ALL PHOENIX REAL ESTATE

This just in as of a few hours ago, as first mentioned earlier today here:

NEW YORK (Reuters) - The U.S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed “short sales” of homes and other loan modification alternatives to stem a rising tide of foreclosures.

The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed, according to an announcement on the Treasury’s website.

Until now, sellers on a short sale receive absolutely nothing. If the Treasury department’s guidelines take hold, that also will change.

Financial incentives for completing short sales or similar deed-in-lieu transactions — in which the deed is simply transferred to the lender — include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would receive $1,500 in relocation expenses. [Emphasis added.]

And here’s the best part, at least for those of us who have spent months in the past trying to elicit some sort of response from a lender:

Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt.

Second lien holders won’t necessarily be happy, but their position always has been untenable - by being in secondary position, they receive nothing if a home’s foreclosed upon.

In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.

The Reuters story references a release on the Treasury Department’s website; hell if I can find it right now, but it is 11:13 p.m. … I’ll try again when I’m awake.

Questions abound, at least in my sleep-deprived mind. Will lenders suddenly start to follow these guidelines in general? Will they implement these guidelines for the stacks of files they already are holding? Will those sellers already waiting simply be grandfathered into the short sale purgatory in which they’ve been sitting?

One thing’s for certain … if these guidelines do take hold across the board and if short sales are handled primarily by agents who know the process and the details of the mountain of paperwork that comes with a short sale, all the advice I’ve given to buyers about staying out of the short sale game will turn 180 degrees in a heartbeat.

[h/t to Lani and Agent Genius]

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As things stand now, there are two primary drawbacks to making an offer on a short sale:

1. The process seemingly takes forever, with agents and buyers waiting on lenders who in turn are waiting for investors to decide whether to accept less than the amount of the mortgage on a given property.
2. Most agents and many lenders still have no idea what to do with a short sale, leading to delays while agents try to figure out how to put together a complete short sale package and lenders try to find someone with experience and authority enough to decide.

There’s a further complication in that there’s no consistent process that applies to all or even most lenders; Bank of America requires a different sellers’ financial profile form, for example, than Chase or Wells Fargo, etc.

Comes word today from Dave Liniger, speaking to a group of RE/MAX agents here in Phoenix, that changes are in the works beyond what was announced in October.

In meetings with the Treasury and Housing departments, Dave outlined a plan that would standardize the short sale process (taking out much of the guess work) and, if all goes to plan, would shorten turnaround times on short sale responses from weeks to days.

Each draft of the policy has been met with changes from various stakeholders, Liniger said, but Treasury officials plan to have something in place in the near future.

Much of the focus for the changes center around the Certfiied Distressed Property Expert certification (CDPE), a two-day course that has been offered for the past year. The National Association of REALTORS has developed its own course - Short Sale and Foreclosure Resource certification - which also covers much of the same material.

(Disclosure: though I’ve worked with many short sales and foreclosures, I do not as of yet have the CDPE designation; by this time tomorrow, I’ll be an SFR. In case you happened to be wondering.)

If these changes take hold, 2010 could become the year of the short sale - that’s not from Dave’s mouth, but from mine. The conditions are there except for the consistent ability to get these transactions closed. If lenders and investors finally get on board fully, the short sale market in Phoenix and elsewhere will be far different next year.

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Below is a snapshot of the Avondale real estate market with data provided by the Cromford Report as of November 26.

Looking for homes in Avondale? You can search the Avondale real estate listings or, if you prefer to view listings by RSS, you can add the feed here.

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Questions abound when it comes to short sales in the Phoenix real estate market; nearly all deal with how the process can be shortened, the bank’s motivation and confusion about the real meaning of the price listed in the MLS.

Some of the most common questions center around the idea of cash - whether a cash offer will speed the process as it will for almost every other kind of sale - or, seemingly just as often, wonder at why the bank is taking weeks or months to approve a sale to someone offering cash.

The simplest answer when it comes to short sales is the one no one really wants to hear:

The bank doesn’t care if the house sells or not.

Though short sales require the approval of the bank - since the owner is upside-down on their house, the sale can’t happen unless the lender agrees to write off the difference of the mortgage balance and the sales price - the bank isn’t party to he discussions leading up to the decision to sell a house as a short sale.

Sure, it’s possible someone in the lender’s short sale department will suggest an owner try a short sale but that suggestion falls far short of actual agreement on the sale. And since the lender hasn’t agreed to a short sale at any price, much less the price being offered based on a below-market-value sales price created by the listing agent, any buyer - even those offering cash - have to sit through the entire lengthy process.

Think of it as someone coming to your front door offering to buy your car - except your car isn’t for sale. Oh, and they want to give you $5000 for a 2008 Escalade. Just because they’re offering cash doesn’t necessarily mean you’re going to be motivated to sell the car. Add some financial distress to the situation and it’s possible you’ll consider it, but this isn’t going to be a snap decision by any means.

Before approving a short sale, a lender is going to take its time to make sure that the seller is unable to continue making his or her payments. Anyone can write a hardship letter; the proof is in the financials.

Offering cash isn’t going to speed the process because, at the end of the day, it’s not about you the buyer. It’s about the seller and the lender. You’re just along for the ride.

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Last year, with the switch in local MLS providers here in the Phoenix real estate market, agents applauded the new-found ability to enter an unlimited number of photographs for any given listing. And in so doing, most seemed to forget the reality of real estate buying - it’s a process of elimination.

When buyers search for homes online, they rarely are looking for the home they want to purchase. Instead, they are looking for the homes they have no interest in so they can be eliminated from any further consideration - floor plans, photographs, curb appeal - all can lead to a particular property being kicked aside without the buyer ever walking in the front door.

Not that all buyers remember that this is a process of elimination; it’s not uncommon for one of my clients to want to view properties with floor plans they’ve already deemed as unsuited for their situation. Sometimes we look; more often than not, I remind them of their own established decision and we move on to something different.

From a seller’s standpoint, it’s imperative to remember this basic truism as it ought to have an impact on how your agent markets your property. There really only are so many photographs that can be taken of a 1,200-square-foot home before it gets completely out of hand and you’re looking at electrical outlets.

More importantly, make sure the photographs of your home reflect your home as it really is but still casts it in the best possible light. The greatest compliment I ever received from a buyer of one of my listings is that the house looked exactly as the photos showed that it was.

It was the last one standing after everything else had been eliminated.

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