The term REO means “Real Estate Owned.” This term applies to properties that have already completed the foreclosure process and have moved into the bank’s real estate inventory. Banks are in the business of lending money and not owning property. Because of this they like to sell the foreclosed assets quickly to a new buyer. Purchasing one of these properties is not difficult but it does require some patience and a bit of skill on the part of your real estate agent.

The first thing to do if you think you want to buy foreclosures or REO’s is to contact an expert in that market segment. I happen to be one! I list and sell properties for several large national banks. This means that I usually have homes coming available in the near future that have not even hit the market yet. Naturally my buyers have an edge when buying my listings. Many properties end up having multiple offers on them so knowing what to offer is the key to winning the bid.

The first this to do when thinking about entering the REO market is to get pre-qualified. I have several great local lenders that I work with and all of them are skilled in REO mortgages. The pre-qual letter given to your by your lender is like a pass to home buying. It shows that you have the ability to obtain financing for your new property. You can also get a full blown pre-approval from the lender. I recommend this if you have time to do so. The lender will do a more thorough investigation into your qualifications as far as credit, debt and employment are concerned. This step will also allow you to get approved for specific loan programs. That can be a key thing when buying a REO property (more on this later).

Once your lender has given the all clear sign, you and I can begin looking at properties. I have several ways of searching for these properties through banks, the MLS and other sources. Many times people think they can just search the MLS on their own but are you aware that some banks will not allow the listing agent to state that the property is bank-owned in the MLS? This means that your search will come up showing only some of the REO assets but not all of them. I know where to look and have access to lists that civilians may not have. you can browse the MLS on your own but to really find the good deals you will have to get in touch with me. The good deals go fast. Blink and you will miss them!

Make an Offer!

After you have found a property that meets your criteria you will want to make an offer. Keep in mind that these homes do not stay on the market long. Lots of other people are doing the same thing you are doing–looking for bargains! This means that you don’t have time to waste “sleeping on it” or thinking it over for a few days. After you have looked at a number of properties you will know a good deal when you see it. I can run the numbers (comp sales) for you to help you with your decision and then we need to get down to business and write a contract. When we submit the offer to the bank you are required to sign the written contract, submit an earnest money check (won’t be cashed until acceptance) and the pre-qual letter or statement from the bank showing funds to close. This happens when buyers are paying cash for the property. The bank has to be sure that you have the money available to close on the property.

Banks usually take anywhere from one to 7 days to respond to an offer. If you hear something quickly it might mean that they want to counter your offer but if the offer was in the acceptable range for the seller it will be accepted. Once they accept the bank’s addendums and contract forms will be sent for the buyer to sign. These addendums usually are documents that restate the fact that the bank is selling the property in as-is condition, can charge you a per diem fee if you close late and other special requirements. These terms are not negotiable. The bank does not make allowances. The buyers either accepts or declines. Period.

Next…Inspection, Appraisal & Closing

Possibly. Keep in mind though that this process is dependent on may variables determined by your mortgage lender. First of all, visit your lenders web site to see if they offer loan modifications. They will list the steps required to modify the loan. The problem sometimes occurs when the lender tells the homeowner that it will be no problem to lower the monthly payment and then at the end of the process, the promises made by the lender in earlier conversations are not kept.

Each modification program has different rules but generally the homeowner must be currently living in the home and not using it as an investment property. Next the homeowners must be able to show that their income has decreased and there is a hardship in paying the current payment.  Once all of the criteria have been met and the correct documentation has been submitted to the lender, the lender may or may not modify the loan.

I do not recommend employing the services of a so called “Loan Modification Prifessional” that will do the paperwork for a fee. If you simply must enlist the help of a service, please do so ONLY if you can pay upon the successful completion of the loan mod. Many companies charge borrowers upfront for the loan mod and then are unable to deliver. Think about it, if you really had three or four thousand dollars laying around would you need to modify your loan in the first place? Don’t do it.

Statistics show that a huge percentage of the loans that actually do end up getting modified end up in foreclosure anyway. Most times, if you are having trouble paying the monthly payment, a savings of a few hundred dollars per month is not going to make any difference.

Short Sales

Short sales make the most sense to me for those having trouble paying their monthly payments. The process can definitely be successful when done correctly.  When you do a short sale, the lender agrees to take less for the house than you currently owe on it.  Again there are strict criteria on who can qualify to sell their home short and who cannot. Those who cannot would be those with obvious equity and no hardship. Those who can will meet the criteria listed below.

• you have a hardship, such as a job loss, divorce or medical emergency
• you owe more than your house is worth
• you’re unable to afford your current monthly mortgage payment
• you’re unable to modify your current home loan

Step one is to call us at 719-264-7777 and make an appointment to go over your current situation. Step two is to determine the true value of the property and list it for sale in the MLS. Beware of the scammers will instantly buy your home for cash or at least claim to do that.  Banks are getting wise to these scams. The buyer makes an offer to purchase your home for a super low amount. They then turn around the same or next day and try to resell the property to a new buyer. In essence this steals equity from the lender and can be considered fraud. Buyers who intend to resell the property must disclose their intention as part of the sale so the lender is made aware of this condition. Most lenders do not look favorably on this practice.

 Colorado State laws are also very strict about waiting periods before an investor can transfer the title to a home purchased in a short sale. These shady dealings are exactly why you should never trust the sale of your home to some company who clains to just want to help people.  Many of these companies advertise on craigslist.com or use hand made signs on street corners. I have a 21 year real estate career in Colorado Springs and real estate license that I do not want to lose. All of my dealings are done in a professional manner. I just can’t risk it for some flaky investor doing things the wrong way!

Short sales are not for the faint of heart. The process can be tedious. Lots of paperwork has to be filled out, signed and sometimes signed again. Homeowners simply can’t do it themselves. The real estate closing fees and commissions are figured in the final payoff to the bank. Most sales do not require sellers to bring any money to closing. Once again, if you had thousands of dollars laying around, would you be thinking about a short sale? Probably not.

Selling a home short will not damage your credit as much as a foreclosure. Again, you will have missed payments and that dings your credit. The real focus should be on finding a more affordable place to live so you can start fresh. I help people just like you in all stages of mortgage distress. The key is to take action immediately! Contact me now so I can advise you and you can make a plan for a better future.

Fall is the time to start getting organized after a summer of fun and relaxation. Rose Kelly of Professional Mortgage Associates gives us a few tips to help get started. Read on below and get started!

Prepare a Post-Mortem Letter
Review or prepare a post-mortem letter to your spouse spelling out the location of your assets and property (assets of a deceased are often lost because a spouse may not be aware of them or know their location), the names of all your advisors, and any other information your spouse should know to minimize his or her burden in the stressful period after your death.

Get Your Social Security Statement of Benefits

Request a Personal Earnings and Benefit Estimate Statement from the Social Security Administration. This statement summarizes your Social Security earnings history and provides an estimate of the benefits to which you are entitled. It is important to verify that you have been credited for all of your earnings. You can also use this statement in your retirement planning. We can help you with this statement; just give us acall at 719-388-2412

Review Your Budget vs. Actuals for YTD 2011
Compare July income and expenditures with your budget. Make adjustments as appropriate to your August expenditures. Make sure you invest your planned monthly savings amount.

Estimate Your Tax Liability
Total up your taxable income, capital gains, and deductions through this date. This information can be used to plan your estimated tax payments, and perhaps avoid or minimize any underpayment penalties.

To ask more financial questions or to obtain current mortgage info, give Rose a call. Her contact info is below.

Rose M. Kelly
Mortgage ConsultantNMLSR ID10326
Professional Mortgage Associates, LLC | 1740 Chapel Hills Drive | Colorado Springs, CO 80920
MAC M1449-011
Phone 719.388.2412| Cell 719.650.8228

Your home is overpriced

Buyers are very tuned into local market conditions. They know all about your competition and based on the many internet data systems that show current home values (correct or not), they know what they need to pay for a home. These buyers now control the market. They determine your home’s value. Realtors can come up with comparable sales to justify a value but that does not mean that buyers will pay that price. You can ask for the moon and set your listing price well above comparable properties in your neighborhood, but at some point it will be up to you, the seller, to accept what the buyer thinks your home is worth. Once the price is set, we need to monitor it closely.

Most real estate agents, and hence most qualified buyers, will see your listing in the first 30 days on the market. If the initial price is too high by as little as 5%, it will be duly noted and interest in your property will fizzle. You likely already priced out buyers who might have qualified for financing at a more reasonable price. Even if you manage to find a buyer at your inflated asking price, the property may not appraise at that figure and the financing will fall apart.

An overpriced house is like an overpriced sweater in a store at the mall. It becomes shopworn if it has been hanging there more than a few weeks. People overlook it and buy the newer inventory. Fresh pricing is a key part of the home selling process!

Staging is a must!

Today’s marketplace is competitive. Imagine that you are a buyer. Do you want to view homes that are dark and cluttered? No way! Buyers will stay much longer in a home that has been professionally staged for showings. Give your home a makeover and do it now! If you want to compete, you have to show an effort. New paint, carpet and a good cleaning can go a long way to help buyers take an interest in the property.

 You’re in a bad location

We all know the phrase “location, location, location.” The fact is that it’s true. Your location can’t be changed. If your home is on a busy street, reduce the price. If your home backs to apartments or a busy shopping area lower the price. If you are in one of the less popular school districts, price will be affected. The point is, location rules in real estate.

If your home’s location is less than desirable, your options are somewhat limited. You certainly can’t change your location but you might be able to do a bit of landscaping to help hide the problem. The key is to do the landscaping early. Trees don’t grow overnight. Plan ahead for best returns. The best way to compensate for a poor location is to reduce your asking price.

You chose the wrong listing agent

Sorry that this happened but it is common. Some agents will take a listing at any price just to have a sign in a yard. Some agents just put the house in the MLS and nothing else.  Again, the rules have changed. You need to make sure that you have a proactive Realtor with a high-tech marketing campaign. Also make sure your agent has a good reputation in the area. I try very hard to establish good relationships with my fellow agents. After all, they are really my biggest customers 

You have no ongoing marketing for your home

In this day and age, most home marketing is done online. We use a variety of channels to market our listings. Our listings are marketed using a combination of many portals such as YouTube, Twitter and Facebook. Our web site shows a page describing your home. Google instantly indexes our site to show all of our listings within minutes of them being posted. We have gotten very creative with ways to get the eyes of buyers on your home.  We can’t afford to just sit back and wait for something to happen!

Take action now! 

If you would like to talk to us about why your home is not selling or if you have not yet listed with an agent and want to make sure that your home does sell, contact us. We would love to help you achieve success!

I used to have a Wachovia Pick-A-Pay mortgage on the last house that I owned. That house sold in 2008. Even so, I just received notice of a Class Action Lawsuit settlement for those who had or have one of these loans.

After paging through the info that the law firm sent to me, I noticed that I am eligible for a settlement. The court has awarded a settlement of $50 million to compensate those who were affected by the negative effects of this type of loan. Personally, I never noticed any negatives from that mortgage but keep in mind that I understand how these programs work.

The Pick-a-Pay types of loans offered borrowers several options each month when submitting a payment. The borrower could pay the full amortized payment, an interest only payment or the always bad option–the minimum payment. If someone paid the minimum payment, the penalty would be that a negative amortization would occur. This means that the difference between the real payment and the minimum would be added to the loan balance. Not something that is good in any way! The problem came when home values dropped. Many home owners were put into situations where their home values were much lower than the loan balance. The with the added negative amortization, the loan balance could have been even higher.

These loans were used to allow buyers to qualify for loan amounts much higher than they could realistically afford. Buyers were told that they could make the minimum payment and still afford the house. Only partly true because if the home owner could not pay off the full loan amount at closing, they were in trouble!

If you still have one of these loans, there are several options. First of all, if you wish to stay in your home, call Wachovia and ask for a loan modification. Chances are that they will be very open to this idea now that the court is breathing down their neck about this lawsuit. Next, be sure to watch for the letter coming in the mail. I knew mine was coming so I did not throw it out like I do most mail that looks like this. The letter will explain your options and provide a claim form for your portion of the settlement. You can also file a claim online at www.pickapaysettlement.com  If you do not file, you will not receive any money.

How much will we all receive? Who knows. It could be $25 or it could be $25000. It will all depend on how many claims are filed. The claims are being grouped into categories of A, B and C. The A group no longer has a Pick-a-Pay loan. The B group is for those who have mortgage payments that are not 60 days past due. Then lastly the C group. They have mortgage payments that are more than 60 days past due.  The court will convene in April to decide if the settlement is fair for those harmed by these Wachovia loans. Then if there are no appeals, the funds will be disbursed. Keep in mind though that the attorney fees will be up to 25 million! This could all take a long time but it is definitely worth it to file your claim! I did mine online in a matter of two minutes. Call me at 264-7777 or click contact to ask a question. I’ll follow up later when they send me more info!

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This is it! All new upscale remodel just minutes from Fort Carson! Gorgeous kitchen with all new cabinets, stainless appliances and slab granite counters. New paint inside and out. All new bathrooms as well. Nothing has been left undone in this home! Tri-level floor plan offers formal and casual living spaces. Four bedrooms, two baths. 1408 square feet. Attached garage with opener. Perfect for anyone who needs to move in fast and start living! Easy to buy with your VA loan. We have several lenders who can assist you with any financing option. Contact me now for your private showing.

Be Prepared!

If you think you might need to sell your home using a short sale, don’t wait to get started. Short sales can take a long time depending on the lender that holds your loan. Many times homeowners will spend too many months in denial before finally contacting me to talk about a short sale. If your home has an FHA loan, the bank will want 90+ days prior to the foreclosure sale date to submit the completed short sale package. This means that if you have waited too long to get started, the short sale won’t have time to be completed before foreclosure.

Get organized

The first thing to do after speaking with a qualified Short Sale Realtor is to get your paperwork in order. Think of this as having to un-qualify for a mortgage. You will need lots of documentation to prove that you need to sell the home and have a big portion of the loan forgiven. Some of the things you are going to need are: financial statements, pay stubs, real estate listing agreement, copy of the MLS listing etc. I recommend that you contact the lender directly to find our exactly what they need for your case, then make a special file for everything so that when the time comes we can submit the entire package together.

Be wary!

In Colorado Springs there are many “Short Sale Vultures” lurking around looking for distressed homeowners. They often have investors waiting to buy your home with the intent of selling it immediately to another buyer at a much high price. Be very careful here! If this is not fully disclosed to your bank, you could be held liable as part of this potentially fraudulent scheme. I see these situations every day and see this as a major problem. Call a reputable Realtor, not one of these people that have flimsy signs at road intersections.

Get your home ready!

The Colorado Springs real estate market is highly competitive. Even if your home is priced way below the market value, it still needs to be staged and ready for showings. Make it easy and appealing for buyers to view your home. They can buy other homes. Your home needs to stand out as special. Remember, the short sale process is a big hassel for the buyer and especially their agent. Most agents do not have the patience to wait for a short sale to be approved. If it falls apart, they have to take the buyer out again to find a new home. This means twice the work for them. The buyer needs to be very in love with your home to make it worthwhile to wait for the short sale approval.

Choose your Realtor Wisely

When selecting an agent, make sure the agent has successfully completed short sales before! Don’t just work with your neighbor’s brother’s friend because they need the business or you met them at the BBQ last week. Make sure the agent is aggressive, professional and knowledgeable. Gone are the days when an agent could just put a home in the MLS. Selling a home in today’s market requires much more than that. I am experienced in short sales. I know how to communicate with banks–I do it every day!

Following these simple guidelines will give you an edge in selling your home in today’s Colorado Springs real estate market. Contact me or leave a comment below if you need help selling your home using the short sale option.

A Picture Is Worth 1,000 Words

I like to look at home listings.  I know, you are saying…

“But Shawn, don’t you view homes for a living?”

Yes, indeed, I do!

In my off time, I enjoy viewing listings of homes from different cities around the country. Currently, I receive listing updates every day from an agent in the Scottsdale, AZ area. I find it interesting to see what my money can buy in a different city. It is also fun to see how styles and decor differ from one part of the USA to another.

Apparently, in Arizona, many agents like to take photos of the closets of the homes that come up in my search. It really amazes me that the home sellers must know that the agent will be coming over to take the photos yet they often do not make much effort to clean up for the shoot.

Case Study

This week however, I did receive a listing that caught my attention!

The listing really stood out for me when I came to the pictures showing the inside of the two closets in the master suite. Check out this photo!

This guy has real pants hangers! Wow!

Obviously, if this guy puts this much effort into his closet, he probably changes his funace filter every 28 days and makes sure that things are maintained according to schedule. This is a home that deserves a second look beyond just the MLS sheet!

Based on this one photo, I can tell that the house is CLEAN!

The Lesson

That’s over half the battle right there. In this market, a home seller has so much competition that they really have to be on their toes to compete. Many times, lowering the price is not going to make any difference. A home buyer coming to Colorado Springs to view homes has only so much time to look at listings in person. They have been viewing listings on our site and many others for weeks and often months.

If a home has unappealing photos, it will be bypassed for one that has a closet like this one!

Before I put my house on the market,  I think I had better go out and buy some of those special pants hangers ASAP!