When a bank is willing to lose money

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fort-myers-clarion-hotel

fort-myers-clarion-hotel

By now, we all know that the Fort Myers Clarion Hotel has been sold.
In 2011, the owner, an Indian group, stop the payments on their mortgage and the Bank, the fifth third bank, took over. They hired WALNUT & VINE PROPERTIES I LLC which is the company who use to handle the Fifth Third Bank commercial foreclosures. So far, so good.
WALNUT & VINE PROPERTIES I LLC hired then Janus Hotels Management to manage the property while the foreclosure took place.
The fact that this hotel was foreclosed upon was public domain already and an interest to purchase was born here and there. Personally, I had 2 prospects who were willing to make a letter of intent to purchase the hotel. Both were in the $4 millions range for a 192 rooms hotel with pool, restaurant and tiki bar.
However, I had never received any news, when I was able to contact someone handling the case. A lack of cooperation was evident.
Now, CLARION REDEVELOPMENT GROUP LLC, a company owned by Creighton Development is the proud owner of that property and paid $3,300,000 for it to the bank.
So, it is still not clear why a business focused on making as much money as possible, a BANK, is knowingly willing to pass on $700,000.
Of course, I don’t say my 2 clients would have buy it. But at least, I would imagine the bank to review all offers or all interest that buyers out there may have.
I have seen people willing to earn less money than they could but for a bank, it was my first time :-)

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Comments (0) Sep 11 2012

Do you really need a Real Estate agent to purchase a property?

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Do you think you can write an offer on a Cape Coral foreclosure for sale without the help of an agent? The answer is a big YES!

If you think about it, my guess is you want to save the typical 6% commission that we make. If it’s the case, you are completely mistaken. First, our commissions are not set to be 6%. It’s negotiable. And in the foreclosure and REO world, it’s the bank that decides how much they really want to pay. Most agents doing foreclosure make about 1 to 2% of the closed price as the seller representative. So the buyer’s agent is really doing something like 2 to 4%. In that case, if you represent yourself for that foreclosure home purchase, you’re really saving about those 2 to 4% commission.

Now, prepare yourself to get an accepted offer on that Cape Coral foreclosure house for sale. You will need a few things checked with the listing agent, and I have been in contact with most of them, they use to be very difficult if they are not in front of another agent because they think they’ll have to do all the work believing that you won’t be able to do your part:

  • What kind of paperwork do they want?  Typical is proof of funds, pre-approval letter from your bank, etc…
  • How many offers are on the property? Maybe it is a multiple offers situation already.
  • Is there a mandatory minimum MLS marketing time?
  • How do they want to receive your offer?  Fax, website or email.

So, once you have all that done, you’ll be able to put a good offer but you will need to know something important: the price. Don’t google that. You will not be able to rely on sites like Zillow or Trulia for pricing. They are not accurate. Hire an appraiser instead, especially if you do not have access to your local MLS. The point here is that you don’t want to pay too much or too little. Too much and you may overpay for the property and too little,you may lose the home to higher bidder.

You can also read this buying a foreclosure in Cape Coral post for more tips.

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Comments (0) Sep 26 2011

10 Short Sales questions and tips

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Here are 10 frequently asked short sales made questions which are incredibly useful especially if you are just getting started or contemplating quick sales as a means to acquiring pre-foreclosures.

1. What occurs on the seller’s credit rating when they permit an investor to short sell their property?

What typically takes place is the loan will show up as “paid” on their credit report; even so there will probably be a notation that says “settled for less than originally owed” or something along these lines. It’s additional favorable for a homeowner to small promote than to have a foreclosures on their credit report.

2. Where do you find investors for short sales?

Depending on where you live, you may see buyers who advertise with bandit signs or in your local newspaper. Call the investors directly and ask them if they’re experienced in performing short product sales and if they would be interested in working with you. Another good place is your nearby real estate investors club meeting.

3. Define a short sales?

A short selling is really a form of pre-foreclosure sale made and occurs when the mortgagee agrees to accept much less than the loan volume to avoid foreclosure. A negotiated short sale results inside a discounted buy price for the buyer. The buyer would finance the acquisition significantly the same as in any conventional realty acquisition.!. but devoid of the luxury of time.

4. Can an proprietor profit from a short sale?

The seller can’t profit (monetarily) from a pre-foreclosure short sale.!!! But you will find usually exceptions towards the rule.

5. How do bankruptcies affect the possibility of carrying out a short sale?

Most mortgagees won’t take into account a short sale if the house owner is in bankruptcy.!.why? Due to the fact negotiating a short sale made payoff is considered a collection activity. Collection activities are prohibited in bankruptcy.

6. Can somebody tell me what paperwork do I have to include inside a short sale package?

Documents depend on the lender. Each loan company has diverse requirements. It is typical to require hardship letter, buy and sales contract, ECOR, settlement statement (HUD 1), net sheet, pay stubs, bank statements, personal financial sheet (monthly budget), amongst other things.

7. What percentage of mortgage firms send somebody out for an appraisal on a achievable short sale?

All lenders order a BPO or full appraisal of the asset prior to making their decision to accept or reject the short purchase offer. This is there only way of assessing the worth of your home.

8. How late in the pre-foreclosure procedure can you begin a short sale?

Attempt to allow a window of at least 90 days to effectuate a mortgagee approved, pre-foreclosure Short Sale made.

9. What is a Due on Sale clause?

“Due on Sale” Clause (DOS) Provision inside a mortgage or deed of trust calling for the total payoff of your loan balance inside event of a selling or transfer of title towards the secured genuine asset. A contract provision which authorizes the loan provider, at its choice, to declare immediately due and payable sums secured by the lender’s security instrument upon a purchase of all or any part of the genuine home securing the loan devoid of the lender’s prior written consent.

For purposes of this definition, a sale or transfer indicates the conveyance of authentic house of any proper, title or interest therein, regardless of whether legal or equitable, regardless of whether voluntary or involuntary, by for deed, leasehold interest with a term greater than three years, lease-option contract or any other technique of conveyance of true home interests. Standard language which states that the mortgage must be paid when a house is sold.

10. Will banks enable a short sale when the owner has some or a beneficial sum of equity?

If a asset has what the financial institution would consider a substantial quantity of equity, chances are they would take into account allowing the asset to foreclose and then reselling it closer towards the retail value. Focus on homes that don’t have much equity. Your job will be to create the fairness in the home by negotiating a successful short sale made.

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Comments (1) Sep 12 2010

FSBO letter.

Posted: under Realtor® Tools.
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Years ago, I was using a letter to target FSBOs. This letter had several updates time to time, making it better every time.
Now, I don’t use it anymore since I have been better, in a “on-the-spot” situation, to list FSBOs. I now list 4 on every 5 FSBOs out there without any material. You can learn that here.
But I think it can be very useful for other agent looking to hit FSBOs.

Greetings Mrs. & Mr. Jones, (check owner’s name in tax roll and make it personal)

My name is you name and I am a REALTOR® with your firm and I specialize in the listing and selling of homes in neighborhood name.

While out showing some properties in neighborhood name, I noticed that you are marketing your house on your own. I’m sure you have a good reason for doing this and I respect your decision. If you would like some information to help you with pricing, I would be happy to drop off a “neighborhood name analysis” for you. This analysis will give you a good idea of what’s currently on the market and what has recently sold in your area. If this interest you, then give me a call and I will get one over to you.

Selling real estate can be very confusing and complex. I have good connections with Mortgage Brokers and Title Companies that can help you through this process. If you do find an interested buyer, give me a call, and I’ll connect you with the right people.

I also have an excellent “For Sale by Owner Help Kit” which offers tools and advice on selling your home. I’ll forward some of this kit to you over the next few weeks. I think you will find the information very helpful. In the meantime, go check out my for Sale by Owner page at your site url.

If I can be of any assistance give me a call me on my direct line at your phone number or via email at your email. You can reach me anytime. If you get a voice message leave me a message and I will call you right back. I promise.

Make it a successful day!!!

Your name, REALTOR®,

We want to keep inviting them to call. “Call to action” phrases need to be in everything you do.

1. We let them know we are active in their neighborhood.

2. We offered them free stuff.

3. We let them know we understand the decision they have made, to go it alone, no push.

4. We made ourselves available, to help with info, if they find a buyer.

5. We let them know that we have connections in the business.

6. We told them we would be staying in touch and sending them more info.

7. We invited them to call us, again.

8. We will put pictures and.or virtual tour of their home in our site (with permission).

Notice I’m not trying to sell them. One of the keys, with FSBOS, is to remember that they are going to sell alone because they probably don’t like agents or they may have had a bad experience in the past that has clouded their thinking. Or they just don’t want to pay us. Whatever their reason I have found that just offering to help them is a very non confrontational way to start with building trust.

Your goal with the letter is to get them to call. Once they call, you want to make the appointment.

Then when you are in front of them you can “sell” them. It sounds simple but a lot of Realtor® make this mistake. They are selling when they should just be making an appointment. There is a time and a place for everything.

This is a way to list FSBOs but slower than what I teach in my eBook.

Good luck!

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Comments (1) Jan 17 2010

Short sales document: Short payoff offer & proposal letter

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This is the short payoff offer I use when I need to present the offer and the short sale package to the lender.
You can copy/paste it and use it as you wish.

SHORT PAYOFF OFFER & PROPOSAL LETTER

Date: November 18, 2009
To: Amy Butler – Loss Mitigation Representative
Lender: Acme Bank
Loan Number: 011-12-1234
Borrower Name: John F. Doe
Property Address: 123 Main St. Miami, FL 33141
Auction Date: 1/ 12/2010

*** NET AMOUNT OF SHORT SALE OFFER TO ACME BANK $168,000.00 ***

Dear Ms. Butler:

We are submitting for your review and subsequent approval, this comprehensive SHORT SALE
SUMMARY PACKAGE pursuant to our recent telephone conversation regarding the possibility of a discounted payoff on the aforementioned defaulted mortgage loan.

We are working very closely with your Borrower to facilitate a sale of the above referenced property. We have in fact entered into a purchase and sale contract (attached). I represent the Buyer and my clients are seeking to buy the property without the need for a mortgage contingency and subject only to your approval of this short sale proposal. Inspections have been completed. This sale requires and is only contingent upon your approval of the short sale offer subsequent to your approval of our request for a discounted payoff, we can close very quickly. We guarantee a cash based closing of the transaction within 5-10 days of acceptance of our offer.

We have been given complete authorization by the Borrower to discuss the mortgage loan that is presently in default that you are seeking to foreclose. We have again included a signed Letter of Authorization executed by the Borrower, which has been previously faxed to you.
Our contract offer to the Seller, Mr. John F. Doe, is $181,000.00 which will net your bank $168,000.00 after all closing costs and expenses which you can see on the Estimated HUD Statement attached hereto.

We understand that in order for our offer to be accepted that there may be additional due diligence which may need to be completed. Should a second Broker’s Price Opinion (BPO) be necessary, or if one has never been completed, we urge you to have one completed and as we have control of the property we would like to meet with your representative to ensure a proper assessment of the scope of repairs of the subject property and a true and accurate appraisal of the estimated “AS-IS” value of the subject property.
In order to obtain the most accurate valuation, it is our belief that it is imperative that the interior of the house be viewed and that the BPO not be limited to a cursory drive-by viewing or desktop appraisal or automated valuation.

Loan Number: 011-12-1234
Borrower Name: John F. Doe
Property Address: 123 Main St.
Miami, FL 33141
Auction Date: 1/12/2010

We can provide interior access to the house to your representative and will meet with your
representative with 48 hours notice.
As an auction date is pending in the very near future, (January 12, 2010) we believe TIME IS OF THE ESSENCE in resolving this matter. We are prepared to close this transaction within 5-10 business days from receiving written notification of your acceptance of this offer or our acceptance of any counter offer that you may make in response to our offer.

If you have any questions, please do not hesitate to contact us as necessary as we stand ready to
facilitate and expediting a short sale payoff on the aforementioned loan.

Sincerely,

Your name

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Comments (2) Jan 05 2010

Real Estate agent: documents you need for your short sales.

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First of all, understand the short sales.

A short sale is a transaction that happens when a homeowner is owning more money on his/her home than what it is worth in today’s Real Estate market, and when the bank or the lender is willing to take less than what the homeowner owes.
Most of the time, that bank or lender will be able to collect more money with a short sale than if the homeowner goes into bankruptcy or foreclosure. That’s why they will be listening to short sales under certain circumstances.
For the homeowner, the short sale transaction is a better situation than going bankrupt or foreclosed. They credit will be hurt for 2 or 3 years instead of the 7+ years in a foreclosure situation.

Secondly, here are a list of documents you will need in order to prepare the short sale transaction with the bank representative:

FOR THE REALTOR:

  • ~ Signed letter of authorization from seller authorizing you to negotiate with the lender on their behalf.
  • ~ Letter of facts about the property. Everything that is wrong with the property and why it is impossible to sell it at a higher price.
  • ~ Current Market Analysis. Highlight comparable sales that reflect the lower value.
  • ~ Photographs. Remember, the photographs aren’t to highlight a charming house. Photograph evidence of damage, bad location, etc…
  • ~ Evidence of all showings and feedback. Explain to lender results and conversations you’ve had while trying to sell the property.
  • ~ Copy of listing contract/MLS Listing/MLS history.
  • ~ Current “AS IS” CMA.
  • ~ Copy of purchase contract if you have one.
  • ~ Preliminary HUD
  • ~ Make sure the seller has a detailed, tear jerking letter of hardship. See an example here
  • ~ Sales and services Quotes

Also, insert copies of the following if any:
1. Code Violations
2. Fines
3. Hearing Information regarding the maintenance of the property
4. Evidence of lawsuits the City is filing against lenders
5. Evidence of pending litigation or changes in the law
6. Insert Tenant / Landlord provisions if it helps your case
7. Evidence of the town / city’s enforcement of fines against other banks
8. Latent Material Defect
9. Sexual offenders and predators

FROM THE SELLER:

    -Two years tax returns and W-2′s.
    -Three months bank statements.
    -Pay stubs for last 30 days.
    -Detailed monthly budget.
    -All mortgages with account numbers.
    -Copy of the deed.
    -Copy of the note and/or mortgage
    -Pending bankruptcy, or other action/judgment or lis pendens.
    -Tear jerking hardship letter. See an example here

Buyers generally get a lot more house for their money in a short sale situation, because these properties are usually very competitively priced in order for the sellers to unload them before they end up in foreclosure. It’s a very good situation for them. The only downside I see is often the multiple offers situation for those short sale properties. But there are a lot of short sale properties available in the Cape Coral Florida market than in other parts of the country, so this area is the place to buy!.

So, if you are thinking of buying a short sale, here are 3 tips:

1 – Find a Realtor with short sales experience. There are many rigorous short sales and foreclosure training programs available to real estate agents, including the Certified Distressed Property Expert (CDPE) and the Short Sales and Foreclosures Resource Certification (SFR). If you wish to purchase a short sale property in Cape Coral, Florida, or anywhere else for that matter, you will greatly increase your chances of getting your deal to closing if your agent is experienced and comfortable with short sales….either through a short sales certification program, or through hard knocks experience in the field.

2 – Get pre-approved. No short sale offer will be considered without a pre-approval or a proof of funds letter. If you have not yet been pre-approved by a local lender and are not sure who to call, your real estate agent is a good source of referrals. The pre-qualification process generally takes less than 30 minutes, and can be done over the phone, however, a pre-approval takes longer but is better than a pre-qualification. Make sure you work with a local lender – today’s wild & woolly finance environment means that you greatly increase your chances of closing a deal if you use a local lender with a good reputation. All short sale offers must be submitted with a pre-approval letter, or with a proof of funds, as bank’s statements, in the case of a cash transaction.

3) Submit your highest and best offer the first time around! Lenders generally do not counteroffer….they will either say “Yes” or “No”. So if you are going to go through the process of waiting 60 days or more to hear back from the lender, you will greatly increase your chances of hearing that “Yes!” if you submit a good, solid offer with no contingencies.

Once you submit an offer that is approved by the seller, the seller has to submit your offer to their lender to see if the lender will accept the offer as well….remember, in a short sale situation the lender is agreeing to accept less than what the homeowner owes on the mortgage…..and the lender is going to do whatever they can to minimize the amount of that loss to their bottom line. Parting with their profits is not something that comes easy to lenders…..so it takes awhile to find out if they are willing to take the level of financial beating that is inherent in the amount you are offering. Sometimes the wait can be up to 90 days….sometimes much more (the amount of the wait often depends upon which lender holds the paper).

Look at the frustrating wait time as the price you pay for getting the chance to get a home you might not otherwise be able to afford.

If you want to receive listing from banks, this program will give tremendous help to get in the game as well.

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Comments (0) Dec 31 2009

Short sales documents

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There are a significant number of short sales in the Cape Coral area. And I see also a significant number or Real Estate agent that have a false idea of what is a short sale. A short sale is a Real Estate transaction where a homeowner is selling his/her property. It is NOT the lender who is selling it. The lender just takes a loss. If you are involved in a short sale transaction, here are the documents needed:

Purchase and sale agreement.
This is the contract, the accepted offer. This document shows that an owner is willing to transfer ownership of the property to a buyer, under a specific set of conditions and/or terms. The purchase and sale agreement needs to be well-executed. To be legally binding, it must be signed by all who have their name on the deed.

Hardship Letter.
The hardship letter is an important document written by a homeowner to his/her lender, explaining the reasons for being unable to continue paying the mortgage. To be effective, it must state the homeowner’s situation, show concern, and demonstrate that the homeowner is taking action for the problem to be resolved. It is even better if this letter is hand written and not very long.

Homeowner’s financial statement.
This is a document presenting all income, assets and liabilities. The homeowner and all co-borrowers must be included on this worksheet.

Latest two bank statements.
If the homeowner has more than one account, all the statements must be presented.

Latest two pay stubs if any.
If the homeowner has more than one job, all the stubs must be shown. Unemployed homeowners must present the latest available. Self-employed individuals can provide a profit and loss report.

Last two years tax returns.
Sometimes, homeowners in a foreclosure situation have missed filing their taxes. In this case, present the latest available and write a personal note to the lender explaining the situation very clearly.

Last two years W-2s.
Employers provide this to employees and the IRS every year. Provide the latest available.

In addition, if relevant and available, you may include the following list of documents. Those may be useful as well. In some instances, they are absolutely necessary.

    * Death certificate
    * Divorce decree
    * Incarceration decree
    * Bankruptcy discharge letter
    * Relief from stay
    * Proof of disability
    * Insurance claims
    * Police reports
    * Court approvals
    * Anything that may be useful

Additional Documents.
Once in contact with the lender, these two additional documents will be needed.

Listing agreement.
Lenders want to see if the property is listed or has been listed by an agent. They like to see that homeowners are serious about selling and did everything in their power to sell it, or to be out of their problem. This is also a must for real estate agent commission allowance.

HUD-1.
This is the RESPA compliant settlement net sheet. RESPA stands for Real Estate Settlement Provisions Act. It shows who gets paid what, and how much. This document shows the main thing the lender wants to know: How much the lender will get. You can get in touch with you favorite title company to have it ready as a good faith estimate.

Those are the documents needed for a short sale to be negotiated and it is important for Real Estate agent to be ready right away. That will help you, your sellers and the buyer’s agents. The more complete, the better. The degree of what is acceptable varies from lender to lender. Some lenders are more demanding than others. Have all these documents. The short sale will go a lot smoother.

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Comments (1) Dec 26 2009

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