distressed sales: potential pitfalls and opportunities for buyers

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Distressed Sales:

Potential Pitfalls &Opportunities for Buyers

2009 REALTORS® Conference & ExpoSaturday, November 14, 2009

9-10:30 a.m.

San Diego Convention Center 

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  Moderator

Haley Hwang, e-PRO, SFR

Coldwell Banker Residential Brokerage

Glenview, Ill.

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Agenda

Overview of distressed properties

Timelines for distressed-sale transactions

Ideal buyer candidates

Questions to ask listing agents Potential pitfalls for buyers

Q&A (last 30 minutes)

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How Do You Answer?

Should I buy a short sale or foreclosure property?

Why can’t you get me a great deal on one of those

corporate-owned homes?

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Why can’t I buy this?

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For the price of this?

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  Short Sale Expert

Scott Thompson

Mortgage Resolution Services Inc.Rancho Cordova, Calif.

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  Foreclosure

Expert

Mike Phillips

Century 21 All-Pro

Kansas City, Mo.

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  Relocation Expert

Liz Nunan

Houlihan Lawrence Real EstateArmonk, NY

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Short Sale & Foreclosure Attorney

Stanley J. Czaja

Czaja and AssociatesChicago, Ill.

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Did You Know?

Distressed Sales in the U.S.

 – NAR

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Did You Know?

1 in 136 U.S. homes received aforeclosure filing in 3Q 2009 

 – RealtyTrac

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Did You Know?

1. Nevada (1 in 23)

2. Arizona (1 in 53)

3. California (1 in 53)4. Florida (1 in 56)

5. Idaho (1 in 97)

6. Utah (1 in 97)

7. Georgia (1 in 119)

8. Michigan (1 in 122)9. Colorado (1 in 131)

10.Illinois (1 in 141)

Top 10 Foreclosure States (3Q 2009)

 – RealtyTrac

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Did You Know?

For every short sale that closed in 2008,eight homes went into foreclosure.

 – Fannie Mae

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Did You Know?

Roughly 3.4 million homes are expectedto go into foreclosure by the end of 2009, up from 1.2 million homes in

2007.

 – RealtyTrac

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Distressed Sales Defined

What Is a Short Sale?

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Distressed Sales Defined

What Is a Foreclosure?

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Distressed Sales Defined

What Are Corporate Inventory

Homes?

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Estimated Timelines

Short sales

Foreclosures (REO)

Corporate inventory homes

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Advocate for Your Buyers!

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Who Are the Ideal Buyers for 

Short Sales?

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Who Are the Ideal Buyers

for REOs?

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Who Are the Ideal Buyers for Corporate Inventory Homes?

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Identifying Distressed 

Properties

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MLS or Agent Remarks (CC: Pursuant toshort sale)

Special compensation information: short sale

Tax records – mortgages recorded

“Bank approval” required

“Sold as-is”

Identifying Short Sale

Properties

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 Listing agent or e-mail address

(reo@risingrealty.com) Vacant property tagged by city or village “Addendums” required after contract

acceptance

“No surveys or disclosures,” “EM incertified funds,” “bank-owned,” “proof of funds,” “tax proration 100%” Tax records – owner is listed as a bank

Identifying REO Properties

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Special “addendums” need to accompanyall offers

“Corporate-owned” Tax records – relocation company listed as

owner 

Identifying Corporate Inventory

Properties

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Questions to Ask Listing

AgentSHORT SALES

What is the status of your file?

Do you have more than two liens?

What is your plan to satisfy the lien holders?

Do you have any direct experience with the

lenders involved? 

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Potential Pitfalls

SHORT SALES

Potential for not closing

Poorly prepared listing agent

An inflexible buyer 

Additional lien holders on the property

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Potential Pitfalls

REOs

Lack of control No property history

No remedy for inspections

Nonrefundable earnest money

Firm closing dates

Condition of the home

Higher costs

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Buyer Protections in Contract

Short sales REOs

Corporate inventory homes

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The Rewards

Get properties at below market price

Make a good real estate investment

Know that they didn’t overpay for a

property

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Q & A

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Additional Resources

Handouts for Consumers on ShortSales (put your branding)

SFR certification (Short Sales and

Foreclosure Resource) – $175 fee waived through

12/31/09!NAR’s Field Guide to Short Sales

NAR’s Field Guide to Foreclosures