To say that our local real estate market has been active lately is an understatement. We’ve taken a little trip to Crazy Town, that place where too few homes for sale and too many buyers collide — more often than not, in a deafening crescendo of multiple offers.

In Crazy Town, listing agents find themselves spending a sizeable slice of each day manning the phone banks.  From the moment we hit “submit” on any new property that is reasonably presented and priced, we start getting the calls from civilians and other agents alike. A listing agent is suddenly the most popular girl in town.

These calls all begin in much the same way. Before I can truly engage the caller in meaningful dialogue – before I can answer his questions about Homeowners’ fees, granite counter tops, and how much I stand to make and will I give him some of it – I need to know who it is I am talking to.

The first problem is that most of these calls come through our main office line. While I love our receptionist and she generally excels at redirecting calls, she is not a real estate agent. She still doesn’t quite know what we do or the right questions to ask. Consequently, each caller is introduced to me as “a potential new client.” It could be an appraiser, a termite inspector, one of our own agents, or my doctor calling to schedule that little bypass. They are all “potential new clients.” So I must first do some vetting.

Is this the party to whom I’m speaking?

Usually, the call begins like this.

“I am calling about your listing.” (Silence)

“Which listing?” I ask. Because, you see, we usually have more than one listing at a given moment. And while I am quite intuitive at times, I admittedly have yet to master utter clairvoyance.

Several minutes later, having together successfully mapped the home in question (“You know, the green one by that other street, I can’t remember the name, but it ends with ‘Road’”), we are finally getting somewhere. But I still have to dispense with one more bit of business.

“Are you an agent?” I ask sheepishly.

Perhaps because we have become accustomed to communicating in 140-character sound bites, it is rare when a caller introduces themselves by name, let alone job classification. This includes my colleagues.

Why does it matter? Well, if I am speaking with an agent, the conversation would necessarily move in a slightly different direction, since I really don’t care if they dream of having a pool some day — or have been preapproved for a loan.

So, you aren’t an agent. Are you working with one?

“Are you working with an agent?” we ask next.  That seems like a simple enough question, but it is one that is usually met with so many stutters and stammers that you would think I just asked them to explain the theory of relativity in Swahili. And usually, once they have regained their composure, the answer is “No.”

“No,” I have learned, can mean many things, including but not limited to:

1. No.
2. No, I am not working with an agent right now. Right now, I am eating a bowl of Grape Nuts and talking to you. I haven’t been working with an agent since this morning when my agent showed me twelve homes.
3. No, I am not working with an agent right now. My agent is (on vacation, sitting an open house, not returning my calls, in traction) but I really want to see this house right now and it has to be right now because I am a busy, busy guy. Just open the darn door, already.
4. No, I am not working with an agent per se. I will work with an agent when I find the house I want to buy, but only if that agent is the listing agent because I think I can cut a deal and I don’t need no stinking agent anyway.

Now, first let me go on record as saying the reason for my question is NOT ABOUT DUAL AGENCY. Yes, I just screamed. It’s not about dual agency. While I do not happen to subscribe to the theory that dual agency is the root of all evil, it is not something we seek out nor do we prefer it. Rather, the reason for my question has to do with the way agents work and are ultimately compensated.

The Offer of Compensation

When an agent takes a listing, the listing contract specifies a commission and how much of that commission will be shared with another broker in the event it is another agent that represents the buyer in a successful closing. When a listing is entered in our Sandicor Multiple Listing Service (MLS), the listing agent is making a “blanket unilateral contractual offer of compensation to the other MLS broker participants for their services in selling the property.”

If you are “working with an agent,” then, there is the expectation that your agent will perform certain agent-ish duties – like showing you the home, explaining the contracts, providing you with market data, and negotiating and closing your sale.

Notice I included showing the home among the list of buyer agent duties. “But as the listing agent, you owe it to your seller to promote the property and get people through!” you might challenge. Yes, I do indeed. I am happy to – I WANT to – take buyer calls, because I know more about this home than anyone else, and I am best prepared to answer questions and sell-sell-sell. But when a buyer is working with another agent, it is their agent who should be opening that door. Sorry. I know that sounds harsh.

Caveat emptor: On many, many occasions I have accommodated a represented buyer’s request for a showing. But on these occasions, I did so because either the agent begged for an assist (“I’m in traction!”), or because the agent was otherwise unavailable and there was a sense of urgency (like multiple offers on the table). We take our duties to our selling clients very seriously, and we want all interested buyers to have the opportunity to get it while the getting’s good, because this is in our client’s best interest.

The point is, be honest. It’s OK. We are not mean or lazy. In fact, we are quite reasonable people. But it is not unreasonable for you to expect your agent to do their job.

The Code of Ethics and Professional Courtesy

There is also a little matter of ethics. From the National Association of Realtor’s Code of Ethics:

Standard of Practice 16-13 All dealings … with buyer/tenants who are subject to an exclusive agreement shall be carried on with the client’s representative or broker, and not with the client, except with the consent of the client’s representative or broker or except where such dealings are initiated by the client.

Before providing substantive services (such as writing a purchase offer or presenting a CMA) to prospects, REALTORS® shall ask prospects whether they are a party to any exclusive representation agreement. REALTORS® shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects’ exclusive representatives or at the direction of prospects. (Emphasis added.)

This section admittedly applies to situations where you have a Buyer-Broker agreement with your agent – an agreement in which you have professed your undying loyalty to your agent in writing. While we don’t personally use Buyer-Broker agreements, considering them a bit heavy-handed and preferring to earn our clients’ loyalty, a lot of agents do use these bad boys. And, if I don’t ask the question, I may end up providing “substantive services” unknowingly – like talking comps. Or showing the property.

Even absent a written exclusive agreement with your agent, I ask the question because I consider it a matter of professional courtesy. Sometimes a buyer gets a little anxious; I understand. They know their agent is out of pocket for the next 14 minutes and figure, “What the heck! I’ll just have the listing agent let me in.” But unless there is that true sense of urgency – like the seller is going to accept an offer in the next 13 minutes – I am much more comfortable with the buyer’s agent performing the agency duties for their client.

How We are Paid

This is obvious to agents and most, I think, non-agents, but some people truly don’t understand the nature of our jobs. We don’t make a plug nickel until our client closes escrow. In fact, we are a debt center until and if our client closes escrow. So, if I am spending my time showing homes – my listings or otherwise – to someone who knows that they will ultimately be having another agent write their offer, I am doing pro bono work. I am doing someone else’s work. Which leads us to…

A Case Study

The reason for this particular bee in my bonnet stems from a recent encounter we had with a buyer who was not “working with another agent.” He was calling on one of my own listings. As it turned out, he fell into Category #4, a listing agent-direct buyer. Unfortunately, as is so often the case, our psychic powers failed us this day, and we learned the truth too late.

Since I have already exceeded my self-imposed 4-million word limit, I’ll leave you with the high points:

• Man calls about new listing
• Man is “not working with an agent”
• Man wants to see home but has only two time slots
• These time slots are already spoken for on my own dance card
• I suggest that another agent from our office, one who in infinitely familiar with and has sold many homes in this development, could show him instead. This makes unrepresented man very happy.
• Agent meets man, at which point man treats agent with general contempt and informs him that he will be having any future discussions about this property with only the listing agent.
• Man vaporizes over a period of three days during which time listing agent receives multiple offers and seller accepts one.
• Unrepresented man calls four hours after property is placed in pending status, proudly announcing that he is “ready to write an offer!” Presumably he was also ready to negotiate a portion of my commission, but I will never know. We didn’t get that far.

This, of course, was a bummer all the way around. While the gentleman no doubt thought that, by being disingenuous, he was simply employing a clever business strategy, using people is not cool. Not only did he strategize himself out of a home, he showed disrespect for another individual who dropped everything to work for free this day.

Or maybe he truly didn’t understand how we work and are compensated. Now he does.

The post “Are you working with an agent?” appeared first on San Diego Castles Realty.

Buying a home after a divorce presents special challenges, but with some attention to detail it is possible to overcome these situations and acquire the right home for the next phase of life.

Divorce can leave both spouses in difficult financial circumstances, but they each still need places to live. For many, that means buying a home. Often, however, divorced couples are left with a remaining mortgage on their joint home that neither of them knows how to effectively manage.

Home Mortgage Refinance for the Old Home

Before either party can consider a new home, it is important to deal with the mortgage on the former home. While selling the property and splitting any proceeds is often the most logical way to go, that is not always possible.

In cases where one partner wants to keep the home, it is essential for the other party to make sure his or her name is removed from all paperwork to limit liability and protect the individual's credit history in case of default by the other spouse.

A home mortgage refinance is often the best course of action if the joint home is not being sold. The party who wants to keep the home may not automatically qualify for refinancing, however. Proof of income and other paperwork is usually still required, and this can be difficult to provide after a division of assets.

Since the original lender is under no obligation to help with a home mortgage refinance, many find solutions from other lenders.

Considerations for the New Home

Financial experts recommend that newly divorced homebuyers get a letter of approval from a lender before going to see new homes to prove to real estate agents that they have adequate resources to make a purchase.

Before looking at any property, they should also carefully consider what size monthly payment is comfortable for them and how large a home they can reasonably afford in their new financial circumstances.

While it can be difficult to get a new home loan after divorce, some lenders approve clients for larger mortgages than they can handle. It is important for the recently divorced who are considering homeownership to take into consideration the costs involved in upgrading the new home as well as other difficult-to-predict costs that impact the monthly budget like transportation to and from the new neighborhood.

Beyond Finances

Couples with joint custody of children must consider their proximity to each other when choosing a home location and must make sure both homes have enough room for the children to stay over.

It is also important for divorced people to consider how their social lives will develop after a divorce. A suburban home can seem lonely to those living without a partner, but a downtown condo could be just the thing to spur a new lease on life.

While buying a home after a divorce can be challenging, it is also an important step toward normality for those whose lives have been in upheaval for months or years.

The post Guest Post – Buying a Home After a Divorce appeared first on San Diego Castles Realty.

Do the Bus People convey with the home? What about the Red Bull promo display cooler? Can my buyers keep that in case the fridge croaks?

Do you think the flashlight doggy is communicating with aliens or just has a skin allergy?

Is this on the wall of a tween living in the home or is this the listing agent’s car magnet?

Note: agent, if you take your own photos, do not take them after happy hour when you are lying on the ground sideways.

These people really went all out on staging.

Speaking of staging. 101: Blow up mattress in the living room? Check. Dirty sheets? Check. Lamp askew? Check.

Doesn’t it make you want to run over and shut it for them?

The caption under this bank-owned photo read “master bath/spa”.

I couldn’t resist. There is some lesson in here about how presentation matters in maximizing profitability…staging and professional photography…all that stuff too.  These were just some of the MLS photos that, over time, made me laugh out loud and right click them to enjoy at a later date.  It’s like Realtor® Geek-Speak.

The post Fun With MLS Photos appeared first on San Diego Castles Realty.

Did you ever wonder why banks seem to approve so few loan modifications and often just foreclose instead?  For any home owner, that seems ludicrous.  Any rational person would think, “Why can’t they just fix my adjustable rate mortgage at today’s rate and keep me in my home and paying my mortgage?  Why would they want to risk having me stop making my payments and incur all those legal fees associated with a foreclosure?  Aren’t there government programs that incentivize banks to work with home owners to modify loans?”  But you are a rational person, not an insider at the bank.  It’s whole different story if you know which rock to turn over.

The cold, hard truth is banks may make more money when they foreclose on a house than when they modify its loan.  At this point, it becomes relevant to distinguish between a loan servicer and the investor that actually owns the debt.  For example, Bank of America may collect the monthly payments but not own the actual loan.  B of A is often only the servicer for an investor who coughed up the cash (or bought the mortgage backed security) for the actual loan amount.  Loan servicers (B of A in this example) may make more money when the property forecloses.  Being professional paper-pushers, they slap delinquent accounts with late fees, legal fees and other random “processing” fees.  If the home forecloses, those back fees must be paid because the servicer is pretty high on the food chain of lien holders.  If a loan is modified, often the servicer must waive those junk fees or roll them into the modification agreement.  If the fees are rolled into the loan, the servicer gets paid back over the course of 30 years as the borrower pays off their mortgage.  The servicer who is not only processing your monthly payments but also handling all your loan modification paperwork asks themselves: “Would I like all my money paid in full soon or potentially have to waive all my fees to process this modification?”  To take it a step further, if the investor agrees to modify the loan from 6% to 5% interest rate, the servicer loses money over the long run too.  These are the people processing the loan modification applications.  No wonder they “lose” so much paperwork from well-intentioned borrowers.

To answer the question “Aren’t there government programs that incentivize banks to work with home owners to modify loans?”…well yes.  The Home Affordable Program (HAMP), birthday March 2009, offers banks between $500 and $1500 to work out a loan modification with home owners.  Let’s do the math.  Thousands of dollars’ worth of junk fees waived + a reduced interest rate = let’s just say it’s more than $500 – $1500.  I’m pretty sure servicers can do that math.  (Source: HAMP Compensation Matrix, updated Nov 9, 2010).

Let’s consider the investor who is neatly tucked behind the servicer.  The servicer is out in front taking all the heat from consumers and the press because they think that servicer actually owns the loans they process payments for.  That investor isn’t stupid.  They insured the loan on the property in the first place.  (Think: AIG).  When the house forecloses, it’s very likely the investor is paid in full by their handy insurance policy.  That’s why we buy insurance, right?  Then when that house goes up for sale on the courthouse steps, that investor (or sometimes the servicer) sends out their people to “buy it back”, so it becomes a “bank-owned property”.  If there is no one else bidding on the home, they buy it back well under market value.  Then they list the property as an REO / bank-owned property and sell it.  As the owner/seller, they bank the profit.  Then…this is the gross part…if the home owner refinanced that loan at any point, the investor can also sell the borrower’s “debt forgiveness” to debt buyers for pennies on the dollar.   See: http://en.wikipedia.org/wiki/Recourse_debt They can sell the right to collect on that “shortfall” to some vultures for a couple thousand dollars that then have the right to pursue the unfortunate borrower until the day they die.  I am not being dramatic here.  There is literally no statute of limitations on how long the debt buyer (aka collection agency) has to pursue that borrower.  The debt buyer who paid $1000 for the loan then has a tremendous opportunity to make a killing trying to collect as much as they can wring out of the borrower.  The grand finale: the investor reports the re-financed loan’s shortfall to the IRS as income to the borrower.  Let’s do the math.  Insurance pay-out + profit from selling the house as a bank owned property + a little cash on the back end to peddle it to a debt buyer = let’s just say it’s more than $500 to $1500.  I’m pretty sure the investors, like their buddies on the servicing end, can do that math.

The media rages: “Why isn’t the HAMP program helping more people stay in their homes?  It’s an utter failure!  It doesn’t make sense!”  Right, it doesn’t make sense to the banks either.  Can you imagine what the government would have to pony up to compete with the profitability equation the banks enjoy when they foreclose on a house?  If people thought the TARP bailout was over the top, it would pale in comparison.

Just a few ideas about why the banks (servicers and investors) might choose to foreclose on a home rather than modify the loan.  My guess is this is just the tip of the iceberg.

The post Follow the money: foreclosures beat loan modifications any day…for the bank. appeared first on San Diego Castles Realty.

As a Realtor®, I find myself having some pretty quirky conversations about credit scores with my clients.  I get to tell stories that sound like old wives’ tales and recipes.  For example: “I had some clients who were so excited about buying their first home, they went running out and bought a whole new bedroom set.  They fell into the ‘No Interest for 3 Years!!!’ trap and financed their new ‘free’ furniture.  They almost lost that new home over coveting a new bed.”  What?  Yep, your lender pulls your credit again just before they ship out the piles of loan documents for you to sign.  They want to see if anyone went out and bought a new car, stopped paying their credit cards or…bought a bed.

As you can see from the lovely pie chart depicted above, there are 5 ingredients mashed up into your FICO score dessert.  Take, for example, the bedtime story.  When my eager young buyers went to Store Credit A-Go-Go (not the real vendor’s name, the real vendor is – uh – bankrupt), they took advantage of the in-store credit option.  That carves up that “15% Length of Credit History” piece and mixes it in with the “10% New Credit” ingredients of the pie.  25% of their credit score was hanging in the balance.  Since they were only a few points above the threshold required for their loan qualifications, they dropped just enough to fall out of eligibility for their loan program.  No dollop of whipped cream on that serving.  Their lender barely had time to switch them into a different loan program so they didn’t lose their first home.  They ended up paying a higher interest rate because they were deemed higher risk borrowers.

Or my funky ditty about my buyer’s new computer… “I had this buyer once who saw an ad for the biggest, baddest computer known to mankind with monthly payments of only $24 per month (on approved – wait for it – credit)”.  Unlike the first scenario, she had a FICO score with plenty of room to move.  Instead, she served up a heaping slice of “30% The Amounts You Owe”.  When her lender pulled her credit a few days before closing, her total amount owed hopped right out of the mixing bowl into a splat on the floor.  You see, boys and girls, even if you only pay $24 a month for your fancy abacus, your score says you owe the whole $3000 now.  With her house on the line, she coughed up the $3000 to bring her debt ratio back into the acceptable range required by her loan’s underwriting standards.

Then there’s the new refrigerator another buyer decided she wanted to get from Lowe’s because she could get 10% off if she put it on her new, shiny Lowe’s card.  That is a cholesterol- busting combo of “10% New Credit” + “10% Types of Credit” + “30% The Amounts You Owe” + “15% Length of Credit History”.  Ouch.

I am chock-full of Betty Crocker greatest hits of close-call credit nightmares.  Too bad I get to be the wet blanket all over my buyers’ consumer aspirations while in escrow.  “Don’t buy anything.  Don’t close any credit card accounts.  Don’t move a muscle.”

Fair Isaac Corporation (FICO) launched a consumer education website.  (www.scoreinfo.org)  They came up with that fancy pie chart showing the breakdown of the factors under consideration when reporting agencies whip up your credit scores.  This is not your mama’s apple pie.  You should check out the recipe.

The post Not Your Mama’s Apple Pie appeared first on San Diego Castles Realty.

What other factors come into play when considering an offer and comparing it to others?
There is the low hanging fruit: offering price, length of escrow, requests for the seller to
pay closing costs, down payment and type of loan. What if all those things are more or
less equal? Or what if the seller can counter multiple offers so they become equal?

Secondary contract terms can tell a lot about the strength of the offer. For example:
how much earnest money is the buyer bringing in? That indicates how much skin
the buyer is willing to have in the game or how much money they have in their bank
account depending on how you look at it. Is their pre-approval letter with a loan broker
or a direct lender that you can verify is actually closing loans? Then there is the basic
question of “is the contract filled out correctly?” Why does this matter? Because it
tells you a lot about the agent who wrote it. The buyer’s agent is their advisor. They
recommend lenders to pre-approve with, how much to offer, how to interpret the seller’s
disclosures, who to hire to complete inspections: how to negotiate every last item
throughout the marriage of the transaction. If this agent is steering the buyer ship how do
we decide if they are a credible captain?

The buyers may not have interviewed multiple agents before settling on one…so my
sellers and I need to look into the matter ourselves. The no-brainer: is their real estate
license valid and current? This basic question is one of the reasons the agent’s DRE
license number is required on all contracts and marketing materials. Second, does this
agent have any restrictions on their license (read: hand slaps) or any pending complaints
or judgments? Who is their broker? What is that broker’s reputation? Agents can look
up another agent’s production to see what homes they have sold, where, with whom and
for how much.

Back to my recent experience in “spying” for my sellers. The offers were different but
the seller would counter them so they’d end up the same. She needed to take in the whole
picture to decide who had the best potential to actually close the sale. This is when I
summarized what I learned about the buyer’s agents. One agent was a “part time realtor”
by his own definition…he said he “does real estate on weekends and summer breaks”
because he is a teacher. He explained this to me when I asked (in a very polite manner)
why he hadn’t closed any sales in the 4 years he had been licensed. One agent was his
own broker and also happened to be doing the buyer’s loan too. He wouldn’t allow his
buyer to pre-approve with another lender. I guess his double-dipping paycheck was too
important to risk that. Don’t even get me started on the quality of work done by someone
straddling two very complex roles of both loan and real estate broker. One realtor was
brand new and had completed just one sale. But in researching her I discovered that
her more seasoned team agent had worked with a realtor I know well so I called for a
reference. What she told me confirmed my initial impression of the newer agent…high

quality, smart and committed to going the extra mile. Everyone has a first and a second
transaction. You need to start somewhere. The fourth buyer’s agent was a broker who
had been licensed for many years but had not closed any sales since July 2008. With all
the changes in the market since then, could they anticipate speed bumps on behalf of their
buyer to avoid the deal falling apart? One in five escrows currently falls through so that’s
a valid question. Lost market time can cost my seller money.

We discussed the offers, the buyers, their loans, their agents and my seller’s priorities. In
guiding my seller through the totality of the strength of each offer, what I learned about
those buyer’s agents became relevant. The depth and experience (and yes, sometimes
agenda) of the buyer’s agent often explains why the buyer’s offer is what it is. The
buyer’s agent may not be the reason a seller should accept or decline a particular offer,
but it’s important to know who you will be working with. It’s not a popularity contest, it’s
a business transaction. It’s best to see the spike strips before they hit your tires. As Edna
Mode from The Incredibles says “Luck favors the prepared”.

Sellers shop for realtors. Buyers shop for houses. Buyer beware! Not all agents are
created equal. Your agent may be compensated by the seller but hire them like you are
paying them out of your kid’s college account. Because that’s what it can cost you. You
can pay too much for your house or miss opportunities to get the most for yourself out
of the sale – like closing costs paid for, cheaper affiliated services or better loan terms to
name a few. And in some cases you can miss the boat altogether.

The post Buyer! Know who You’re Hiring! appeared first on San Diego Castles Realty.

There is nothing more disheartening than receiving a call from a client I sold a home to in the height of the market. It is a call I dread, most certainly if they are being forced into a move. Running through my mind immediately is, “Oh no! I have to tell them their home is not worth what it was when they bought it!” Most are not shocked with this news, as you would have to live on Venus to not realize “the market has changed”. There are many though who own the “prettiest house on the block”, so can’t imagine the crash could not apply to them. Once the reality sets in, the conversation ensues about where they stand, and how can I help them.

There are many reasons that prompt a move when negative equity is involved. Unplanned life changes and uninitiated events are some that force people into situations they did not elect to be in. The ugly part is that these reasons are only magnified by the fact that they now are going to take a hit on their credit, in many instances through no fault of their own. There are job losses, job transfers, divorce, and, sometimes, even death that force this situation. We all have heard too many stories about those that simply walk away for no
good reason other than making a “prudent” financial decisions, and these stories often infuriate, but there are many more others who have done all they could to keep their homes and are genuinely out of options.

There are borrowers who jumped through the hoops to try and qualify for a loan modification using the Home Affordable Modification Program (HAMP), which was designed to enable borrowers that meet eligibility requirements to avoid foreclosure by modifying loans to a level that is affordable and sustainable for the long-term.

Then there are those who have to sell and will try to qualify for the Home Affordable Foreclosure Alternative program (HAFA). This provides incentives in connection with a short sale and is used to avoid foreclosure. The trick is you need to first qualify for HAMP to proceed to HAFA, and many homeowners for various reasons do not. There may not be enough proof of “hardship” after all the evidence is reviewed. Loan mods are not always what they seem.

HAFA would streamline a short sale and allow a borrower the approval to do so prior to their home being listed. This, if able to come into play, makes the process of a short sale a bit more smooth. If a borrower continues to proceed with a short sale after they have been denied HAFA, they need to start the process with the bank all over again, often resubmitting identical documentation even if it has only been a few short weeks.

Navigating a short sale is tough. The banks can be very uncooperative, and too many agents are misinformed or lack the necessary knowledge and experience. The expectations of buyers and sellers as to how long the process will actually take are too often unrealistic. Expectations must be managed with from the get-go. Frustrating for agents are issues and obstacles that are completely out of our control. This was a hard concept for many of us, self-employed agents who are accustomed to managing and controlling the real estate transaction process, to understand. It took time to “get it”. The concept is even more frustrating for clients who have never been exposed to a short sale and do not understand why the banks’ processes seem so illogical at times.

This is the quick and dirty version of how a short sale typically goes:

A client needs to list a home due to a life-altering situation or a simple matter of affordability. They call their Realtor who then breaks the news to them that their home will not sell for what they owe on it. It is now our job to prepare the listing and market the home to obtain an offer at the highest price, and also help advise our client on their options and the best approach for the short sale. We then help our client navigate the mounds of requested documents the bank will need to see. This always involves, at a minimum, two years’ worth of tax returns, two months’ worth of all bank statements, one to two months’ worth of pay stubs, a complete list of monthly expenses, and a letter of hardship. This is just to get started.

The bank typically will not look at any of this documentation until you have submitted evidence that the home is listed and an offer from an actual buyer. Once this has all been faxed to the bank – yes, faxed, because banks have been slow to adopt modern-day conveniences like email and electronic signatures, the waiting game begins.

Once the bank has verified that they received the paperwork, typically a steaming mound of documents totally more than 50 pages, which can take a week or more, they will assign you an intermediary who you will most likely never, ever talk to. You feel grateful if are ever lucky enough to receive an email from them, but generally you get your updates solely from customer service at this point.

The intermediary could be one of many who will touch this file. This person generally is the one that sets up the BPO (broker’s price opinion), which essentially is their appraisal, and you continue to wait. The BPO can take anywhere from two weeks to a month to be completed. Once the BPO is returned and if you’re lucky, you will finally be assigned a negotiator, or at least the person who will review the file to set you up with the negotiator. Most banks will not divulge to you the BPO number. It is a guessing game, one that Realtors should “win” based on the comparable sales data we scrutinize, but remember — sometimes there is no logic involved.

At this point, your agent will (should) call the bank daily for an update to find out when they are going to be given the contact number or email address for the actual person who is working on the file (the infamous negotiator. This typically takes weeks. Eventually, the negotiator will contact the agent, at which point they will typically require more documentation — updated pay stubs and bank statements, since the ones sent in originally are clearly now outdated. And although you and your agent have been waiting for months for some sign of human life at the bank, this updated documentation will be required NOW lest your file be returned to the bottom of the stack. There is nothing more frustrating than having to explain the lunacy of the process at this point to a client. “Yes, I know Mr. Client, we have not heard squat in 45 days, but now we have, and they need it by noon or the hostages die!”

Despite the request for updated documentation, which is generally considered a positive indicator that someone is finally paying attention, the bank at this point may or may not tell you if the offer is going to be accepted. Short sale offer acceptance is always accompanied by multiple, scary disclosures, conditions and counter offers. The counter offer frequently involves price. This is when, as agents, we have to figure out where the additional funds will come from, and if it a higher price is even warranted. Many times it is not.

There are many factors that the person performing the BPO may not have taken into consideration. Does this house sit on a busy street? Are there repairs that are needed? Can you buy the house down the block with all the bells and whistles for less? Does the appraiser even live in this county? In these instances, if the buyer or seller is unwilling or able to meet the demand, the agent will typically request an appraisal review.

At this point, I put together a portfolio of sorts with the comps in the neighborhood. “Look,” I point out, “this one has granite in the kitchen, a pool in the back yard, and it is selling for less”! I dig up all the homes I can to show them they are “off” in their determined value, and if necessary put each property on a nice little map showing proximity to the subject property.

Sometimes the bank is actually happy with the purchase price but they would like a monitory contribution from the seller. Some sellers may be able to provide a contribution; others may not. Many seller contributions I have seen come directly from retirement, which often involves a penalty for withdrawal. This is not ideal, especially for those who have true hardships. The bank’s attitude is beg, borrow, or steal; they do not care, as long as they get the additional funds.

Oh, lest I forget, there could also be a second lien holder – or third. If so, see above, rinse and repeat. Second lien holders, even if they are with the same lending institution, have their own, separate process for review and approval and require their own documentation. They are also at the mercy of the first lien holder as

to the proceeds they will receive. It is highly likely the second will request more than what was offered to them by the first. Again, we find ourselves scrambling to find the additional funds, or to get the second to agree reconsider and accept the payoff to which the first lien holder has agreed. This really is a topic that could take another ten paragraphs to explain, but ultimately a second could further delay the process another month or more.

Once all these issues are worked out and negotiated, and you have been provided your 10th HUD-1 (settlement statement), you may be issued short sale approval and escrow can finally be opened.

“Hello, Mr. Buyer, are you still there”?

So now we have short sale approval and the buyer who hopefully didn’t get tired of waiting can start their investigations. If we are lucky and hold our breath, the physical inspection and termite report will come back clean enough, and the buyer will wish to proceed. Requests for repairs on a short sale can be very hard to navigate. The bank, as a rule, will not pay for any repairs. Termite work can throw a glitch into the continuation of escrow as well, but can be requested with a new HUD showing how it will affect their bottom line. Some banks will allow for Section 1 termite work (active infestation) to be paid out of their proceeds, others will not.

Finally, you are home free! This, of course, assumes that there is not an issue with the buyer’s loan.

To recap, total time, start to finish, is four to six months on average. And this is only if your original buyer has stuck around for the party.

Short sales have made things very interesting for agents. Many avoid short sales because of the amount of time and effort they involve. In some sort of twisted way, I actually like them. There is a huge sense of accomplishment in closing a short sale. The challenge is invigorating, and I know that you have helped someone through a difficult process with compassion, patience, and understanding. For the lack of control I have in dealing with bank, I have also found ways to encourage them to have my client’s interests in mind as well. This is done with tenacity and fortitude (failure is not an option), but most importantly with being persistent, respectful, and always professional.

Finally, many agents use “professional short sale negotiators” to assume the responsibility of communicating with the lenders. While there is nothing wrong with this, I do not. Rather, I believe that by relegating responsibility for and control of this critical aspect of the short sale process, I am not acting in my client’s best interests, as they have hired me to act as their fiduciary and their advocate. Sure, it would free up much of my time, but conducting my business based on quality, not quantity, is the only way I can sleep nights.

The post Short Sales appeared first on San Diego Castles Realty.

In my former life’s work, and also being afflicted with an engineering background, I spent a good deal of time analyzing data in search of trends and in support of business decisions. Would you think that this is a transferable skill to the land of residential real estate? My goal is not to become bogged down in statistics and data, but to be able to support buyers and sellers with “numbers” to validate their “emotional” purchase and sales transactions. Statistics have a place in the process but will never replace the emotional elements in the transaction. MLS data integrity also has a significant impact in the daily property searches we all execute. Let me paint the backdrop for this discussion.

If you are frequent visitors to The San Diego Home Blog, you will recall many a post from Steve and Kris reflecting on a previous month’s/year’s sales activities or a particular market segment trend. They tend to stay at a macro level and ignore some of the gnats buzzing around my head! I find myself periodically downloading MLS data either to confirm my predisposition towards a perceived trend or just trying to collect data on a new neighborhood or condo complex that a client is exploring. Most recently, while downloading 2007 transaction data, I came face to face with the data base integrity issue to the point of making the effort akin to placing needles under my fingernails. After many a download, I have yet to experience the pleasure of an accurate data set. The inaccuracies come in many flavors, and I find some of the errors are unintentional but unfortunately many are surely intentional. From my list of “favorites”:

• No estimated square footage for the home – could it be that this is a very small home and my list price is rather high? Why not use the data in the public records, or data from a recent appraisal, builder’s brochure info, or homeowner’s records?
• No lot square footage – most often this omission is found on homes where the lot size is quite small, and also a matter of public record (I willingly concede that not all lot sizes are included in our beloved realist.com data base). So as a listing agent let’s just assume that nobody on the other side of this transaction will be smart enough to figure out that this lovely home is on a postage stamp size lot!
• No complex name (condo/townhome development) – Am I an out of area agent and all I know is that the property is located somewhere in a given city? I’ve driven by the monument with the complex name on it but it hasn’t quite sunk in. I wear a clever disguise and promote myself as your neighborhood specialist.
• No subdivision listed (single family detached listing) – see above; in many cases we see the name of the city, or perhaps the subdivision listed in realist.com. Here you thought you lived in the Renaissance subdivision of Scripps Ranch and now you read your listing only to find out that you really live in McMillin Scripps 03 Unit 05. Welcome home! It will just be a little more challenging for the buyer’s agent to find your listing if they are doing an MLS search based upon the subdivision field.

As a buyer’s agent I find it challenging to set up custom searches for clients given the inaccuracies found in the above MLS fields. How lame is it to have a conversation with prospective buyers and utter comments about MLS data base “errors or omissions” preventing their search program from locating all homes meeting their expressed criteria? The flip side of this conversation is explaining why they are seeing properties clearly not meeting their search criteria because you did not enter a minimum square footage so as to not eliminate properties with no square footage entered but in reality meeting their requirements. Hmmm, seems like we’re going in circles here! Bottom line for listing agents…take the time to market your product intelligently and truthfully! Help me help you and your seller to ensure we find your listing during the MLS search process, and cross your door step as a result of finding the basic home amenity data properly and accurately entered.

[Editor's note - originally posted on the San Diego Home Blog]

The post MLS Data Accuracy – Should We Care? appeared first on San Diego Castles Realty.

Showing properties 1 - 10 of 500+. See more Real estate in the city of San Diego.
(all data current as of 5/24/2013)

1. $13,478,000 : 3675 Ocean Front Walk, San Diego
   
   8 beds, 8 full, 1 part baths

   Home size: 5,900 sq ft

   Lot size: 4,320 sqft
2. $12,500,000 : 1865 SEFTON Pl, San Diego
   
   5 beds, 5 full, 1 part baths

   Home size: 6,769 sq ft
3. $9,975,000 : 100 Harbor Dr PENT, San Diego
   
   3 beds, 3 full baths

   Home size: 4,400 sq ft
4. $9,750,000 : MLS # 130015906 in San Diego
   
   9 beds, 10 full, 1 part baths

   Home size: 15,000 sq ft

   Lot size: 2.06 ac
5. $8,850,000 : 14183 Caminito Pacifica Trl, San Diego
   
   5 beds, 5 full, 1 part baths

   Home size: 11,995 sq ft
6. $8,400,000 : 632 San Gorgonio St, San Diego
   
   5 beds, 5 full, 1 part baths

   Home size: 6,557 sq ft

   Lot size: 22,216 sqft
7. $7,975,000 : 4920 (#8) Rancho Del Mar Trail, San Diego
   
   6 beds, 7 full, 1 part baths

   Home size: 10,200 sq ft

   Lot size: 1.49 ac
8. $7,950,000 : 4760 Rancho Del Mar Trl, San Diego
   
   6 beds, 8 full, 1 part baths

   Home size: 12,028 sq ft

   Lot size: 1.20 ac
9. $7,750,000 : 4110 Rancho Las Brisas Trl, San Diego
   
   6 beds, 6 full, 2 part baths

   Home size: 10,725 sq ft

   Lot size: 1.36 ac
10. $7,500,000 : 8543 Run Of The Knolls, San Diego
    
    6 beds, 6 full, 1 part baths

    Home size: 8,876 sq ft

    Lot size: 1.49 ac

Listing information deemed reliable but not guaranteed. Read full disclaimer.

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