What is “BUY AND BAIL”

“Buy and Bail” is a term used to describe homeowners (usually heavily upside down) who go out and buy a new home at today’s value, then once closed, they either try and short sale their home or foreclose on it.  This is happening a lot right now. 

Most people are getting qualified by renting their home to reduce their debt-to-income ratio.  Then they would just stop making payments, collect rent (if the rental contract was even real in the first place), and let the home go.    So the tenants will be booted 6 months later and the community has one more repo on the block.   (more…)

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Please see the link for related article from realtytimes:

http://realtytimes.com/rtpages/20071003_sellerassist.htm

It’s now July 26, 2008, go get a home now  

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First, all short sales are not created equally.  No file is the same, banks have different guidelines, the end-investor has their own internal guidelines, and the agent has their own system for processing.  Every file is different.  It is up to the agent to foreshadow and roadblock ahead of time to save everyone time and energy.  Here are a couple reasons: (more…)

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The market is is fruitful right now, I know this from my listings receiving multiple offers in days, but it is also highly competitive as well.  Most homes claim they are available but technically they are not.  If you were to put a buyer tour together of 10 homes in the west valley and called the listing agent, maybe only 3 would be available to put an offer on if your client was interested.  (this is of course, the agent answered the phone).  Why?

Short sale and lender owned.

First lender owned.   It typically takes about 5 days to fully solidify an offer between seller and buyer and go “pending”.  In between that time there is a contract in review with the lender to accept.  Most of the time they do accept verbally but it takes up to 5 days just to process and get back to the buyer.  So, during that time, it remains active and available for anyone to come in and bid higher.  Just the way it is.

Now Short Sales:  This is a mess considering a majority of the listings are short sales.  The AZ department of real estate,  local associations, and local MLS need to refine this chaos.  Most short sales will remain “active” until it has received an agreement letter from the lender to sale the home.  This could take up to 4 months (Wells Fargo).  So if a buyer agent calls on a short sale home, there is most likely 6-7 offers already in review of that home.  Agents need to tell the consumers this…. When it shows active on a real estate website, it does not mean it is.

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So right now, the AZ west valley real estate market is doing well.  Mostly it is the lender owned homes or REO homes that are selling.  What I am hearing from buyers is that they are getting frustrated by the process of actually bidding on a bank-owned home.  They are finding there are multiple offers and they are not winning the bidding war.  So how do you win?

FIRST: Get pre-qualified, you have to be ready to pounce on that REO home that is priced well under it’s competition.  

SECOND: Hire a realtor that knows how to play the REO game, and play to win.  They should have a buyer consultation with you to explain the process of a bank-owned offer and a short sale offer. 

THIRD:  Be Logical, listen to your agent and go buy a home.

So what is “Highest and Best“?

This is when a bank has multiple offers on a property and they respond to the buyers with asking them to come back with their “highest and best” offer.  Kind of like a silent auction.  Very common right now.  Sometimes the highest bidder will be bidding against themselves and go even higher than their original…this is what the banks want.  They are holding their cards close to the vest and showing a mean poker face.  They do not want to disclose what the highest offer is.  Your agent should have an idea of what it would take to win the home.  If not, get a new agent.

What is “review time in a short sale”?

what’s and “as-is” addendum and do i have to take the home with the flood damage?

why do short sales take so long?

some common questions right now…stay posted for blogs on those definitions.  

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Most of you are worried that it could be a bad investment.  Buying a home is almost never a bad investment…unless you were a speculator in October of 05′ trying to make money.  As an owner occupant in Surprise, long term you will gain.

I finally figured out how to work those complicated calculators that tell the future of things, here is what I found out:

If you buy a home this year for $135,000 and the average annual appreciation rate is 5%, in 5 years your home will be worth

$172,298

That is a gain of $37,298 over 5 years.. not bad considering renters gain a whopping zero!!!  This is also not including any tax benefits, bankowned  purchase rebate, or just pride of ownership.

It is OK to buy, just dont purchase more than you can handle. 

have a great 4th of July

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For those of you on the fence on buying a home in today’s market let me start out by saying that the best time to buy a home is when it is”your best time”.  However, there are some that are trying to wait it out for that exact pinpoint bottom of the market… The market is losing inventory and there are multiple offers on many homes today, I am not saying that we are done dropping in price but we are CORRECTING.   And that is a very good thing.

Investors are back (the real investors), prices are affordable, and rates are still reasonable, so why not buy?  If you have a job history and you are renting at Surprise’s average rental rate, with below average credit,  then you can buy.  

Take a look at these numbers:

Right now in Surprise Farms you can buy a home for around $135,000…At today’s FHA rate of 6.5% a P/I payment (less taxes, MI, insurance, etc) would be $853.00 a month. 

Now, if you are waiting for the market to drop more, look at these numbers:

You waited and the market dropped another 10% (13,500) so now you finance $121,500.  But wait, during that bubblesitting, the interest rates went up to 7.5%.  Now your payment monthly is $849.00 a month.  The same??    Not really because you have to add in that you are paying at least $900 a month in rent to a landlord and not paying down the principle on your own home.   I cannot say what rates will be in the future, other than they will go up.  But, I can say they have come up 3/4 of a percent since early February of 08′.

So, I will close by saying that if you are paying rent in Surprise right now and you are able to buy (you would be very surprised that you probably can purchase) then you should…Why pay someone else’s mortgage for them.

Happy 4th of July people   

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Now as a realtor myself, when I first started seeing this about 2 years ago in California, I thought..”what a great idea”.  And it is a wonderful way to get exposure and gain business, but when I saw the news broadcast of people getting out of the bus like cattle and following the realtor like a flock of ducklings I realized it was not such a bright idea.  Here’s why:

Right now there is a high level of competition for bank-owned homes.  Multiple offers, bidding wars, sold in hours.  So even without a bus full of buyers there would be competition.  Saying that, why would you go to the same homes as 11 other people to bid on it? 

Also, why would you use the same realtor as the other people on the bus?  Which, hopefully that agent has all the bus riders sign a disclaimer,  for the ethics on writing a contract for the same home with different buyers is very shady.   How would that agent best represent you in a bidding war?  Think about it.

And lastly, this is coming from a consumer point of view, if you were interested in buying a bank-owned home, why would you want to go with a herd of other people in a bus?  Could you not just call one of the thousands of agents in the valley for a private tour?  A nicer car?  And a 100% fiduciary commitment?  There are plenty of starving agents right now that would be honored to bring you out and look for a foreclosure property. 

Call one now!!     

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So why the hesitance for a short sale home?  Mostly because in the past they have been known to take a long time to get approved  or non-approved.  Folks.. things are getting better for short sales.  Agents and lenders alike have polished their skills and are now getting agreement letters in under a week.  Lenders are now realizing that if they choose to foreclose, they will lose much more money in the end. 

Now, there are some banks that do not do short sales for one reason or another (ocwen).  Owners with a loan out with ocwen are facing foreclosure unfortunately.  But most do, and have teams and divisions to specifically deal with the short sales.

So buyers, do not be afraid of a short sale home on the market.  Have your agent screen the listing agent to see if they have their short sale “ducks in a row”, some do and some agents don’t.  There are some great deals out there.  And the best part…  with the AAR short sale addendum, the buyer is not committed  to the purchase until that agreement letter from the bank comes in. 

So what are you waiting for?

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