A Complete Guide to Buying Foreclosures and Short Sales Presented By: Presenter: Beryl Gosney Contact Information: Phone: 425-344-2222

A Complete Guide to Buying Foreclosures and Short Sales

Presented By:www.ShortSales-Online.com

Presenter:Beryl Gosney

Contact Information:Phone: 425-344-2222

Info@[email protected]


Topics We Will Cover In This Session

• Road Map to Home Ownership

• Terms and Definitions you should know

• Tips to Finding and Retaining a Real Estate Buyer’s Agent

• A Complete Explanation of Short Sales

• A Complete Explanation of Foreclosures

• Wrap up and Take Aways


The Purpose and Goals of this Session

• To Create and Empower Home Owners

• Educate you about the current Washington Real Estate market and the home buying process

• Empower you with the ability to make educated decisions in the home buying process

Following the Road map to Home Ownership

• The Road Map to Home Ownership is often paved with “fear of the unknown”– The unlearned can be learned– Misinformation can avoided if you ask enough of

the right questions

• A Simplified Overview of the Process– Get approved for financing– Finding your dream home– Making an offer on your dream home– Offer accepted, what’s next? – Becoming a home owner

Common Terms and Definitions

• Get Approved for Financing– Income and Asset Documentation

• Pay stubs / VOE / W2’s / Tax Returns• Statements / VOD / Paper Trail

– DTI – Debt to Income• Front end / Housing expenses• Back end / Total expenses• Includes property taxes, insurance, HOA, MI

– LTV – Loan to Value– CLTV – Combined Loan to Value

• Maximum purchase price based on maximum allowable DTI


• Finding Your Dream Home – The Search– Searching the Internet for Home Listings vs

Searching the MLS– Syndicated Listing Sites

• Realtor.com• Zillow.com• Trulia

– MLS – Multiple Listing Service• Client Gateway• Listingbook• Agent supplied site

– Private remarks contain important info• Only your Agent can see private remarks


• Making an Offer on Your Dream Home– Residential or Condominium P & S Agreement

• Northwest Multiple Listing Service – 8 pgs• Addendum to Purchase Agreement common

with short sales and foreclosures– Good Faith Deposit – Earnest Money Deposit

• Held by Agent up to 24 hrs after acceptance – Seller Concessions

• Credit from seller to be used to cover closing costs only – not down payment

• Based on sales price not loan amounts• Net (actual offer) is less concessions

– Common to ask Seller to pay Home Warranty


• Offer is Accepted, What’s Next?– Counter Offer

• Seller accepts offer with conditions– Fully executed purchase contract

• Both seller and buyer agree on terms– Escrow Company

• Third party that mediates entire transaction and the transferring of all monies involved

– Title Company• Insures title against pre-existing liens

– Appraisal and Home Inspection• Appraisal required by lender• Home Inspection is optional (Get One!)

Common Terms and Definitions• Becoming A Home Owner

– Escrow Period• Establishes closing date• 30 days is normal

– Contingency Period• 17 days for financing / inspections is default• Can cancel if financing or inspections fail• Have good faith deposit returned if cancelled • Complete all inspections and complete

financing– Close of Escrow – Transaction Complete

• Sign loan documents• Fund loan – 24-48 hours• Record loan – Next day usually

Congratulations! You are a Home Owner

• Once escrow has confirmation that your loan has recorded………..You get your Keys!

Tips to Finding and Retaining A Real Estate Agent

• The role of a Real Estate Agent– Third party Agent negotiates and facilitates the

purchase of Real Estate– Seller’s Agent – Represents seller’s best interest– Buyer’s Agent – Represents buyer’s best interest

• How a Real Estate Agent is Paid– Seller offers % of sales price to Agent – Seller’s Agent offers to split this commission with

any Agent that bring buyer that results in the sale of the home


• Tips to find and hire a Real Estate Agent– Friends and Family rule

• Firing a friend or family is not an option– Business referrals are a good place to start

• Lender – experience working through sale• Escrow companies• Insurance Agents

– Looking for and Agent on the Internet• Accessibility and communication

– Text, chat, email, cell phone, IM• Websites vs. Blogs

– The social media phenomenon– Who are they as opposed to What they do


• Tips to find and hire a Real Estate Agent– Ask for references of recent clients

• Call one to threes of their most recent clients– Were they easy to reach / communicate– Did they give good advice during process– Were there any challenges during sale– Would you use them again

• Real Estate Agents work for YOU– Don’t be afraid to expect a high level of service– You are not obligated to stay with one buyer’s

agent – avoid Buyer’s Agent Contracts– Stick with an Agent that does a great job for you

• Do not allow anyone else to write up offer

A Complete Explanation of Short Sales

• The Basics about Short Sales

– Seller is current home owner

– Seller is usually behind on payments

– Seller owes more than home is worth

– Seller attempts to sell home to avoid foreclosure

– Foreclosure process can be suspended or

postponed if an offer has been submitted

– Seller is not always motivated to sell

– Motivation may be to stay in home as long as

possible


• What to be aware of with Short Sales

– Sales Price - What you see is NOT what you get

– Once an offer is submitted –process starts

– Lenders were not prepared for volume

• Approval process takes 3-6 months or more

– Lender will appraise and approve sales price

– Lender will appraise and approve terms

– Low ball offers are not worth the effort


• What to be aware of with Short Sales

– Seller’s agent has most influence in process

• Third party negotiators working on behalf of

selling agent is optimal scenario

– Subordinate lenders can prevent short sale

• 2nd lien holder has to cooperate

• Can “hold out” for more money

– Sellers are not usually willing or able to pay for

repairs to property


• New short sale opportunity to watch for

• Approved short sales – Approval process complete– Original buyer long gone– Want to close FAST– Negotiators are accessible and ready to deal

• What to offer on a Short Sale– Have your agent complete a market analysis– Offer approved short sale price for quick sale– Costs $60,000 to $70,000 to foreclose - liability

A Complete Explanation of Foreclosures

• What you need to know if you want to buy a bank owned foreclosure

– Foreclosure = REO (Real Estate Owned)– Burden of bank owned real estate is great

• Banks make money by lending money• Banks are responsible for property taxes• Banks may be responsible for upkeep

– Damage to property is very common• Health and safety issues = No Financing• Most REO is sold in “as-is” condition

– No warranty or repairs– Not required to provide known defects disclosures

A Complete Explanation of Foreclosures

• What you need to know if you want to buy a bank owned foreclosure

– Banks listing homes very low to stimulate activity– Multiple offers – 25 to 30 offers in first week– Some banks requiring homes on market for 7

days before looking at offers– Make your highest and best offer regardless of

“listing price” – Eliminate the competition– Less down payment = more aggressive offers– Banks ARE paying closing costs– Banks MAY pay for some repairs– Be aware of your “Net” offer

Tips to Find the Best Deals and Make Strong Offers

– Work with a buyer’s agent – Fiduciary duties require

that your best interests are represented

• EXCEPTION: Short Sale Seller’s Agent

– Work with a Real Estate Agent that is familiar with

making offers on short sales and foreclosures

(Hint: recommend Beryl Gosney, this is our specialty!)

– Get pre-approved for the maximum you can qualify for

– Be prepared for competition

– Actively search the MLS supplied to you by your Agent

– not syndicated sites

Tips to Find the Best Deals and Make Strong Offers

– Move quickly on approved short sales and REOs

– Have your agent do a comparative market

analysis on homes you make offers on

– Make your highest and best offer on REOs

– You can not pay more for a home than what it’s

worth – Be aggressive if you like the home

Documents

A Complete Guide to Buying Foreclosures and Short Sales Presented By: Presenter: Beryl Gosney Contact Information: Phone: 425-344-2222