Greetings!   For those of you that don’t know me very well, my name is Fred Weaver and my partner Kevin Kauffman and I run Arizona’s Premier Short Sale Team (www.Group4610.com) – we’ve listed and closed more short sale transactions in the last 2 years than any other real estate team in Arizona (200+ short sale transactions).

I’m writing today with a bit of a sick stomach as I just got done reading one of the most disturbing blog posts on Short Sales I’ve EVER read…the most sickening part of the entire blog post is the author – 2010 National Association of Realtors (NAR) President Vicki Cox Golder.  

Now before some of you jump down my throat and get mad at me, hold on one minute.   I don™t personally know Vicki and this blog of mine is not intended to slander her, it™s intended as a wake-up call for Vicki, you the reader, and our entire country.   PLEASE STOP WRITING ON TOPICS OF REAL ESTATE THAT YOU ARE NOT FULLY EDUCATED ON!!!     You have been a Realtor for 37 years specializing in commercial, farm, and land “ you are not a Short Sale expert!

Vicki, as 2010 President of NAR you are called to be a leader of influence.   The tone of your article below, while based on ˜hope™, seemed rather weak in spirit to me.   Please, before you™re going to write on a topic like Short Sales, do some REAL research and talk to some experts in the field (some random Realtor that worked with a NAR staff member, our government, and the Wall Street Journal, are NOT experts in the field).

These new Short Sale guidelines that the Treasury Department has released are not mandatory for loan servicers “ maybe you want to point that out in your next article as well.   Consider for a moment that a good majority of the TARP money that was given by the government to the nation™s banks over the past few years has all been given back OR is in the process of being given back.   Think about that for a moment¦the government was loaning the nation™s banks money to help them out, and most of them ended up not wanting to follow the tight rules and constraints that the government was placing on the money and are giving it back OR have already given it back.   What makes you think these same banks that rejected TARP funds will want to participate in the governments new Short Sale program (HAFA)???

Vicki, I encourage you to greatly increase your education around Short Sales.   STOP reading the Wall Street Journal or any other media publication out there.   START influencing these same media sources with REAL, RELEVANT, and ACCURATE information.   The public is done with weak stories of ˜hope.™   We want truth, not NAR or the government™s latest spin.   In 2010 you will be in a position of great leadership, please use this place of leadership and influence wisely.   STOP talking to Realtors, escrow officers and title companies that make up the majority.   START talking to the minority “ as you should know more than 80% of all real estate business is done by 20% of the agents “ start talking to the 20%.   Most of all, STOP listening to the government.   START watching what they™re doing and what the banks are doing, NOT what everyone™s saying.   œYou shall know them by their fruits as the Bible says.   START influencing the government and the banks “ again, you are in a position of influence to be able to do this!

Lastly, I invite you to attend one of my partner and my upcoming Short Sale classes.   You can find a list of these classes at http://www.group4610.com/realtor-classes.asp.   I also invite you to tune in to www.ShortSalePowerHour.com for daily real, accurate, and relevant content from people in the trenches that have closed hundreds of Short Sales with a 90+% closing rate (certainly you know the industry closing rate is anywhere between 15-40% depending on who you talk to).  

Hope for Short Sales, Posted by Vicki

Posted: 17 Dec 2009 10:43 AM PST  

I was recently talking to a member of the NAR staff who is looking to move closer to work. She mentioned that her REALTOR ® discouraged her from looking at properties that are potential short sales. The reason? The agent explained that those transactions are difficult to close because they involved what she termed œfunny money.  

 In other words, the money from the sale is divided among various parties, which can delay the sale up for months.

We have heard from so many of you about this problem, and we finally have some good news to share.  

As you know, last May, the Obama Administration announced that they would provide guidelines for short sales that would help improve the process. On November 30th, the Treasury Department finally released those guidelines, and we have posted a link to them “ and to a FAQ “ on Realtor.org.    

As a recent article in the Wall Street Journal noted, the rules could help provide structure to a process that has been œchaotic. I sure hope so.  The new rules don™t take effect until April, so until then, we™ll have to keep trudging along with the current process. But, this is a step in the right direction, and I am confident that we will see a much more robust market in 2010, as buyers return in force.    

Now, if we could just get the banks to lend money. That™s a topic for another blog. “ Vicki Cox Golder, 2010 NAR President

50% Of Rescued Mortgages Have Re-Defaulted

 Click HERE to view full article.

The latest data from the Office of the Comptroller of the Currency (OCC) shows that over 50% of homeowners who had their loans previously modified in order to avoid foreclosure have re-defaulted. This seems like an awfully high failure rate.

As one might expect, mortgages which were given higher cuts to their monthly payments (during the modification process) have been less likely to re-default. More help prevents re-default.

Hopefully the Making Home Affordable plan has encouraged more aggressive modifications. Past mortgage modifications were clearly just a delaying game, rather than a solution, since in the end more than 1 out of 2 “rescued” mortgages re-defaulted. It should have been done better the first time.

Were financial institutions unable to face the upfront losses which more aggressive mortgage modifications (and the haircuts they might cause) would have caused? Feel free to enlighten us here.

Time is running out on your opportunity to cash in on the  8,000 First-Time Buyer Incentive and I know many of your still have questions about this program so below are some bullet points to help you understand this program better.  

• The home must be the buyer’s primary residence. Howeverowning a vacation home or a rental property already does not necessarily disqualify you from taking advantage of the credit (as long as you haven’t owned a primary residence in the past three years).

  Close of escrow must occur by Nov. 30.

• The tax rebate is for 10 percent of the purchase price, up to $8,000.
• The home buyer can’t have owned another home in the past three years.
• Single home buyers earning 95K or less qualify. If you make 75K or less, you qualify for 100% of the $8000. If you make halfway, 85K, you qualify for 50% or $4000. The credit phases out gradually between 75K and 95K of income. For example, if you make halfway between the income limits, 85K, you qualify for up to half of the credit.
• The same rate applies for married couples and joint buyers whose incomes limits are doubled to $150,000 to $170,000. Married couples or joint buyers whose incomes are less would receive the full $8000 credit. At an income level of $160,000, halfway between 150 and 170, the buyers would receive half the credit – or $4,000. And the credit phases out altogether at $170,000
• The home cannot be purchased from a close relative.
• Buyers must live in the home for at least three years or repay the rebate.

If you’re interested in learning more about the new tax credit or about homes in your area please contact us today via email us at Info@group4610.com or call us at 480-449-6642

Click HERE to view video.  

With all due respect to Mr. Hertzog, the real estate agent featured in this video,  this  further illustrates why not every agent should be listing your home and negotiating on a short sale on your behalf.   While we acknowledge a rise in banks requesting promissory notes from borrowers within the last 6 months (not 4-6 weeks), any skilled short sale agent knows that this is merely a ‘collections tactic’ of the banks and that it can be overcome by talking to the right person at the bank who understands figures (what will the home net the bank at foreclosure vs. through a short sale).  

Please, please, please….do not list your property with just ‘any’ agent that claims they know short sales.   Our team has closed over 170 short sale transactions in the last 18 months and we have over a 90% success rate.   We’re not looking to call out or embarass  Mr. Hertzog or other agents in our Realtor community, but this is further proof why you need experts on your side that have experience, results, and a process whlie negotiating on your short sale.

Real estate agent Gene Call of the Heber/Overgaard area (NE of Phoenix)  recently attended one of Kevin Kauffman and Fred Weaver’s Short Sale Level I class.   Gene is also the Financial Editor of the local paper and affter attending their class,  wrote an article that will be appearing in the local paper this month….  

One of the reasons for such a busy week and the flying Valley run was the opportunity to attend a seminar taught by Arizona’s largest volume short sale team, Fred Weaver and Kevin Kauffman.   Fred and Kevin are agents with Keller Williams.   From this point on, I will refer to the team as the “KW Hotshots.”   In one sense, the seminar was a real affirmation in that our “systems” approach was very similar to theirs as far as documentation and general procedures we use with lenders. At first break, Fred and I stood before each other saying, “Where do I know you from?”   It hit me that Fred had been part of the team that had responded to the attempt of myself and others to bring a Christian business mentoring group to the mountain some year and a half ago.   Fred is one of the leaders of a dynamic group providing such mentorship in Mesa for the entire Valley region.   Fred says, “I was over at your house; remember?”   Small world!   The KW Hotshots have done extensive research and have extensive experience in the area of short sales.   Results demonstrate the benefits for them and the clients they serve have come together nicely! They shared statistics and experiences that I want to share with you for your education, based on their now 1,000 plus case history.    

The first statistical fact that really caught my eye was the fact that on a national level, 20% of short sale offers to the lenders are accepted; 80% fail.   They went on to explain many of the dynamics behind this reality.   Much of it has to do with shear volume.   The KW Hotshots told of establishing a good rapport with a major company’s short sale negotiator–a person at the decision making level.   They arranged to meet with her when they were in Dallas on other short sale business.   They tell of her leading them to her small upper floor cubicle populated by a picture of her children, the thank you note they had sent her after she helped them close the first transaction and her computer.    

As they began to talk shop, she revealed she had 540 cases.   The time frame was last August. The colleague beside her was assigned 520.   Do you think your short sale request is going to get a whole lot of time allotted to it when you are one of 500?     Makes the case for putting your best foot forward right out of the chute!!!!     It gets better.   In February, she told them her case load had passed 1,000!   They observed that some lender’s negotiators have lower case loads yet many are that high or higher.  

In this column, we have rehearsed the flawed system most institutions use to process short sales (and loan mods) but it deserves revisiting to understand the points of this article.   Your short sale request has gone through several preliminary phases before it is finally assigned to the negotiator we have been talking about.   The first step requires a group of clerical workers to review your submittal package to make sure all of the documents on their checklist are present.   Kevin tells of visiting call centers where fax machines were in a long line against the outside wall of the room.   All day clerical workers worked incoming faxes to get them packaged (electronically imaged) into files coded with your name, address and loan number.   The room chuckled in understanding when Kevin queried, “Now do you understand why the financial statement, which is the middle page, out of your 40-page package ends up missing?”   The clerical worker needed a potty break or simply dozed off.   The simple solution seemed to be File 13 for the couple of extra pages they had after handling the rest of your file.   That is why you mark every page with at least a loan number!  

After the fax pros’ are done, it is another group of clerical workers that review the documents.   They must sign off on the document package before it goes to the actual negotiator.   In many operations, these are the same folks sitting behind phones in the call center that we talk to when we are trying to check status of your short sale case (or loan modification).    

KW Hotshots pointed out several note-worthy facts regarding the folks in these departments.   Many of these folks have been recruited from a “collections background”.   Said differently, tact, diplomacy and customer service are not normally part of their tool kit.   Kevin also pointed out their usual wage level–think flipping hamburgers at McDonalds.   Add all these dynamics together and one can reasonably expect another dynamic that all of us in the business have experienced.   During file review, many of these folks get hung up on such details as a bank statement showing a $100 expenditure at Macy’s or $10,000 in a savings account for someone loosing a $700,000 home. This leads many of them to want to complain and suggest that this client doesn’t deserve any help or relief from the financial institution and certainly to assail a Realtor that has the audacity to request a 6% commission when their company is already loosing so much money.   Kevin’s excellent point was that even though we must deal with these folks, they are not the decision makers.   Overall success has to do with not letting them bog down and stop the process.   Success requires being able to maneuver on around them and up the ladder to those making the decision.  

The KW Hotshots “bottom-lined” their observations to this:   short sales involve two problems; people problems and a math test.   The path to a successful short sale requires the ability to deal with the people involved in the process to the point that the math problem finally gets laid on the table of the decision maker.   The only question the “lender corporate” wants answered in the whole process comes to this:   do we have more beans in our jar if we accept this short sale than we would have if we foreclose?    

KW Hotshots shared a war story which offers huge insight.   A negotiator, thinking they were sending out just the acceptance letter on a short sale approval, also mistakenly sent out their “in-house worksheet”.   Subject property was only in the $100,000 range.   Their internal numbers revealed that they thought the lender was $31,000 to the good by accepting the short sale, although much haggling over price, commissions, and other fees had preceded the acceptance letter.  

Why then a 20% success rate for short sales?   At the risk of being redundant, people and math!   On the presenter’s side of the “people” equation, the KW Hotshots point out that many Realtors/sellers/short-sale negotiators approach the challenge with timidity.   The lender’s call center staff beats them up and get the file trash canned before the request ever gets to a decision makers desk.  On the receiver’s side of the “people” equation, the major element of destruction stems from overwhelming volume and poor lender systems.   People lose or misfile files.   Clerical processors are not geared or educated to understand the big picture challenge as documenting facts to use in doing a simple math problem.   Impetuous natures interfere. “Red-herring” is the term the legal profession uses when they refer to the ability for those involved in a case to get distracted on superficial issues that have no real relevance;   such as what got spent at Macy’s last month.   If you become the “squeaky wheel” and push your case through the first couple of levels to reach a negotiator’s desk, you still have to do something to have your one case be the one that gets attention when there are 399 in the same stack as yours.       Many times the only way this happens is for you to find out who the negotiator’s supervisor is or who the supervisor’s supervisor is or …….  

Many short sales fall out because the person submitting them doesn’t do their “math” homework and therefore fail the math test.   The KW Hotshots point out that “math” is not rocket-science engineering here; more like regular real estate math.   Does the submitted offer represent a value at or close to what can be easily established as the fair market value?   Can you demonstrate that?   If it does and you can, when the lender has paid the normal fees: real estate commissions, HOA fees in arrearage, taxes, legal and transaction costs (that they will try to avoid paying but will ultimately pay) the lender knows you have passed the math test.  

If the short sale offer submitted represents 50% of the fair market value and the requests that all of the above closing costs be deducted so that the lender nets $15 on a $200,000 property, the submitter has not passed the math test.   Off to the pile in the corner goes your short sale request!     Onto your credit record goes that stamp “foreclosure.”     It can cost you a lot for a long time to fail this math test!

Governor Jan Brewer signed HB 2008, which repeals SB 1271 and its change to the anti-deficiency statute. AAR would like to thank our members for their quick response and action on this matter. AAR’s success is due, in part, to members like you who help engage on issues down at the Capitol. AAR will continue to work with legislators and industry stakeholders to protect homeowner rights at the Capitol. Other budget news… The governor vetoed SB 1025, general revenue bill, which included the repeal of the state equalization tax credit. Maricopa County will begin printing property tax bills reflecting the increase come early next week. Governor Brewer also line item vetoed cuts in K-12 education, restoring funding. She stated in her press conference, however, that more cuts are likely or additional revenue will be needed. She believes the overall budget plan should avoid the need for state borrowing at least until early spring. There was no immediate call for an additional special session, but one is likely in the coming month.

As many of you have heard, within the last 30 days a bill was passed in the Arizona legislature (Senate Bill 1271, Re ARS 33-814) altering the Arizona law around deficiencies and banks abilities to pursue a borrower for the difference between what they owed and what a home was valued at at foreclosure.   This change in law is to take affect on September 30, 2009.  

Let me be very clear here, this change in law ONLY references foreclosed homes sold at a trustee sale and DOES NOT in any way reference Short Sales – homes sold prior to a foreclosure.   As always, there are a lot of opinions on the true effect of this bill.   Please click Here for one of those opinions.  

Please don’t stop reading here as the story does not end there.   The original sponsor of the bill, an Arizona Senator, has already asked the Governor and legislature for an immediate repeal of the legislation – apparently he didn’t think this one through real well….WOW!  

Here’s a brief update from the Arizona Association of Realtors on what is currently being done to repeal the legislation…