Some properties are being advertised as a short sale when they really aren't in an attempt to lure bargain-hunter buyers. A new book,Foreclosures, Short Sales, REOs, and Auctions: Tools for Success in Today’s Real Estate Market, published by Dearborn, provides guidelines for using the term correctly. Here's an exclusive excerpt:

There are a number of licensees who are attempting to attract buyers by using the term short sale in marketing property. It is very similar to the furniture stores that are constantly advertising that they are going out of business to draw purchasers. The fact that a home has lost value or that the loan has increased in amount and is now more than the value of the property does not automatically make the transaction a short sale.

It's important that a licensee conduct a thorough analysis, not only of the property value and loans but of the prospective seller’s financial condition as well. As was indicated, according to some licensees who are experts in the field, only a small percentage of short sales are approved by lenders.

What is to be gained by these licensees who advertise properties as short sales when they really aren’t? The answer is attracting more buyers, of course.

Some licensees are describing properties as preforeclosure listing or short sale and use the terms synonymously. Appropriately, a preforeclosure sale of property would involve one where the owner is in default. The property may or may not be worth less than the loan amount.

On the other hand there are owners who are not in default attempting to sell a property for less than the amount of the loan who appropriately call the transaction a short sale.

Is it a short sale if the lender has not approved a sale? How can a lender approve a transaction without having an offer from a buyer? What can be done about these situations? It may be as

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Posted on November 20 at 12:04 PM | Permanent Link | Add a Comment (5)

The following is excerpted from Financial Shock: A 360-degree Look at the Subprime Mortgage Implosion and How to Avoid the Next Financial Crisis (Pearson Education, 2009) by Mark Zandi, chief economist and cofounder of Moody's Economy.com. Here are four policy changes Zandi recommends to prevent the next financial crisis. Read all 10 in his book.

Buy the Book

Policy Step #1: Adopt a voluntary mortgage write-down plan

Many troubled mortgages could be salvaged if lenders would agree to modify them, typically by reducing the principal owed. The borrower would get to stay in the house, the lender would avoid a costly foreclosure, and the economy might avoid falling into a destructive self-reinforcing cycle in which house price declines beget foreclosures which beget still more price declines. Thus it seems both reasonable and urgent to encourage this wherever possible.

While there is no silver policy bullet that will address this problem, a number of proposals have circulated that could help. Most involve a small commitment of taxpayer dollars.(1)

Passage of an effective mortgage write-down plan faces several hurdles, including reasonable concerns that it would end up helping those who least deserve it. Lenders who faithfully observed sound underwriting methods would not benefit; nor would those homeowners who are working hard to keep their mortgages current despite financial strains.

The counter-argument is that the housing problem is so serious that it threatens the honest and

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Posted on November 12 at 10:02 AM | Permanent Link | Add a Comment (0)

The following is excerpted from Sustainable Housing and Building Green (Dearborn, 2008) by Marie S. Spodek and Ken Deshaies.

Audits in the Real Estate Transaction

Energy audits are an excellent source of additional information to help sellers, builders, and buyers make quantifiable decisions when buying new appliances or a new home. Tenants also benefit because energy audits allow them to choose energy-efficient rentals. (VIDEO: Watch an energy audit in action.)

Role of the Real Estate Licensee

Essentially, licensees should be the “source of the resource, not the source of the information.” Real estate licensees should not hold themselves out as experts, and they should not promise savings or results from an energy audit. To avoid any hint of impropriety, agents should never accept a “referral fee” from any of these companies or sell any of the products without fully disclosing any relationship to the company. Even with full disclosure, licensees should avoid

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Posted on October 13 at 10:15 AM | Permanent Link | Add a Comment (1)

Quick Skim

You may be throwing hundreds — or even thousands — of dollars away on direct mail pieces that go straight to your prospects’ junk pile. To make sure your letters are getting read, keep them simple and sincere. That’s just one of the tips that authors William H. Pivar and Corinne Pivar serve up in the latest edition of Power Real Estate Letters: Letters, E-mails, and More to Meet All Business Needs (Dearborn, 2007). “Because direct mail is one of the most costly advertising media in terms of each contact made, you don’t want to waste dollars on mailings that fail to maximize results,” the authors write. Find out 10 quick ways to make your letters snazzier so they’ll grab prospects’ attention in those critical first 15 seconds. Plus, get advice on how to ensure your letters come across as personal and professional, not as cheap mass-mail pieces. Read an excerpt

Posted on June 22 at 11:28 AM | Permanent Link | Add a Comment (2)