Thursday, August 16, 2007

The Short Sale!

An emerging trend that will garner permanence or just another passing fade in today’s marketplace? What do you think? Well whatever your proclivity on the subject it is my firm belief that as professional REALTORS® we owe an obligation to ourselves and the clients that we serve to know something about the subject. There are a number of definitions espoused on what the definition is and my favorite just happens to be: “a sales transaction where a seller’s lender agrees to accept a payoff of less than the balance due on the loan.”

As of August 1, 2007 the Arizona Association of REALTORS® has added two new forms to their arsenal of pre-printed forms. We now have a Short Sale Addendum to the Residential Purchase Contract and an Addendum to the Listing Agreement. Both forms are the result of a perceived notion that we will be experiencing an onslaught of foreclosures and/or pre-foreclosure seller dilemmas in the months ahead. Nationwide predictions of real property foreclosures over the next five years or so are in the millions. A scary thought isn’t it? And in my view it doesn’t look like it’s going get any better, any time soon, based on daily newspaper reports on failed mortgage companies, the “credit crunch,” and the subprime mess.

So what does the best-prepared practitioner do? They prepare for the worst and make sure they become re-aquatinted with the fundamentals of the foreclosure process. They learn to identify the characteristics of a short sale. They recognize the differences between foreclosures and short sales and how to advise their client in each circumstance. They perform a service to the client if they know how and if they don’t they refer their client to someone that has the expertise in this area. In other words they do what’s right by helping their clients through these challenging times and become the proverbial problem-solver.

If you have an interest in doing the right thing and want to learn more about the short sale contact me directly and I’ll send you my 3-page guideline for REALTORS® on the subject of Short Sales.

Monday, August 13, 2007

American Home Mortgage files for bankruptcy

American Home Mortgage Investment Corp., the nation's 10th largest home lender, filed for bankruptcy protection…Yesterday!How do you translate this event into your daily activities as a REALTOR®?

Easy, just imagine for a moment that you’ve just spent 6 tough weeks battling to get your buyer to the closing table with an unconditional loan approval. Yes, it was a long, hard journey; the appraisal; the BINSR; getting all the required documents to the lender; working with a seemingly uncooperative listing agent; you get the picture…but that’s all behind you now…you did it, you made it happen! You’re at escrow feeling good about your efforts. The seller and buyer have signed the papers, the buyers’ down payment and certified funds are in. The buyer can’t wait to transfer the funds from this closing to the purchase of their new home. All that’s needed at this point is for escrow to receive wired funds from the lender. But the funds never come!

Can this happen? Can this conceivably happen to you and your client? Yes it can, and sadly, it happened to many across the country just recently. As a result of AHM’s closure it happened to approximately 4000 transactions nationwide.

So what can you do to avoid this from happening to you? For starters, get to know your lender! Get intimate with the details of the LSR. Make sure it’s completed properly and accompanies your contract. Stay on top of your transaction. Track and monitor the loan process. USE the LSU! Memorize, if you must, all the steps in the loan process. Conduct planned and periodic follow-up on the lender. (The AAR residential purchase contract provides an opportunity for you to do so). Get non-conforming loan commitments in writing. Make sure your buyers have “locks” on their loans with plenty of time to close their transaction.

Remember that the buyer is your client and you have a fiduciary relationship and obligation to them. The lender doesn’t have that same relationship with your client they work for the investor.