Selling Poinciana One Property at a Time.

Hi folks. Today I'm going to talk a little bit about short sales. As way of disclosure, I want to mention, that I am NOT an expert on short sales. However, I am an experienced Broker in Florida and do have short sale knowledge. I just prefer to not handle many of them.

But....I want to see if I can help when it comes to working with Sellers of short sales. How to price the property properly and how to negotiate the deal.

First, if you are a Seller facing foreclosure, a short sale could be a viable solution for you and the Lender. Seek the advice of an Attorney and an experienced REALTOR®.

My market, Poinciana FL, is saturated with short sale listings. Some will be successful but many more will not.

The key to being successful is pricing and negotiating.

When meeting with a Seller, who may be a candidate for a short sale, it is imperative that the property is priced right. When I say "priced right" I mean as close to market value as possible at a price that will get the property under contract quickly.

One of the problems I see in my market is that short sales are priced way to low. It seems like listing brokers are just picking a number out of the clear blue sky and placing the property on the market. While they may generate a lot of activity, these deals, more than likely, will not close. Plus they are doing the Sellers a major injustice. The Seller will either be foreclosed on or end up with a huge deficiency judgment against them. Not to mention the possibility of owing good ole' Uncle Sam some money.

Pricing a short sale should be just like pricing any other property. You are looking for a price that will sell the property in a reasonable amount of time and at a reasonable price. The fact that the property is a short sale, requiring 3^rd party approval, is nothing more than a negative market condition.

If the true market value of the property, if not a short sale, is $200,000, then what you should be doing is taking this figure and making an "adjustment" for the "negative market condition(short sale)". Depending on your market it could be a 10% to 20% downward adjustment. Let's say that your market is showing you that short sells are selling for 20% below a normal sale of similar properties. That means that this property should sell for $160,000. So maybe you price at $165,000 or $169,000 depending on your area's sales price to list price ratio.

Now you have a property that is priced right AND you have a very good chance of getting the Lender to agree to the short sale if you bring them a CONTRACT at $160,000.

OK so here's the second step. Negotiating the deal. Notice up there where I bolded CONTRACT. This is important. Many REALTORS® are submitting OFFERS to the Lenders for approval. This is wrong and will limit your ability to get the short sale accepted.

A short sale requires 3^rd party approval of the CONTRACT not the offer. What this means is the Buyer and the Seller should be negotiating the deal as they normally would. Once they have agreed on a price, hopefully as close to the $160,000 possible, they sign the contract and the deal goes pending, subject to 3^rd party approval. The 3^rd party approval is nothing more than a contingency and should have an end date on it. It's no different than inspections, loan approval etc., except that it is a Seller contingency. It is a contingency that needs to be removed or it will expire with time.

Once the deal is signed, by all parties, you are now in a position to submit the short sale package to the Lender. Then the wait begins.

It's important to remember that, if you are working for the Seller, your goal is to get them as much as you can for the property in a reasonable amount of time. By doing this you are limiting their liability created by the "short" and you are giving them a good chance to avoid a foreclosure by presenting a fair contract to the Lender.

So, if you are inclined to handle some sort sales. Do it right. I know short sale is the "buzz" word right now but as professionals we need to understand what we are doing. There's a lot more to it than just throwing it out there and hoping it sticks. If that is what you are doing then you are harming the consumer and need to stop. I hope this post helps. If there are any short sale experts out there that feel this info is incorrect please let me know. I'm trying to learn as much as I can. Thanks.

More articles on short sales by Broker Bryant.

Copyright © 2008 http://www.brokerbryant.com/ | All Rights Reserved

Bryant Tutas
Broker/Owner
Tutas Towne Realty, Inc
Licensed Florida Real Estate Broker
http://www.brokerbryant.com/
***The content of this blog is solely my opinion***

FORECLOSURES (REOs) IN POINCIANA FL

Yesterday I wrote a post titled "Buying foreclosures in Poinciana Fl". The post was a little on the boring side but it was written for a reason....Google juice!! I just listed a couple of REO (bank owned) properties last week so I'm trying to attract attention from anyone wanting to buy or sell a foreclosure in Poinciana Fl.

Since ActiveRain has tremendous Google juice I figured a post about foreclosures with a key word rich title would work well for me. Well.....it did!!!

In fact with only one post, posted 24 hours ago, I now have the number one position on Google for the following searches.

• Buying a foreclosure in Poinciana

• Selling a foreclosure in Poinciana

• REOs in Poinciana

• Foreclosures in Poinciana 

• Poinciana foreclosures for sale

• List a foreclosure in Poinciana

• Find a foreclosure in Poinciana

• Sell a foreclosure in Poinciana

Folks, that's incredible!!!! Of course I do have an advantage in that I work a very specific niche market but it will work in yours as well. It just may take a little longer.

My goal is to break into the foreclosure market. Foreclosures are on the rise in Poinciana and I need to get me some of those suckas to sell!! So I'm fishin' for foreclosure business on Google.

Being in the first position for these searches presents me as the expert on foreclosures in the Poinciana area. Even though I am not the top foreclosure expert in Poinciana....yet, being first on Google gives the perception that I am.

And really, perception and presentation, are a big chunk of what we do. It's how we get business. Of course you do have to be able to back it up to keep it. Fortunately for me, I am very good at what I do, so if they call, they won't be disappointed.

Anyway, I wrote this post to show you how strong our blogging efforts are when it comes to Google. Write about what you know and what you do and the business will come.

Now, if anyone wants to buy or sell a foreclosure (REO) in Poinciana Fl give Broker Bryant a call. I'll be waiting.

By the way, can you guess how much that bass weighs in the picture? I caught it yesterday from my back yard. This may be a trick question based on my presentation and your perception. Give it a try. I'll post the answer later.

Copyright © 2008 http://www.brokerbryant.com/ | All Rights Reserved

Bryant Tutas
Broker/Owner
Tutas Towne Realty, Inc
Licensed Florida Real Estate Broker
http://www.brokerbryant.com/
***The content of this blog is solely my opinion***

Hi folks. How often have you had Buyers call you wanting to buy a foreclosure? Usually, when this happens to me it's first time homebuyers who are really just looking for a "deal". Of course many times they also have no money.

When this happens I spend time with them on the phone explaining how difficult it is to purchase a foreclosed property. Not only is it difficult but if it's a "good deal" you are going to need to have strong finances to even have a shot at getting it. Investors buy the "good deals" and they play with cash.

Foreclosures can be a good opportunity to purchase a property below market value but they really aren't for the inexperienced Buyer. If you have no money and need the Seller to pay all of your closing costs, then more than likely, you will NOT get a "good deal" in the foreclosure market. It can be done but you will certainly want to work with an experienced agent and you will want to make sure you have been approved for a mortgage before shopping.

You will also have to move fast. The property will be sold "As Is" with right to inspect. You will want to have it inspected and be prepared to walk away if you are not in a position to pay for repairs. You will not be reimbursed for inspection costs if you don‘t close on it.

Janet Guilbault wrote a post earlier this week about one of the pitfalls of purchasing a foreclosure, the dreaded per diem penalty!!! Unlike a normal purchase, if the closing is delayed the Buyer will be required to pay a penalty for every day the deal doesn't close beyond the contractual closing date. This is usually $100 to $200 per day! And if you can't close it at all......kiss your deposit good bye.

I wrote an offer on a foreclosure property this week for one of my Buyers. The nine page bank addendum, in addition to the per diem clause, also had this little gem in it:

SELLER'S UNCONDITIONAL RIGHT TO CANCEL THE CONTRACT AND/OR ADDENDUM:

AT ANY TIME AFTER THE EXECUTION OF THE CONTRACT AND/OR ADDENDUM, SELLER SHALL HAVE THE UNLIMITED RIGHT AND AT IT'S COMPLETE DISCRETION, TO ELECT TO DEEM THE CONTRACT AND/OR ADDENDUM BETWEEN THE BUYER AND SELLER NULL AND VOID AND NOT CLOSE THE TRANSACTION FOR ANY REASON AND THE PARTIES SHALL BE RESTORED TO THEIR ORIGINAL POSITION AS IF THE CONTRACT AND/OR ADDENDUM NEVER EXISTED.

SHOULD SELLER EXERCISE IT'S DECISION TO NULLIFY THE CONTRACT AND/OR ADDENDUM, THEN SELLER SHALL RETURN THE DEPOSIT AS DEFINED IN PARAGRAPH B(5) TO THE BUYER. HOWEVER, IT IS SELLER'S SOLE DISCRETION AS TO WHETHER OR NOT IT WILL REIMBURSE THE BUYER FOR ANY COSTS, AS OUTLINED IN PARAGRAPH 6(B), OR OTHERWISE.

THE BUYER AGREES THAT SHOULD THE SELLER CANCEL THE SALE FOR ANY REASON THAT THEY WAIVE THEIR RIGHT TO SUE FOR SPECIFIC PERFORMANCE AND/OR DAMAGES AND FULLY RELEASE THE SELLER AS FURTHER SET FORTH IN RELEASE CONTAINED WITHIN PARAGARPH W HEREIN.
***********************************************

This clause basically states that the Seller can back out of the contract at anytime prior to closing for any reason at all. They will give the deposit back but may or may not reimburse the Buyer for any costs they have paid i.e inspections, survey and appraisal.

The Buyer is obligated to perform under the contract the Seller isn't.

We removed this clause when we made the offer but the Bank refused to negotiate with us if we made any changes on their addendum. So we put it back in and agreed to it.

Fortunately, my Buyer is very experienced, is paying cash and is willing to take the risk to purchase a property 20% below market value. We can only hope that the Bank doesn't find a better deal before my Buyer has a chance to close. We want to close in 10 days to limit the risk. So we'll see how it turns out.

The point of this post is to be very careful when negotiating on Bank owned properties(REOs). Make sure to read every word of that Bank addendum and make sure your Buyer fully understands what rights they are giving up.

Buying foreclosures can be a good way to get a "deal". Just make sure you know what you are getting into. They are not for the inexperienced. In my market you do not have to buy a foreclosure to get a "good deal". There are better and safer ways to buy Real Estate. Find a good and experienced REALTOR® to help you out. Better yet......call Broker Bryant! Any thoughts?

Copyright © 2008 http://www.brokerbryant.com/ | All Rights Reserved

Bryant Tutas
Broker/Owner
Tutas Towne Realty, Inc
Licensed Florida Real Estate Broker
http://www.brokerbryant.com/
***The content of this blog is solely my opinion***