Finally, a short sale system that really works and helps sellers and buyers get transactions through in the least amount of time with all documentation required by the banks.  Chuck Marunde is pleased to announce the first online short sale engine for the State of Washington and the entire Northwest.  Chuck has been working with a group of short sale experts from Florida for about three years, and the final product is now complete and ready for buyers and sellers to use.  This is the first and only powerful online short sale engine in the entire Northwest and on the Olympic Peninsula and in Sequim and Port Angeles.  What does it do?

Short Sale Online System

This short sale engine solves a major nightmare for buyers and sellers.

For too long the process of getting a short sale through has been a nightmare, and many clients and their Realtors will say that is an understatement.  When a home’s fair market value is less than the balance of the mortgage on the home, the house is upside down, and if a buyer and seller can reach mutual acceptance on a fair price in the current market, it may mean the bank must accept less than the mortgage balance.  This is what we call a short sale.  But trying to get banks on the east coast (or anywhere) to cooperate on a short sale in Sequim or Port Angeles has been nearly impossible.  I’ve had several short sales go south simply because we could not get the bank to work with us on a short sale, and much of that had to do with documentation and the timely processing of all documentation by the responsible parties.

The state of the short sale market has been chaos–literally.

Banks have been ill-equipped to handle the massive volume of foreclosures and short sales, and their loss-mitigation departments were not staffed or trained to handle the defaults and short sale process.  In fact, there were no systems set up for handling large volumes of short sales, nor were there even standards upon which to make decisions regarding short sales.

While banks have been unequipped to handle short sales necessary to get houses sold in this recession, real estate agents have been thrown into the lion’s den in terms of trying to figure it out how to handle a short sale, with agents all over the country doing whatever they heard might work, sending in wrong documentation, insufficient backup documentation, and in many cases not knowing to whom to send the documents and requests to.

Finally, someone has created a short sales system that is being used effectively to complete short sale paperwork, assemble a professional package to submit to banks, and a system of organization and management of the entire process from beginning to end so that all parties involved (buyers, sellers, banks, their Realtors, and their attorneys) can log in to the online account to facilitate the transaction.  There has been nothing like this available until now, and Chuck Marunde is pleased to announce this launch of the areas first online Short Sales Engine.  The system includes:

1. Paperless Short Sale System
2. Online Short Sale Document Collection
3. Online Access For Parties Involved in a Short Sale
   
4. Valuation and BPO Reports
5. HUD-1 Calculation Tools and Forms
6. Internal and External Notes System
7. Fax and Email Packages Through The System
8. Professionaly Built Short Sale Package

If you are a buyer of a home that must be a short sale, contact Chuck Marunde.  As your buyer’s agent, he can use this Short Sales Engine to push your offer through to acceptance faster than anyone without this incredible system.

If you are a seller that must list and sell your home as a short sale, this is the system you need to accomplish what has been confusing to so many across the country.  Although previously Chuck has not been accepting listings that necessitated a short sale, Chuck is now accepting short sale listings because this system is so efficient.  This short sale system gives Chuck a huge advantage in getting a short sale through, and that advantage plays out in favor of his clients who list their property with him.  It doesn’t hurt that Chuck was a real estate attorney for 20 years and understands the foreclosure and short sale process from his own professional experience.

“I’m very pleased to finally have this short sale system up and running after three years of behind-the-scenes work with the most knowledgeable short sale experts in the country.  While I am rolling this system out for everyone in the State of Washington, I am pleased to make this announcement first to Sequim and Port Angeles residents right here,” says Chuck with obvious enthusiasm.  “I’m grateful to be able to bring something so needed and so beneficial to buyers and sellers on the Olympic Peninsula.  This online short sale tool is going to help a lot of people get their homes sold so much faster in cooperation with their banks.”

“Today I talked with one of my associates who is a Realtor and used this system to help one of her clients.  After completing the online documentation from the checklist, she hit the button that assembled the entire short sale package for the bank, creating a cover sheet, a table of contents, and all of the documentation and letters required by her client’s bank.  She said it was about an 80 page package.  She sent the package that was created within the Short Sale Engine while online directly to the designated point of contact at the loss mitigation department on a Friday.  That same afternoon, that bank employee called my associate and said, ‘I got your package and it is so professional.  Everything we need is there and labeled nicely.  Since you’ve given me everything I need to make a decision, let’s get this done right away.  I’d like to get this file off my desk.”

This short sale system works.

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If you are buying a home in Sequim or Port Angeles involving a short sale, here are three proven steps to making that purchase a huge success.  If you’re not familiar with the term “short sale,” it involves buying a home at a price that is less than the current mortgage balance.  Most people are familiar with the concept of a car  being upside down when the car isn’t worth what is owed on it.  Until the recent real estate recession, we didn’t have homes that were upside down.  Around the country many homes have had to sell as short sales.  Of course, this requires the bank’s agreement to cut their losses and take a payoff on the loan that is less than what is owed.

Short sales are closing every day in cities like Las Vegas and Phoenix, but not in Sequim and Port Angeles.  The procedure and the steps to accomplish a successful short sale here are different than the template for the short sale hot spots around the country.  As a real estate attorney who handled many foreclosures and short sales, and now who represents buyers in short sales as a real estate agent, I’ve articulated three steps to a successful short sale in Sequim or Port Angeles.  If you do complete these three steps, you still have no guarantee, but if you miss one of these steps, you are guaranteed to fail or end up with a nightmare scenario.

3 Steps to Buying a Short Sale Home

1.  Know the process and save yourself from disillusionment.  Know that negotiating a short sale in Sequim or Port Angeles will be a slow and tedious process, and the bank can leave you waiting, literally not responding for months.   The process can drive a normally patient person to say, “Forget it, I’m not going to sit around waiting, not knowing when or if anyone will decide to respond to my offer.”  [Again, this is not the same in Las Vegas where there are currently 700,000 loan modifications in process.]

2.  Find a Professional Short Sale Buyer’s Agent.  Buying a home that must be a short sale is not something you want to do without an experienced professional who has been there, done that many times.  There are many nuances and many traps for the unwary.  I picked up many clients as a real estate attorney who thought they knew all they needed to know, but subsequently found themselves in deep trouble.  When I represent a client as their Short Sale Buyer’s Agent or their Foreclosure Buyer’s Agent, I cost my clients absolutely nothing.  Sounds too good to be true, doesn’t it?  But it is true.  The seller pays all my fees as well as his agent’s fees.  What I give my clients is a lifetime of real estate experience, including many short sale and foreclosure transactions.

3.  Do Your Due Diligence.  You’ve got a lot of due diligence to do when buying a home in a new area, and a short sale or a foreclosure will require some additional due diligence because of unique problems associated with distress sales.  Also in this process, the bank will submit certain documents to you, in addition to the standard real estate forms used in Washington, and these forms will require legal interpretations as you will be asked to sign them.  Some entities representing banks in this process have put together forms that were not drafted by an attorney and give them complete access to all of your personal financial accounts and identity.  That is not only inappropriate, but dangerous, and yet many who don’t know or aren’t getting good advise are signing such documents. [I know this because I have reviewed these documents and advised my clients.]

Your ideal home may be in the MLS and listed with an agent, and it may or may not necessitate a short sale, but if it does, know how to go through the entire process and come out a winner.

I hope this information is helpful.  If you do find a home that is for sale, and it is either a foreclosure, or was, or it must be a short sale, you can hire me as your Short Sale Buyer’s Agent or Foreclosure Buyer’s Agent.  Contact me by email, chuckmarunde@gmail.com, or call me at 360-775-5424.  I would love to represent you.

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A number of Sequim and Port Angeles homes have been for sale subject to short sale approval.  This means that the selling price agreed upon by the buyer and seller will require the bank holding the mortgage to agree to accept less than the balance of the mortgage.  The practical problem here and in many parts of the U.S. is that we can’t get these short sales approved through the banks if our lives depended on it.  I’ve written about how impossible it is to get bank cooperation, even when the offer is very reasonable.

The Feds have compiled new guidelines for banks to implement a short sale, which take effect in April of 2010.  This may  be good, although I’ve seen the guidelines, and even though I was a lawyer, I dreaded the idea of having to read this massive document full of legalese and bureaucratic phraseology.  I’m not going to read it.  If you want to, here it is:  Short Sale Guidelines.

I will cut to the chase for those of you who want the 411 without further ado.

Basically, these guidelines, which are voluntary, will allegedly provide a template of procedures for banks to use around the country, so we can get these short sales done in a reasonable period of time with some sort of standard.

Two points of interest to me.  First, the guidelines are to provide standardized forms, procedures, and timelines to allow the borrower to receive pre-approved short sales terms prior to the property listing.  Wow!  That would be a miracle if it actually happens.

Second, the borrowers are to be fully released from future liability for the debt.  Wow!  That would be miracle two if that happens.  According to the guidelines, these are supposed to happen, at least for the banks that agree to voluntarily participate.   Let’s hope they all do.

You can read more about short sales, the process and the challenges at Sequim Short Sales.

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The success or failure of your short sale depends on where you live.  It should not be, but it is.  How banks are handling short sales varies dramatically based on where you show up on Google maps.  I’ll explain.

A short sale is the sale of a home at a price less than the current mortgage balance.  While a buyer and seller may agree on a price that is less than what is owed on the mortgage, obviously in order for such a transaction to close, the bank has to agree to accept less than what they are owed.  Without their agreement, they will not issue a reconveyance of the deed of trust extinguishing the promissory note on the debt.

Bank short sale departments have been totally overwhelmed by the volume of short sale requests (let’s not even get into the foreclosure chaos that has also overwhelmed the banks).  They did not gear up for this, which means they do not have systems in place to manage short sale requests.  A bank has a lot of due diligence they are obligated to do in the process.

They must process an offer from a Realtor and coordinate with the seller, their client.  This means having an organization that can manage files, computer database records, and compile  all loan and value information from various sources (which exceeds the capacity of many bank databases at this time).  They must put together a checklist of information and documents they need to process a short sale request, and as one short sale clerk told me,

“Sir, we have multiple checklists, depending on who is the supervisor at the time, and I’m sorry but it’s chaos in our short sale department.  I’m not supposed to talk like this.  Our investors are demanding that we require certain items, no matter how impossible it may sound, and we have no flexibility.  We have requirements, which vary as I said, and we apply those nationally.  I’m so sorry but our investors are requiring this, and I have no authority to help you, no matter how reasonable your request may be in your market, if you cannot meet all of our [multiple] checklist requirements.  And I cannot promise you that the offer will be considered within any particular time period.  We usually take 30 to 90 days to process a request, but it could take any amount of time, but we have files we haven’t been able to get to in months.”

The result of such chaos and lack of good organizational systems is that bank short sale departments have implemented systems on a regional basis.  So Las Vegas and Phoenix short sales (and foreclosures) are handled much differently than a small out-of-the-way market like mine in Sequim and Port Angeles on the Olympic Peninsula in Western Washington.  Short sales are being approved daily in the Vegas market, but not here.  It is like pulling teeth to get a bank to cooperate on a short sale here.  I take that back, because it is much harder than pulling teeth.

Do the bank short sale departments specifically and intentionally create different systems around the country?  I seriously doubt it.  I think the more likely explanation is that they reach the practical limitations of manpower, money, and other organizational resources.  Their pipeline is getting clogged up in numerous places, so where do they focus their resources first?  In the larger markets that have crashed with thousands of homes in foreclosure and thousands needing to be sold prior to foreclosure as  short sales.

The reason this is important to understand is that rules and principles for handling short sales that work in one part of the country may not work so well in another part of the country.  While many are out making millions selling their short sale secrets and systems, for the Realtors among us who get involved with short sales, it is important to know that what worked in Miami might not work in Tacoma or Sequim.  The process, the paperwork, and the people will all be different.  As with every real estate transaction, every short sale must be handled on its own merits and each client given the highest customer service to work through the unique issues in that transaction.  Be prepared to spend between three (3) and five (5) times as much sweat and labor on a short sale as you would on a regular sale.

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There are Sequim spec homes for sale, homes that builders built anticipating they could sell those homes to buyers during or after construction.  During a strong real estate market a Sequim spec home would sell within a reasonable period of time, provided the location was good and the floor plan was what the majority of retirees want when they move here.  There have been a few speculators who built homes that were just plain weird, and those homes sit on the market a long time.

Being a good carpenter and being good at marketing are two different things entirely.  New contractors often get in the market just as it starts turning down. A Port Angeles builder who was not a novice had about 24 spec homes foreclosed upon this past year.  What a disaster that was, but it was obvious he was sailing against the wind when the real estate market crashed and he kept on building like there was no tomorrow.  Those of us who have been in real estate for a few cycles anticipated his foreclosures, because there were no buyers and he had massive lines of credit.

There still are some spec homes on the market, and not all have been foreclosed.  Some are in default to be sure, and will have to be sold as short sales if they are to be sold at all.  But as I have written elsewhere, there is a major problem trying to get a short sale through these days.

This is a true story, although I have changed the numbers slightly and not revealed any names to protect the guilty, although in this case most of the players are innocent victims of a banking system out of control.  (This is not to suggest that the seller is not responsible for his speculation and mortgage debt, because he is.)

I represented some great retirees from the east coast, and having found the ideal home, which happened to be a spec home, I drafted the offer on behalf of my clients, and it was accepted by the seller subject to the bank’s acceptance of less than the balance owed on the mortgage.  The seller had some inkling from his bank that they would accept this price, and my buyer clients were excited to be getting the home of their dreams at a price less than what it would cost to buy the lot, develop it, and build the same quality home.  The seller was glad to get this home out of his inventory and move on to put out some other fires in his portfolio.

A short sale is a necessity today if a bank is to get a house that is in default out of it’s bad loan inventory.   The reality is that the fair market value of homes is low enough and far too many homes were over appraised and refied, so many homes are upside down.  In this case, the buyers and sellers agreed on a price of $329,000.  The balance owed the bank was about $405,000.

Immediately after the parties reached mutual acceptance, the agreement was sent to the seller’s bank for their stamp of approval, and then the agreement would go to escrow for closing in about 30 days.

Alas, after waiting and waiting for weeks and over two months, the deal is dead.  Why?  Because like the other four short sale transactions I’ve been involved with this year, the banks simply won’t respond for months and months until at last the parties just move on with their lives, and eventually the banks foreclose.  In this case, the bank actually did something even more interesting.  After making us wait two months with no response at all, they suddenly raised the price to $405,000.  (Obviously, they forced the seller’s hand here, and made him raise the price, since they would not accept less than what they were owed.)

That’s right.  The fair market value of the home is $329,000, plus or minus, because that is what a ready, willing, and able buyer will pay, and it is the price at which the seller is willing to sell after having this spec home sit on the market for about two years.  (One could argue it is worth $340,000 or even $370,000 maybe, but the market is really weak right now, and this home has been on the market for two years.  My client’s offer was the only show in town.)

Isn’t it amazing that the bank raised the price to $405,000, the amount they are probably owed?  Why would they do something so ridiculous, effectively killing this transaction or any other transaction on the horizon?  This home is doomed to sit empty for another year or two at $405,000, at least in my opinion.

The answer is that the “system” has caught up with the seller (and my buyers), and the system is now in control.  Let me explain.  The bank that originally had this loan was taken over by the FDIC and all the customers and accounts have been assigned to another bank.  But the toxic loans are kept and managed by the FDIC, in this case a Seattle administrative office.

The banking and federal deposit insurance rules and regulations are very complicated, and there are things the FDIC case manager simply does not have legal or administrative authority to do.  He may not have authority to sell a house for less than the amount owed on it.  The FDIC is not a bank or a mortgage institution.  It is governed by different rules, rules that do not necessarily address the facilitation of short sales.

What the FDIC has told me is that they will be wholesaling toxic loans to other financial institutions for pennies on the dollar, maybe only 25% to 50% of the loan balance.  But that will take time.  Maybe in a year or two this Sequim spec home will have finally worked itself through the labyrinthian bureaucracy, at the end of which it will probably sell for less than $329,000, since it will have been sitting vacant and appear to be rundown and worth less.

My argument to buyers is that the best buys in this market are not Sequim spec homes for sale, because these homes are often short sales disasters.  There are many better deals to be had in the multiple listing service in Sequim and Port Angeles, homes for sale by homeowners who are not in default, but are selling at extraordinary prices.

There are some beautiful homes that are not spec homes that are listed as short sales.  If you make an offer on one of these homes, be sure you have a buyer’s agent who knows the process and how to walk you through it.  It is a labyrinthian path for the uninitiated.  I recommend a professional guide.

You can search all Sequim spec homes for sale and all other homes listed for sale here.

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Some Sequim homes are in foreclosure or need to be sold for less than the current mortgage balance (short sale).   Fortunately, Sequim and Port Angeles have far fewer homes in distress than most of the country.   There is some confusion among homeowners in financial distress and even among real estate agents about what happens and how to work through the process.

If you’ve read my articles on this blog about the foreclosure process and short sales, you may be familiar with the way things work.   You’ll find a series of articles on this real estate blog on foreclosures, the foreclosure process, costs and fees in a foreclosure, the short sale process, and getting a short sale through.

I’m told by mortgage bankers and insiders working inside the loss mitigation departments of mortgage companies that a short sale will not even be considered by a bank until a loan is in default at least two months.   Of course, that’s not real sensible on the part of the banks, but that’s the way it is.

I have a listing that will be a short sale, and to sell it the bank will end up taking less than the current mortgage balance.   If they do not agree, it will simply go to foreclosure and they will end up taking even less.   They know this, and this is why short sales are being accepted.

Buying a house in foreclosure or trying to structure a short sale requires knowledge about the process.   Frankly, it is much harder than handling a regular listing and a regular transaction.   I recommend reading the series of articles in the above link before making decisions.

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