller and the seller can accept the offer, make a counter-offer or reject your offer.  A knowledgeable listing agent (and your buyer's agent) should have an idea of what the mortgage provider will accept.  Some listing agents prefer to have the seller accept any offer to get the short sale process moving and to see what the bottom line will be for the mortgage provider.  Most listing agents prefer not to put a lowball offer in and will counter-offer at what they think the mortgage provider will accept (sometimes it is somewhere within 10%-20% of appraised value, but each mortgage provider has their own standards).


Once an offer is accepted by buyer and seller, the buyer might be expected to treat it as any other offer by bringing in earnest money and handling inspections within the time frame provided on the contract.  Some listing agents will allow these things to occur after mortgage provider acceptance.  However, this makes it much easier for a buyer to walk away as they have no skin in the game.


Once the seller has accepted the contract and all inspection/attorney/earnest money contingencies have been taken care of, the wait begins.  The listing agent will send the contract to the mortgage provider.  It is usually by fax, and for some reason these faxes constantly get "lost."  I believe the faxes get lost because no one has been assigned to handle the file yet.  I feel the wait is trying to get the person assigned that is responsible for the particular sale/file.


Once the person is assigned the file, things usually start moving a bit more quickly.  But keep in mind, I've waited 60-90 days just to get that person to finally be able to communicate with.  Prior to that, you get a different person every time and they don't have a file in the system yet - for 3 months or longer!  Your contract is in limbo somewhere at the mortgage provider's short sale office.  Until it is assigned to one of their employees, no one knows where it is.


In the meantime, the buyer is calling their agent who is calling the listing agent who is calling the mortgage provider and getting the same answer over and over - we don't have that fax, send it again.  The listing agent might have to send that contract package (with much more than the contract - this can be a very lengthy package) many, many times.  Until someone is assigned that file and it gets entered into their computer system, there is simply no one that can help.  


I even sent a package in via Fed Ex once and was told they don't look at anything that is sent by mail!  They only wanted faxes.  I've also had short sale employees switched and have to establish a rapport with yet a new person who doesn't know anything about the file.


During the months this is happening, the seller, the attorney and the listing agent are all calling, faxing and e-mailing (once we get someone's e-mail), trying to get an answer.  There is a fine line to keep up contact vs. getting these employees upset.  Some listing agents call daily and I think that's taking a big chance at having your file get "lost" or something else.  It is recommended to only make a weekly call.  


These short sale employees are inundated with short sale files.  One very nice person told me they were so understaffed that even if he worked 24/7 he could only make a small dent in the files.  And that is why many short sale listings end up getting foreclosed on, even when they have a good offer in the works.


Be prepared to get a counter-offer from the mortgage provider, and it could be for more than the list price!  They send out agents/brokers to provide them with BPOs (Broker Price Opinions).  They want a certain value based on those BPOs and expect to get it.  You must decide whether you feel the property is worth it.  They can also outright reject your offer, after all that time.


You must also be prepared to close very quickly.  I've heard of short sale approvals expecting a closing in less than a week!  If you have applied for your mortgage like you should have, you should be able to close quickly.  However, in a case like this, you would have also already paid for an appraisal.  Your mortgage company might give you the choice to send the appraiser out prior to mortgage provider approval or take the chance of waiting for approval and having enough time to get the appraisal in and be ready to close quickly.  Most times, once approval is made you could have up to 30 days to close, but each mortgage provider is different and if you're not prepared you could lose the deal.


Keep in mind, the foreclosure department is separate from the short sale department, and they rarely communicate.  I've heard of transactions making it to the closing table only to be told it was officially foreclosed on that morning!  Sometimes, that can be reversed (by a good attorney) and the closing can happen at a different time.


The Agents Usually Get Blamed


There are some inexperienced agents, both listing and selling/buyer's agents, that should not handle a short sale on their own.  But many agents get blamed when they've done nothing wrong because no matter how much is explained to the buyer and seller (who is usually going through an emotional roller coaster), they simply don't understand the wait and the lost paperwork and the "broken record excuses".  


I've told buyers what to expect yet they start calling me twice a week after a two or three week wait and they start getting antsy.  This wait also negatively affects the sellers since they don't know if they're going to be able to do the short sale of if they will foreclose.  Many buyers walk away before approval, which wastes valuable marketing time for the seller, bringing the looming foreclosure ever closer.


Judy Orr is an experienced sw Chicago suburbs real estate short sale agent and has a 100% closing ratio on her short sale listings.  In fact, there is only one short sale that didn't make it to closing and Judy represented the buyer on a problem property listed by another brokerage.  That home is still up for sale and we've waited since January of 2010!


If you're interested in buying short sale listings give Judy Orr a call at 708-536-8200 or use the Contact Form.
 ]]> </description>
            <pubDate>Thu, 30 Sep 2010 15:10:49 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.cook-county-real-estate.net/blog/short-sale-story-buyers-side-part-2.html</guid>
            <link>http://www.cook-county-real-estate.net/blog/short-sale-story-buyers-side-part-2.html</link>
            <author>judyorr@gmail.com (Judy Orr)</author>
            <title>Short Sale Story - Buyer's Side Part 2</title>
            <description> <![CDATA[ 
So many buyers call me asking me for a list of foreclosure property or ask about short sales thinking they're going to get a real deal.  I try to explain to them how it works and the fact that no one is guaranteed a "deal" when purchasing one of these properties.  In fact, I've seen many foreclosed and short sale properties where the bank won't budge on price and the prices are simply too high for the condition of the property.  On the foreclosed property I handled in Country Club Hills, the mortgage holder was ready to reduce price right when we got an offer.  That fact made the lower offer more acceptable to the bank since they were thinking of reducing.


Banks don't always understand the current market - or maybe they don't care 


I recently showed the property I had written about before in my Orland Park short sale post and was shocked at how this property had deteriorated since I showed it to my prior buyer clients.  The grass was overgrown and filled with weeds.  What once showed as a majestic home now looked run down.  


When I entered the home with the new set of buyers we were greeted with a terrible mildew smell.  We found mold growing on one of the walls in the sub-basement and the smell was terrible down there.  Yet the bank was sticking with it's price that no one felt was right for today's market.  So the house has sat and gone downhill.  


In the beginning I thought it was worth the list price but viewing it now I feel it is overpriced.  Yet it remains on the market with a notation that the bank will only accept full list price.  I'm sure time is running out and this home will go into foreclosure at some point.


A buyer called me about a short sale property...


and wanted to see it immediately.  I had never worked with this buyer before and she was telling me how she didn't like the listing agent and didn't trust him.  I told her I would show her the property since the other agent stated he would not represent her as his brokerage did not allow dual agency.  


I contacted the agent and he informed me that a decision was going to be made soon which meant we were coming in at the end of the short sale cycle.  There were multiple offers on the table and I informed my buyer of this.  Yet she still came up with a lowball offer.  I told her with multiple offers it was probably not going to be accepted but she stated that she understood.  In fact, she was all rush-rush about it and when I was unable to answer the phone one time when she called she said something to the fact that she guessed I didn't want her business!  I was with another client and that statement forwarned me that this might not be a client I want to work with.


Sure enough, I called her a few days later to tell her that her offer was too low and was not accepted.  She seemed upset at first but then gave me another address she wanted to view.  Again, she seemed overly excited and everything was "drop what you're doing and show me this house - NOW!"  


We went to view that house and one more in the same day.  Her mother came along as now she was going to purchase the property and pay cash.  Then they were going to work out the financing between themselves.


I wasn't crazy about the house they viewed and thought the 2nd home had more potential.  However, they all agreed on making an offer on the first home I showed them that day.  I wrote up the offer and collected the earnest money check.


When I faxed the offer in I was told by the listing office that funds had to be verified so I called the buyer (the mother).  She was very upset because she had purchased with cash in a different state and didn't have to verify anything.  I told her they would not review her offer if she didn't follow their rules.  That's when I found out it wasn't truly a cash deal but she was getting an equity loan on her home, which was paid off.  And I learned something - you cannot get any kind of pre-qualification or verification for a home equity loan for some reason.


At first I thought there was something fishy going on but I talked to another loan officer who told me that's how it works with most mortgage companies and equity loans.  So we had a problem and the buyer was getting angry at me.  I had a loan officer talk to her over the phone and pre-qualify her (he was aware of the whole story and did this as a favor).  We then used his pre-qualification and sent it in with the contract.  


Once again, it was a lowball offer and I had to inform her that they accepted a better offer.  She was very irate and yelled, "Nobody ever says no to me!"  That was it for me, I was not going to deal with these buyers again.  


We were talking homes listed under $100,000.  The offers were actually under $50,000.  The few bucks of earnings were not worth the headaches of going on multiple showings, writing up multiple lowball offers and dealing with these people.  I have no idea if they've found anything or have started offering more money or if they just gave up.


However, I believe they blamed me for them not getting these homes.  It was almost like they didn't believe anything I told them (just like they felt with the original agent they worked with).  These people wanted it all their way and did not feel the need to follow rules.  I only worked with them for a couple weeks so it's not like we forged a close relationship but there was no reason for them to not trust me as I explained everything to them.  I just don't think they liked what they heard.


I just got a call this week from a buyer asking about foreclosures...


and I once again explained how foreclosures work and how they're not necessarily a good deal.  I told her that I had no "foreclosure lists" and that foreclosed properties were listed with all other homes on the market in our MLS.  I asked her how much she could afford and that's the search I created for her.  I explained that if there are any foreclosed listings that they will come up in the search.  She seemed to understand but I truly feel her price is too low for the areas she wants to live in.


Unfortunately, this is not an investor but a family who wants to live in a certain area but can't afford to purchase an average home in those towns.  So they're looking for homes that are foreclosed or need work since that's all they can afford.  I set them up for an e-mail search and we'll see if anything comes up.


Recent first-time buyers told me to take short sale listings off their search


I explained how short sales work to these buyers after showing them a few properties that were listed as short sales.  I told them my prior story and how long they might have to wait and they finally made the decision to remove all short sale listings from their automated search.  They found a great home in Tinley Park and are now happy first time home buyers.


I now explain the truth about short sales to home buyers, whether first-time buyers or experienced buyers (short sales are in all price ranges), and most don't want to deal with them.  And that makes me happy because I have become bitter with the experiences I've had trying to sell them.


I have read in many different real estate forums and blogs how other agents no longer show short sale listings.  It's unfortunate for sellers that are trying to avoid foreclosure but until the mortgage holders make these kinds of sales easier and quicker I see more and more agents shying away from these listings. 
 ]]> </description>
            <pubDate>Wed, 23 Jul 2008 16:05:50 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.cook-county-real-estate.net/blog/short-sale-story-from-the-buyers-side.html</guid>
            <link>http://www.cook-county-real-estate.net/blog/short-sale-story-from-the-buyers-side.html</link>
            <author>judyorr@gmail.com (Judy Orr)</author>
            <title>Short Sale Story From the Buyer's Side</title>
            <description> <![CDATA[ 
I've written about my Chicago short sale experience on one of my listings.  It was a valuable experience having been on the listing end as I learned all about how short sales work.  However, trying to share that experience with buyers isn't as easy as it sounds.


I was working with one couple that finally settled on a beautiful Orland Park home for sale that was a short sale listing.  I wasn't completely sure if it was a short sale as it wasn't explained that way on the MLS print-out.  However, it did mention that lender approval was necessary so I figured it was a short sale and the listing agent confirmed it with one phone call. 


I was told there were 2 other offers in already so our's would be the third.  We were around $40,000 under asking price at that point in time.  Then the wait began.  As much as I told my buyers we would have to wait I could tell they were getting impatient.  Of course, whenever they requested I would contact the listing agent, knowing that if he had any news he would contact me.  


He promised he would contact me on a weekly basis but that never happened.  I don't even know why he mentioned it as I didn't expect him to do so, but he should not have committed himself.  Anyway, during the waiting game we noticed the price on the property had been reduced.  Still no word.


Going into the 3rd month or so my buyers once again asked me to contact the listing agent, which I had planned to do anyway.  As soon as I called him he said he was going to call me.  Sure...  He finally got an answer.


And the answer was - the mortgage holder would only accept asking price, which was $5,000 off the original list price when we started looking at it (it had been reduced by a lot before we viewed it the first time).  My buyers weren't going to pay list price.  


In my opinion the home was worth it.  But today's buyers simply don't want to pay full price, even though in this situation the price had been reduced by more than $50,000.  


I checked the listing on the MLS to see if it ever sold and was surprised that even though it still showed as an active listing there were private agent remarks stating that an offer had been approved.  I'm not sure that is acceptable but since my buyers were not interested I didn't pursue it.


Unfortunately, after working a long time with these buyers they seem to have either given up or maybe started working with someone else.  I tried to get them to start looking again but they gave me an excuse that they were tired of going through all of the listings.  They are still on my Automated E-Mail Home Search but have not set up any further appointments, at least not with me. 


This makes me wonder if the short sale situation left them bitter and maybe they learned of a friend or relative in the real estate business that they started working with, or maybe they walked into an open house and worked with that agent.  So short sales can definitely cause negative feelings and I'm hoping this is not the issue with these buyers.  But emotions can take hold and someone has to take the blame.  I'm afraid in this case it might have been me. 
 ]]> </description>
            <pubDate>Thu, 12 Jun 2008 21:07:43 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.cook-county-real-estate.net/blog/chicago-short-sale-story.html</guid>
            <link>http://www.cook-county-real-estate.net/blog/chicago-short-sale-story.html</link>
            <author>judyorr@gmail.com (Judy Orr)</author>
            <title>Chicago Short Sale Story</title>
            <description> <![CDATA[ 
I am seeing more and more short sale listings as 2008 continues on it's slow course in real estate sales.  These listings are competing with the many other real estate listings that are being sold by home owners that want or need to move.  In some cases short sale prices and foreclosures are now being used as comparables by appraisers.  I've been on both ends of short sales.  I had a short sale listing and have presented buyer offers to several short sale listings.


I will talk about my short sale listing that was a condominium for sale in Chicago.  This unit was owned by an out-of-state seller that had only seen the condo once.  It was a family investment and a divorce caused the need to sell.  This condo was a conversion in an original Chicago mansion and was only a few years old.  There had been renters since day one but it was vacant when I got the listing.


When we first listed the unit there was another condo for sale in the same building and one that had recently sold and was deal pending.  Since this was such a unique property we listed at a lower price than the other two listings as the other units offered a bit more.  The deal pending unit lost the deal at the last minute and did not go back on market.


So only my listing and another listing remained for sale.  We were the first to take a price drop as we had showings but no offers.  The other unit finally started reducing.  Still, neither unit was selling.  Our competition was brand new units in new buildings as the Bronzeville area the building resided in has been regentrifying and there has been a lot of new construction and conversions.  We were also up against all price ranges, many units offering similar amenities priced much lower.  Still, not much was selling in the area.


The other listing expired and the unit did not re-list.  My seller had no choice but to sell (the other unit was owner occupied).  After more than a year on market my seller was feeling the crunch.  He couldn't afford to make payments any longer and his CPA suggested he try to sell the property as a short sale.


My seller contacted his mortgage company on his own and started arrangements.  We were finally told the mortgage company would consider a short sale offer and told the seller that they would consider offers at least within 20% of appraised value.  So we once again dropped price several times until we got interest.


We dropped down to $230,000 when we got our first offer in over a year.  It was extremely low, something like $145,000.  But it started the wheels in motion.  Only the seller had any communication with the bank.  He sent me instructions on how to write up and present the offers.


Soon after the first lowball offer we got a full price offer.  Another full price offer followed shortly.  The offers were faxed as instructed.  Then we all waited.  My seller was calling the loss mitigation department every Friday.  A month went by when he was told that the file was closed.  He asked why.  They said something about not being able to read a page of a contract.  


Something was fishy as multiple contracts were faxed so why would one illegible page cause them to close the file?  I refaxed everything and even made one of the buyer's agents rewrite her offer as I'm sure that was the offending contract.  She did and I sent the offers once again via UPS.  Still no contact.


It took over 2 months for a loss mitigation person to finally contact me.  He explained that if he worked 24 hours a day, 7 days a week he could not catch up with the amount of files they had to deal with.  In the beginning, he also said I should not have sent the offers UPS as they only work with faxed offers.  I explained about the file being closed because they couldn't read one of the faxed pages.  He had no answer for that.


I at least started speaking to him on a more regular basis but still no acceptance.  We were nearing the 3 month mark when another offer came in at $236,000.  I went back to the other buyers and as a courtesy gave them the opportunity to come up with a best and final offer.  None of them increased their original offer.  The high offer was finally accepted more than 3 months into the short sale.


Although I thought it was a long time I've heard of people still waiting from December and even October of 2007!  So I guess 3 months wasn't too bad, especially since they actually accepted an offer.  


But think about it, 3 people waited 3 months and more only to be told their offer was not accepted.  The final bidders got lucky enough to come in at a good time as they only had to wait about a week or so for acceptance.  We made it to closing but I ended up forgoing part of my commission just to get it to close as there were problems with the figures at the last moment.  


It was not a pleasant experience although it taught me what to expect and gave me an understanding of the process.  I'm glad I went through it and my seller and I can consider ourselves lucky that we made it to closing on a short sale.  I've heard many horror stories about other sellers where the mortgage holders wouldn't deal or things just went bad.  When a short sale is not accepted then the next step is foreclosure.


If you're a buyer interested in short sales keep in mind that high bid wins (as far as I've seen and heard - I'm not sure how different places weigh other factors such as down payment or owner-occupied vs. investor).  Unless you come in at the very end of the process you need to be prepared for a long wait. Unfortunately, if you hound your agent to make phone calls there is nothing an agent can do to make things happen faster.  In fact, the more calls an agent makes, the more likely they only get voice mail.  There were times when my contact at the mortgage company had a full voice mail and I couldn't even leave a message.  If there is no news to give they will not return the call.  


And I can't blame them for that.  With all the files they're handling if they returned every inquiry they wouldn't have time to actually work the files.  


There is no guarantee you'll get a super deal.  However, with my listing I believe that by the time my listing sold (the market was already declining at that point) it probably appraised for around $250,000.  It sold for $236,000 so those buyers did get a good deal.  But so many buyers think they can make lowball offers and have a chance.  It doesn't usually work out that way, as I'll explain in future posts. 
 ]]> </description>
            <pubDate>Tue, 20 May 2008 22:14:55 -0500</pubDate>
                    </item>
        <item>
            <guid>http://www.cook-county-real-estate.net/blog/more-short-sales-coming-up-on-the-market.html</guid>
            <link>http://www.cook-county-real-estate.net/blog/more-short-sales-coming-up-on-the-market.html</link>
            <author>judyorr@gmail.com (Judy Orr)</author>
            <title>More Short Sales Coming Up on the Market</title>
            <description> <![CDATA[ 
I work with a lot of buyers and even I am amazed at how many listings are coming up that are short sale listings.  


What is a short sale? 


So many buyers have heard the term but don't know what it means.  A basic definition is that a short sale is where a bank/mortgage provider agrees to consider allowing the property to sell for less than what is currently owed on the mortgage.  These are also referred to as pre-foreclosure sales as the seller is trying to avoid foreclosure by attempting to sell their property.  I have heard of some areas such as Florida where short sales are accepted even when owners are current with their mortgage payments.  Normally, the home owner has to prove why they can no longer afford the property and fill out a form and write a "Hardship Letter" before the bank will even consider a short sale.


From my networking it seems like different banks handle short sales in different ways.  Most will not give their complete approval in the beginning but will just state that they will consider a short sale.  This is one thing that makes them difficult for the seller, any buyers and their real estate agents.


What is the process? 


The seller has to start the process by requesting a short sale from their bank or mortgage company.  They must fill out whatever paperwork the bank requires.  It seems like the majority of banks don't offer an actual price they will accept nor will they suggest a listing price.  With a short sale listing I handled we were told the bank would not accept anything less than 20% of appraised value but they would not send an appraiser out until an offer is made.  I was never notified of an appraiser needing to view the property with the exception of the buyer's appraiser. 


So the seller and I decided to choose a price that would fall within what we considered 20% of appraised value and also a price low enough to generate interest.  This was a listing that was on the market for approximately one year with plenty of showings but no offers.  We made many price reductions throughout the listing period prior to the short sale.  


What happens when it is listed as a short sale? 


The property gets listed in the MLS just like any other property but agents usually warn buyers and agents that it is a short sale and needs bank approval.  They usually state to allow ample time for this to happen.  In other words, be prepared to wait for quite some time!


When my seller and I started marketing the property as a short sale and reduced the price we got an offer pretty quickly followed by two more.  The first offer was ridiculously low but this was before I was even given the bank's position that they will not accept anything less than 20% of appraised value.  The next two offers were full price offers.


I submitted all offers to the fax number I was given and in the format that I was instructed to follow.  We waited and waited.  The agents kept calling me and I kept calling the loss mitigation person I was assigned to.  Most of the time I left a voice mail.  Only towards the end was communication established.


In the beginning my seller called the loss mitigation department once a week.  After more than a month passed by (might have been near the 2 month point) he was told his file was closed.  He asked why.  The person he was on the phone with checked and stated it was closed because some of the faxed paperwork was not readable.  The seller was furious and asked why we were not notified.  The person did not know.  I prepared the paperwork over again and actually sent the information via UPS.  I was actually told that is not the way they handle it, it must be faxed!  Well, after a lot of work we faxed everything again and the ball finally started rolling.


But we still waited.  It was going on 3 months of waiting when a fourth offer came in that was over full price.  I offered all of the other buyers a chance to come up with their best and final offers.  A couple weeks later the fourth and highest offer was accepted.  Two buyers waited over 3 months to find out their offer was not accepted (I don't count the first offer as they were informed that there were better offers).


The buyer that ended up purchasing the property was happy and didn't feel the wait as they happened to come in at the right time - when the bank was actually working the file.  So these buyers didn't think the short sale was so bad after all.  I'm sure the first two buyers did not want to bother with a short sale ever again!


I am now working with a buyer that has made an offer on a short sale and we're going on 2 months of waiting.  The listing agent seems to have some communication with the loss mitigation department but he can't give us any real information because he doesn't know anything.  We either have to wait or move on.  Fortunately, my buyers have the time to wait but I think they're getting a little restless. However, I have to admit that if their offer is accepted they will have gotten a good deal.


Why does it take so long?


Once I had communication going with the short sale listing the gentleman I worked with told me if he worked 24 hours a day, 7 days a week he still couldn't catch up.  There are too many files for too few employees.


Others in the industry feel that some banks would rather let the property go into foreclosure and then sell it at market value rather than taking a loss up front.  I don't know what to think.   I have read stories of buyers and agents making an offer as far back as October 2007 and still waiting for an answer.  And I thought a little over 3 months was long!


I'm teaching my buyers about the downfalls of short sales


I am currently working with first-time buyers that viewed a short sale listing and just showed interest in another new short sale listing that hit the market.  I told them truthfully how it works and the fact that if they went this route on their first purchase it could very well be quite a bitter experience.  I've showed them good properties that were not short sales.


Of course, if they decide to make an offer on a short sale I will do so but I don't look forward to it.  Months of waiting, phone calls to the listing agent when I know full well if they know anything they'll call me.  Phone calls from my buyers asking for news when no one has any information.


Many agents I've spoken to have decided not to bother showing short sale listings anymore.  I fully understand and wish I could keep my buyers away from them.  Even if I stopped short sale listings from being sent via buyer automated searches, they still find them on Realtor.com and other online sources.  And I believe in sending my buyers everything out there.


I'll follow-up with the current short sale I'm involved with to share how it turns out. 
 ]]> </description>
            <pubDate>Fri, 28 Mar 2008 14:25:18 -0500</pubDate>
                    </item>
    </channel>
</rss>
