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

A Complete Guide to Buying Foreclosures and Short Sales 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 Buyers Agent A Complete Explanation of Short Sales A Complete Explanation of Foreclosures Wrap up and Take Aways

A Complete Guide to Buying Foreclosures and Short Sales 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, whats next? –Becoming a home owner

Common Terms and Definitions Get Approved for Financing –Income and Asset Documentation Pay stubs / VOE / W2s / 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

Common Terms and Definitions 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

Common Terms and Definitions 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

Common Terms and Definitions Offer is Accepted, Whats 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 – 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 –Sellers Agent – Represents sellers best interest –Buyers Agent – Represents buyers best interest How a Real Estate Agent is Paid –Seller offers % of sales price to Agent –Sellers Agent offers to split this commission with any Agent that bring buyer that results in the sale of the home

Tips to Finding and Retaining A Real Estate Agent 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, , cell phone, IM Websites vs. Blogs –The social media phenomenon –Who are they as opposed to What they do

Tips to Finding and Retaining A Real Estate Agent 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 –Dont be afraid to expect a high level of service –You are not obligated to stay with one buyers agent – avoid Buyers 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

A Complete Explanation of Short Sales 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

A Complete Explanation of Short Sales What to be aware of with Short Sales –Sellers agent has most influence in process Third party negotiators working on behalf of selling agent is optimal scenario –Subordinate lenders can prevent short sale 2 nd lien holder has to cooperate Can hold out for more money –Sellers are not usually willing or able to pay for repairs to property

A Complete Explanation of Short Sales 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 buyers agent – Fiduciary duties require that your best interests are represented EXCEPTION: Short Sale Sellers 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 its worth – Be aggressive if you like the home