Metro Detroit Real Estate Homes For Sale

About a year and a half ago, I attended a day long seminar on foreclosures.  Short sales happened to be a secondary topic.  Led by an asset management company who listed foreclosures, they recommended it would be a good idea to do short sales.  That was the first I had heard of them so I kept increasing my knowledge of the short sale process until I finally successfully closed my first one.  For an explanation of a short sale, click here. If you are a buyer and want to know the ins and outs of buying a short sale, click here.

It seems that every other listing now says "subject to third party approval".  So not a surprise when our title company teamed up with a law firm to assist with short sales.  The law firm consults with sellers as part of an upfront fee that the seller pays.  The title company will collect the hardship package, contact the bank/lender and continue to facilitate the short sale.  However, not all are companies promoting short sale services are equal. 

A new title company (soliciting my business) recommended a third party who turned out to be a company that negotiated for an investor.  They find out how low the bank will go, sell to an investor and make their money on a percentage of the profit when the investor buys (very simplistic explanation).  I received an offer on one of my short sale listings (far below the home's value) which was contingent the buyer's representative taking over the process.  On the first scenario, it was my buyer and I was suspicious when they wanted to make sure that my broker would sign the HUD.  I realized they were doing something similar to the investor scenario I described.  While it is very tempting to have someone deal with all the paperwork, agents want to be careful when turning the process over to a third party.  It is a must for Sellers and buyers to get representation from a Realtor experienced with short sales.  Successfully closing and protecting credit is the ultimate goal. 

There were a couple of things I learned from the lawyer affiliated with our Title company.  The bill to extend the Mortgage Debt Relief Act of 2007 which "allows taxpayers to exclude income from the discharge of debt on their principal residence" has been extended to 2012.  The lawyer also said that he has been seeing a change in the amount being recorded on a Sherriff's sale.  Previously the lender recorded what was owed on the property.  Essentially this establishes the debt as paid since the initial debt has been recorded in a sale.  However, he is seeing lenders entering a low amount which allows them to go after the debt since technically they recouped less than the amount owed.  He suspects that they may start packaging them and sell these to debt collection agencies.  

While everyone (agents, sellers & buyers) should thoroughly read all closing documents, it is vital to take extra care in short sales.  The lender will agree to the short sale and release the mortgage but may not cancel the note or obligation to pay any deficiency balance (in light of paragraph above).  The lender may have written in some sort of agreement for the seller to pay back the deficiency amount.  While they can forgive it entirely, this is negotiable and lenders may agree to a reduced cash amount to be paid immediately or for a balance (negotiated) to be paid in some sort of note.

For things to know if you are buying a short sale, click here.

Metro Detroit Realtor selling Real Estate in Southeastern Michigan.  TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service.  Follow me on Twitter.

What is a Short Sale?

The very basic definition is when a home is selling "short" what is owed to the lender.  Another significant piece is that the lender has to be willing to take less.  This means that s seller has to prove to the lender that they are incapable of making the payments and are about to go into default or already have.  This is known as proving "hardship".  For a lender to agree to take less, it requires a hardship package to be filled out by the seller to prove their financial status.  This may vary from lender to lender but usually entails submitting W2s, bank statements, hardship letter, itemized expenses etc.  Sellers have spoken to me about a short sale without realizing that all income sources must be reported like a 409K, other property owned etc.  I have had clients moving out of state, a spouse losing a job and other factors that may support hardship so it is wise for a seller to consult with a professional to see if they might qualify.  Lenders do not want to own real estate so they are becoming more willing to negotiate a short sale.

Why do a Short Sale?

Every good financial advisor will say that missing a mortgage payment has the biggest impact on a credit rating.  While a short sale will affect credit, it is not as devastating as a foreclosure.  Typically, in a short sale a seller may be able to buy another home within two years.  With a foreclosure, as with a bankruptcy, it may take 3-7 years before another home can be purchased depending on what has been done to restore credit.  The effect of a short sale on a seller's credit report often results in a loss of 200 to 300 points on a credit report and can stay on the report for 7 years.  Consumers are allowed to put a short statement on their credit report to explain the adverse information which may soften the blow.  When it comes to credit, there are many factors and it is best consult an expert-these are general indicators expressed here.

How to do a Short Sale?

Time is of the essence. In this market, homes can be on the market well over a year.  Anyone committed to lessen the impact on their credit and not go to foreclosure, should consult a realtor immediately and tell them the situation.  A Realtor gets the home sold faster than trying to sell it alone.  A realtor gets it the maximum exposure including having it listed on the multiple listing service (MLS).  In a short sale, sellers do not pay commission, title insurance and other costs associated with a sale-this is paid by the lender.  

After finding a Realtor experienced in short sales, do not try to sell it without disclosing the circumstances.  This will delay getting the cooperation of your lender and completing the necessary paperwork.  A short sale can be done even if a seller is not in default on their mortgage.  However the lender gives priority to those sellers who are in default and even more priority to those that have gone to sheriff's sale and are in the redemption period.  Once a default occurs, the process, including the redemption period, can take 9-12 months.  If a home is listed after it goes to auction, the time is significantly reduced.

When choosing a realtor, ask about their experience with short sales.  Ask how they will market your home including the resources they use on the internet.  Over 80% of buyers utilize the internet before they consult a realtor.  Above all, make sure you can work with your realtor.  This is a difficult time in one's life when you face losing your home and you want someone who is empathetic and listens to your concerns.

What Happens in the months to come?

The process can be at a couple of stages before a home has to be vacated.  It is advisable to contact the lender when you know you can no longer make your payments.  There are programs that sellers may qualify for to remain in their home.  Lenders do not want to own Real Estate.  Their ability to finance loans depends of not having inventory on their books. Many more lenders are willing to work with sellers depending what has caused the current circumstances.  There are no guarantees and it varies from lender to lender.

Upon missing the first (or second) mortgage payment the lender will call to evaluate the situation.  After missing two or more mortgage payments, the lender will send notice that they are proceeding with a foreclosure.  Keep all notices, names and numbers of the people from the bank.  This information will make it much easier for your realtor to contact the right people at the bank.  Once the notice of foreclosure is received, it must be published in the newspaper for four-five consecutive weeks and then it goes to auction.  Auctions are held regularly in a specific location within the county.   

Once a home goes to auction (sheriff's sale), Michigan allows sellers a six month redemption period in which time they buy back your home or remain in the home without making mortgage payments for paying taxes.  For farms and large parcels of land, the redemption period can be 12 months.  Even in the redemption period, a seller may still pursue a short sale.  Many lenders will continue to work with a realtor to complete a short sale during this time.  A realtor who works with that particular lender may be authorized to offer a seller "cash for keys" to vacate earlier and forfeit the redemption period.  Lenders cannot force a seller to leave until the redemption period is over.  If the home is not vacated six months after the sheriff's sale, the eviction process will begin.

I have represented both sellers and buyers in the short sale process.  If you have any questions, please contact me.

Metro Detroit Realtor selling Real Estate in Southeastern Michigan.  TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service.  Follow me on Twitter.

The importance of staging a home has come up more and more in my conversations when listing a home.  I know enough to tell clients to take away the clutter including pictures on the refrigerator-have as much space as possible for the prospective buyers to imagine themselves in the home-not to mention painting, upkeep and cleanliness.  I can walk through a home and know when it looks off kilter or dominated by excessive furniture etc.  What came up recently for me was how does it look in the pictures I take - is there a sense of space and openness when people view it online.  I take a lot of pictures and post the best ones but it got me thinking-what else can I learn about something I thought I knew already.

I ran across a credential for Realtors called an "ASP Designation" (Accredited Staging Professional) through Stagedhomes.com which is for Real Estate Agents to be trained in proven Staging techniques.  This is a two day course for Realtors and three days for Staging Professionals.  I first heard about it through the message boards with RE/MAX where many Realtors have the designation and recommended it.  Several of the RE/MAX agents also said they have a partnership with a staging professional as part of their listing presentation.  A staging professional comes when they list the home (the Realtor pays them from $25-$100) and they give some tips on how best to present their home.  Many times the seller wants to hire the stager after this initial meeting and so it is a great lead opportunity for a stager to provide this service with a Realtor.

Selling Southeastern Michigan Real Estate where Buyers have so many choices, sellers have to be really competitive ao I am considering adding this to my tool box of marketing strategies I can offer my sellers.  Does anyone have this designation, heard of it or recommend it?

Recently I was preparing a market analysis for a home where I could not find any good comparables.  I was told by the owner that it had some historical significance and they had some documentation.  I hadn't seen the home yet but could tell in the initial conversation with one of the owners that they working toward preserving it and had a lot of emotional investment in the home.  After many attempts from various angles I happened to mention to a fellow agent in my office the difficulty.  She suggested that I call an appraiser to get a value price check and referred someone to me.  I had never heard of this - probably because I had never needed it before.

As a result of another post regarding pricing adjustments, it was suggested that I talk to an appraiser to find out what they adjust for finished/unfinished basements; 1car/2 car garage etc. in my area.  It so happened that I had an appraisal coming up and he allowed me to follow him around.  It was very helpful and so I called him for a value price check.  He referred me to an appraiser in the area of this home and I was able to get some comps to show my clients.  Once I was at the home, I could tell that they thought it was worth more than the market would probably support and that they might break even at best (only owned it for a few years).  So I suggested they have a full appraisal done on the home and they agreed.

Also, I have been sent promotions recently by home inspection companies that do a preliminary inspection at a lower cost for a seller with the idea that the buyer will choose them to do a full inspection when the time comes with a cost savings to the buyer.  I can't remember exactly how it works but something to that effect.  I saw a program on real estate last night where the realtor suggested a full inspection to the seller because they saw evidence of some issues that might need repair and wanted the seller to deal with them sooner than later.

The point of all this, I am wondering how many realtors are using these avenues with the seller before they list the home or find a need for it.  The appraiser that I followed to gain some knowledge about adjustments ended up calling me as he was having a little difficulty supporting my sale price.  It was a great home and not over priced so I was really surprised by this.  It ended up appraising about $2,000 over sale price but about a year ago it would have been a lot more.

I recently showed a buyer a property and the listing agent called for feedback.  As we were ending our conversation, he said something to the effect of "the $1,000 bonus isn't too bad".  I told him I hadn't noticed the bonus and that never affects whether I show a property or not.

From time to time, I notice when the commission is higher on one listing as opposed to a lot of others and sometimes I notice when it's less--particularly a foreclosure or short sale.  However it never influences whether I show a home or not--even when it's less.  I put in the criteria my client wants, they choose the homes and I show them their choices.  I never leave out the lower commission listings or draw attention to the ones with a bonus or higher commission.  I have heard agents encourage sellers to do this thinking it will really get more attention from other Realtors.  If I ran across a great home and I thought it was what my client wanted and the commission was lower, I would show it.

I am curious as to whether or not you think this stategy really works and has made a difference in getting attention to a listing and getting it sold.

Royal Oak Realtor selling Real Estate in Southeastern Michigan.  TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service.

I received a call for a mortgage lender who saw my website and flattered me on how aggressive I was on my marketing etc. etc.  The first thing I ask to such calls is--are you selling me leads and I am not buying leads.  He said he was just looking for a good realtor in this area who he could refer buyers that he had preapproved and the leads were free.  He said he has been successful in other markets and when he found the right realtor, he would start a marketing campaign to For Sale By Owners.  Something seemed a little off but, after all, I was flattered that he liked my web presence (www.cathytishhouse.com) and what he was selling was free.  We talked a few times and when I tried to zero in on how this all worked--there was a piece that did not sit well for me in all that he was promoting--he started getting annoyed.  I told him that would not go well if he wanted to work with me and I kept digging around trying to figure out why he was marketing to FSBOs.  They are "selling"--how was he going to preapprove buyers.  Finally I got that somehow he gets buyers and then he tries to market them to FSBOs as preapproved and that the buyers will pay my commission.  I don't quite understand how this all works and I immediately said no thanks--I am not asking my buyers to pay my commission.  Has anyone had this experience?

Royal Oak Realtor selling Real Estate in Southeastern Michigan.  TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service