My grandmother thinks I’m broke!
The other day she calls me and says in a thick accent,
“Are you still able to feed yourself? Why are you still in Real Estate.”
I asked why, and she proceeds, “I keep reading in the paper (more…)
Posted in
Buying Advice,
Humor |
23 Comments »
(Update 6-16-08: This post was featured in the Washington Post)
I wrote about my distaste for Short Sales (aka Fake Listings), and how only 5% close in Northern Virginia (as of 2-08, but that might be changing). I guess now my distaste has shifted away from Short Sales, and more toward clueless (more…)
Posted in
Buying Advice,
Short Sales,
Virginia Foreclosures |
32 Comments »
Disclosure: I am not a financial advisor. This is not financial advice, and you’d be an idiot to follow what I do personally.
I personally only own ONE “stock”, and that is called SPY. The #1 bought and sold stock in America, meanwhile most individual investors don’t know about it.
It is an Index Fund (also called an EFT, Exchange Traded Fund) that has all of the S&P 500 rolled into one stock with virtually no fees and no annual maintenance. Motley Fool wrote that “3 out of 4 mutual funds (more…)
Posted in
How I Buy Stocks |
38 Comments »
I officially have 100% proof that we have officially hit rock bottom.
No other indicators from NAR or the government have been as accurate as the proof that I have. I found a 100% correlation!
When My MOM SELLS, (more…)
Posted in
Buying Advice,
Humor,
market timing |
33 Comments »
I am officially launching FranklyMLS.com, the The First Wiki MLS!
Where BUYER AGENTS, in Virginia and DC, from multiple brokerages come together to ADD information and photo albums to listings they visit. MORE DATA & 1,000+ MORE PHOTOS!
THE “OLD 1.0 WAY”: (see all 31 MLS search engines here)
1) One-Way Information. “Here are homes for sale, as marketed by the listing agent. Take it, trust it, or leave it.”
2) Photoless MLS Listings!
Sure they sell for $15,000 less but they are a pain for everyone. Oftentimes foreclosures or a listing by an underpaid or sucky agent have no (more…)
Posted in
Buying Advice,
FranklyMLS 101,
Search the MLS,
Wiki MLS |
79 Comments »
Update 3-19-09: This post is OLD. See new Post from 2-09 Short sales are closing, if done correctly. They can be the best “deal” (I hate saying “deal”). The post below is still great background info.
Update 1-22-09: Still reading this #1 blog post on short sales for a background on the process? Well it was written over a year ago. Short Sales are now closing MUCH more frequently in SOME areas (an 0 in areas like McLean). Subscribe to this blog for I plan to run some numbers on the % that are closing. My guess is the range is 1 in 3 (vs 1 in 20) before. However closing rates can be as high as 80% if your buyer agent asks the listing agent these questions: Top 10 Short Sale Questions.
(Update 6-16-08: This post was written on 2/08, this marketplace is changing ever month. Make sure to subscribe to the blog to get updated on the marketplace, like an upcoming post on more Short Sales starting to close.)
As of 2-08, most Short Sales in Northern Virginia are what I call “FAKE Listings.” (note that this is Virginia, every area is drastically different)
Only 1 in 20 sells.
In Arlington only 3 have sold out of 65 attempts.
I briefly went over Short Sales when I defined all SOL Homes including REOs, Bank Owned Etc. But Short Sales need more attention, as they are very tricky and misleading.
A Short Sale is a listing for sale that requires “Third Party Approval.” That means that 1, or 2!!, banks are owed MORE than the list price.
For Example:
- Home is bought for $500,000 with 5%, or $25k down.
- Home has a $475,000 mortgage.
- Value dropped below $475,000
- If the seller is facing foreclosure, they slash their price for a quick sale
- A Short Sale is attempted at $450,000
- If the bank accepts it, the BANK eats $25,000 (see Phantom tax for Seller)
The Theory Behind Short Sales: Banks would be better off to accept a loss now, versus going through the legal expense of a foreclosure, just to end up selling it for less later. Win win, right? Wrong. Read on.
Bank Trick 1: “Sure, we will consider a Short Sale, IF YOU KEEP PAYING US.”
Yep, a bank sees a desperate seller, and a potential $50,000 loss. They then mislead them into thinking that they might consider taking a bath on the deal IF the owner keeps paying their mortgage. The bank then ignores offers for 2-4 months in order to squeeze out another $2,000 x 4 or $8,000 profit. Brilliant. The bank then takes it over after foreclosure and sells it for $10,000 OVER the Short Sale List price. $18,000 better off, NOT doing a Short Sale.
Bank Trick 2: Sometimes the bank has mortgage insurance and it is CHEAPER for them to let it foreclose versus allowing a Short Sale, which is NOT insured.
For example, I was at an NVAR short sale class and a Realtor asked the speaker, “Why after 60 days, calling 2 times a day (120 calls) with a full price Short Sale offer, did the bank not call us back?” The speaker claimed it was due to an overworked staff.
I asked:
- Did they tell you they would consider a Short Sale IF you kept paying $3,000 a month? The answer was Yes.
- Was the home bought with Mortgage insurance? The answer was Yes.
- Bingo! Why eat $50,000, by accepting the low offer, if the bank a) gets $3,000 a month and b) is insured against a foreclosure and NOT a Short Sale.
She was pissed. She realized that she had been “had.” But this goes on ALL THE TIME. It can take MONTHS to hear back.
Another example:
- A seller in Clarendon 1021 tries to sell his property and profit $30,000 at $600k. (Yeah right!)
- Then he drops it to $570,000. No bites, but the foreclosure is pending!
- They SLASH it to $530,000
(sidenote, I get flooded with calls from friend that want to pick it up for a steal at $470,000! I said that it was impossible… since I’d buy if that price was a possibility.)
- It sits for another month, then the listing disappears after 100 days!
- A month later it is “bank owned” and listed for $560,000
- It sells for $540,000 in 26 days.
The moral here is banks are not dumb and the market isn’t so horrible that they will take all these lowball offers. They sold it for $10,000 OVER the previous list price (which probably had lower offers).
Reston homes from $300k to $400k.
– 20 Active “Short Sales” in Reston (watch out for “Not a Short Sale” listings)
– 73 were Withdrawn, or Expired.
– 3 Under Contract (1 under contract since Nov 2007! Many UC do not close.)
Only 3 sold in the last 24 months. 3 closed sales in 100 attempts!
- Dropped From $480k to $400k, sold at $400k (Full list)
- Dropped from $430k to $400k sold for $380k (5% under list)
- Dropped from $380k to $350k sold for $345k (2% under list)
Arlington Short sales.
– 25 Actives
– 37 Withdrawn
Only 3 have sold in ALL price ranges in all of Arlington in the last 2 years.
- Listed at $335k, sold for $335
- Listed at 700k dropped to $620, sold for $600k
- Listed at 480k dropped to $420k sold for $420.
In Alexandria, only 8 have closed in 2 years out of 80 attempts.
(most were at list, or 2% under list, some were $20k over list)
I show this, so you don’t think “Wow, they are desperate, we can now lowball. These 3 were the ONLY successful ones. Probably because they gave the bank a real offer.
Ok, so enough already with the War N Peace, what should I do?
Advice for Regular Sellers
- Do NOT blindly compete with a Short Sale. If you get an inexperienced agent, and they see 3 Short Sales in your neighborhood, and they have you compete against these “fake” listings, you can lose $25,000. Hope you “saved a ton” on that agent. (see Realtor Rebates)
Advice for Sellers Facing Foreclosure
- Watch out for the bank tricks to “keep paying.” Talk to a lawyer that specializes in bankruptcy to help guide you. They MIGHT recommend stopping payments immediately and saving it up for a rental.
- Use an agent that has completed (as in CLOSED, not listed) at least 1 Short Sale.
- If you have mortgage insurance, be extra careful, the bank might prefer that you foreclose.
- Get bank approval for your list price before listing it. Put in the listing remarks “List Price approved.” Otherwise you will get lumped into all the other Fake Listings and ignored by smart buyer agents.
Advice for Buyers looking for a “steal” (see “deals” post)
- Avoid Short Sales, or expect to wait 2-3 months and expect to put in 5-10 offers on Short Sales before one is accepted. A Short Sale in my building now has 4 offers. He says he is expecting a reply any day now… sorry, but yeah right!
- Look for Approved Short Sales. Ask if the bank has been contacted and if a price has been approved. Multiply time estimates by 4. Ie. 3 days= 12 days.
- Consider offering near, full or OVER list. What! Over list! Are you nuts! CNN says this is a BUYER’s Market! I know it sounds crazy, but if you and your agent see the price is well under your other options… I’ve said time and time again, I’d rather you pay $10,000 OVER list on a house that is $50,000 under the competition versus “saving” $50,000 on a home that is overpriced by $100,000. Ignore list price, focus on VALUE.
- Focus on Bank Owned. These units get replies in a day or two. (See video of Realtor buying a Bank Owned property)
Advice for Buyer agents & Listing agents
If you get one to close, change the remarks to SHORT SALE, NOT TO BE USED AS A COMP in hopes that the appraiser will take that into consideration and not trash the neighborhood (buyer agents, demand it of the listing agent to try to help your client’s “deal” not turn into destroying his own investment).
Sidenote: A home should NOT go under contract until the BANK signs it, but many agents will make this mistake. The seller signing it means nothing, and it should stay on the market as Active.
New Trick: Now that Short Sales are getting a bad wrap, some listing agents are NOT disclosing that it is a Short Sale.
Conclusion as of 2-2008: Short Sales in Northern Virginia suck.
Question: Realtors, should you have a “No Show” policy for Short Sales that aren’t approved by the bank? Are they really “for sale” if the owner (the bank) doesn’t even know about it? Feel free to just tell your clients “read this blog.”
-Written by Frank Borges LL0SA- Broker FranklyRealty.com
Please report typos.
p.s. See Washington Post Article on Short Sales
Posted in
Buying Risks.,
Short Sales,
Virginia Foreclosures |
119 Comments »
When I say “Buying a Listing,” I’m not referring to the actual act of buying a home. Instead I am referring to industry agent to agent jargon. It refers to an unethical trick where some listing agents will inflate the recommended list price in order to win the deal.
I have referred to my mother several times in my blog. I’ve learned more about real estate from her than anybody else, oftentimes from (more…)
Posted in
Listing Advice. |
25 Comments »
So you are buying a Virginia bank owned property, and REO or a Short Sale? You need to understand the various bank addendums that accompany them, or you might miss a $3,000 hidden fee.
But first, a quick background. Agents that are members of NVAR, and are REALTORS, use a 15 page contract that was painstakingly (more…)
Posted in
Buying Advice,
Virginia Foreclosures |
22 Comments »
So you’ve just looked at 10 homes and your brain is fried.
Everything starting to look alike? Oh No!
The solution: Buyer Agent Photo Albums.
Your buyer agent should be taking 30-50 photos per house (more…)
Posted in
Buying Advice,
Photography |
25 Comments »
On the heels of our discussion about legislation to remove the Phantom Tax associated with short sales, (see my quote in the Washington post on Short Sale) there is also legislation out there to freeze Adjustable Rate Mortgages for (more…)
Posted in
Virginia Foreclosures |
19 Comments »
Below is my quote in today’s Dec 7th 07 The Washington Post story, “Those Who Avoided Risk Call Plan a Raw Deal”
-
[Lead up to quote; red emphasis added]… The aggravation has been building for a while and stretches beyond the agreement announced yesterday. For instance, under one congressional proposal, there would also be a break for
“short sales“ — that is, when owners sell a home for less than is owed on the mortgage and the lender forgives the (more…)
Posted in
Press,
Short Sales,
Virginia Foreclosures |
20 Comments »
Part 2 to my: Current Sellers “Wait Till Spring”? Yeah Right. Lose $10,000, which focuses on sellers that put their home on the market around September and whether they are better off trying to get a deal done in December, vs waiting until Spring to get a higher price. My data showed that they got $10,000 LOWER if they waited until Spring.
The question that I still have is:
If you have a home for sale that is “ready” (a fully staged Arlington Virginia Home), are you better off (more…)
Posted in
Listing Advice.,
Staging |
11 Comments »
I was reading The Washington Post on Sat November 24 and I came across their “Real Estate Trends” report for Fairfax County. They compared the first 6 months of 2006 to the first 6 months of 2007, excluded condos, and they used data gathered through the courthouse (ie. not the MLS).
Out of the 47 zip codes, they said the #1 fastest growing zip code was 20170, Herndon at +14.4%. (more…)
Posted in
Buying Advice,
data manipulation,
market timing |
6 Comments »
Punchline: Buy homes with No Additional photos= Save $15,000 on a $400,000 house.
Buyers LOVE seeing tons of photos for each listing online. I think Realtor.com said that listings with multiple photos get seen 6 times more than listings with 1 photo. The tendency for buyers is to see a photoless house and think it is garbage and skip to the next listing (more…)
Posted in
Buying Advice,
Don't Miss Best Of,
Virginia Foreclosures |
28 Comments »
Buy like a Realtor!
This post is a link to a 6 minute video showing the process involved in buying a Bank Owned Property in Arlington Virginia, by a Realtor. Megan Buckley, a Realtor with FranklyRealty.com, recently bought her REO home in South Arlington. It was bank owned.
Foreclosures aren’t as frequent as people think in Arlington, and I still suggest looking at everything, but it is possible to get one for a deeply reduced price versus the previous owner’s purchase price.
Posted in
Buying Advice,
Virginia Foreclosures |
17 Comments »
The FEVER was lost for two years, but it’s BACK!
My Virginia Real Estate blog showcases the trends before you ever knew they existed. This is a new trend, and it is on fuego. Problem is, is it real?
The message is slightly different, but the bottom line is still there: Buy Foreclosures, Flip (more…)
Posted in
New construction tricks,
Virginia Foreclosures |
13 Comments »
I rarely write commentary about news articles but this one stood out.
I was intrigued by Dina ElBoghdady‘s exposé today: Realtor Discourages Use of Outside Lenders, Long & Foster Pushes Own Mortgages, where she questions an email sent by Mr. Foster to all Long & Foster agents.
She wrote, “[The email] chastised his workers for funding mortgages through Bank of America more than 2,200 times last year [vs using L&F owned Prosperity Mortgage].” (more…)
Posted in
Buying Risks. |
48 Comments »
When two of my blog readers send me WSJ articles on the same day, you know something big is up.
Appraisals 101: An appraisal is a report that is supposed to be a 3rd party impartial review of a property (usually under contract) to make sure the price is in line with recent closed sales (not counting houses still “for sale”). This protects the bank from (more…)
Posted in
Buying Risks.,
New construction tricks |
21 Comments »
Many Virginia condo builders have bailed before completion of their projects, voiding thousands of contracts (see: Arlington Condos Trend: Back to Apts). Meanwhile, other builders, including single family home (SFH) builders, decided to plow through the rough market.
Earlier in the year, builders (condos and SFH) were finding buyers were backing out of new construction contracts. Some left 2-7% deposits on the table, some fought for their deposit (ask for specifics). Can you blame them? If a property has dropped $70,000 and you put a deposit for $20,000… um, I know that stinks but why not just leave your deposit on Monday, and go in on Tuesday and buy another one for less?
So now the builder has inventory that they need to move and fast! The liquidation sales are here! And “These prices won’t last!” But are they a good deal? I’ve said before that (No Such Thing As a “Good Deal”) but now I want to specifically look at new construction homes.
The decision is VERY (more…)
Posted in
Buying Risks.,
New construction tricks |
9 Comments »
Newspapers are filled with talk of the flood of foreclosures, but none that I have seen have taken a step back and defined all the different industry words for my new industry word: “SOL” (S* Out of Luck) Homes ™, and how to buy them. 2-3% of MLS listed homes are SOL in Northern Virginia. Can your agent find them?
It might seem odd that I’m writing about how to buy foreclosures listed on the MLS since some might have just finished reading my article Attn. Market Timers! The EXACT Best Day to Buy!
Well SOL homes can get you a 5-15% discount* if you
- Know how to search for them, AND
- You have patience
- You aren’t picky!
- Fully understand the risks of buying “as is”
* Side shout: BusinessWeek did a great job in their article This Old Foreclosure Buying directly from a bank avoids some risks, but don’t expect a steal They both dispelled the 30-50% pennies on the dollar mentality people equate with foreclosures and how foreclosures of a year ago are different today, they no longer occur mainly on courthouse steps. They use the MLS)
So, let’s go over the SOL terms:
Auction disclaimer: I am not an expert when it comes to Auctions. I still have yet to see ONE “real auction” in Northern Virginia. I think they don’t exist, but I can be proved wrong if you’d like (have at me in the comments section).
Dealing with SOL property are a PAIN. Expect counters to sometimes take several days, and sometimes months!
And an SOL home is NOT necessarily a better deal. Somebody might have paid $500k for it with 100% financing and the list price might be $480k as they feel the waters. I saw one short sale in my building that started at $600k (they paid $590k). It was overpriced, so it sat. Then the seller/bank got serious. They did a drastic drop to $530k. It sold for full
price (while I had 4 people come to me wanting to offer $480k, and they missed out). This was 1 of 2 best priced units in the building over the last 2 years. Another short-sale came on and was sold in 4 days, so if you want these, be ready to act FAST.
So how many of these are there EXACTLY on the MLS?!
Homes that are SOL can be found by having your agent search the Realtor Remarks for keywords, or try it yourself on the new keyword based FranklyMLS.com: REO, foreclosure, bank, pre-foreclosure, foreclosed, forclosure*, short sale, auction, third party, 3rd party. *9% of the time this word is misspelled!
In Arlington:
Update to article: I thought I’d run some data from Woodbridge. To my amazement 35% were SOL! This blows my mind!
In Woodbridge
- Today there are 273 MLS homes from $300k-$325k. 97 (35%) are SOL!
MORE DATA ON 6 NOVA AREAS: 48% of MLS homes are SOL (Foreclosure etc) in Herndon ($300k-400k)
This is shocking!
If you do plan to buy, you need a good agent to know when to spot a “better deal” (remember I don’t believe in “good deals” until you sell your place. See “Buyer’s Market?” No Such Thing As a “Good Deal”)
NEW SYSTEM TO FIND SOLs: MLS EMail alerts.
Have your agent sign you up for alerts based on your price range, area AND these SOL keywords in the Realtor Remarks (different than the Public Remarks). If your agent can’t do it, have them email me, I’ll show them how. If you don’t have an agent… (sorry I tried to hold off as long as possible) welcome to FranklyRealty.com . I’ll set it up for you.
For future articles Subscribe with an RSS reader or via email:
(By Feedblitz)
-Written by Frank Borges LL0SA Virginia Broker FranklyRealty.com
Ps. Please send typos and corrections. Disclaimer: Data gathered from MRIS’s MLS database. Distressed homes
Posted in
Buying Advice,
Virginia Foreclosures |
26 Comments »