The Coldwell Banker Office in Big Bear Lake is manned by eight dedicated Realtors who are not afraid to work.  A true testament to the work ethic that that has been instilled in us by our broker, Tim Wood was evident two weeks ago when Big Bear was hit with an epic snow storm.  That storm left five feet of snow in just a few days, crippling the town and shutting down most of the businesses in town.  True to form, the Coldwell Banker office was open as usual with a full staff ready to help anyone with Real Estate issues within the Big Bear Valley.

It is that work ethic and dedication to hard work that enabled the eight Realtors at Coldwell Banker to put over 30 properties worth $15,000,000.00 in to escrow in January.

How many times have you called a Real Estate office for information only to hear that the agent was not available?  How many times have you called a Real Estate office and found that they weren’t even open?  I know that this happens because it happens to me time and time again.  The eight of us at Coldwell Banker have our office open from 8:00 A.M. until 6:00 P.M. 7 days a week.  At Coldwell Banker, we work as a team and support each other.  If you call on any of my listings and I am out of the office at that time, you will be transferred to one of my associates who will be more than happy to answer your questions and show you property.

I am very proud to be one of the eight agents who have made Coldwell Banker so successful.  If you would like to information on any property in Big Bear, no matter who has it listed, I can help!  If you have property in Big Bear and would like to know what it is worth, please contact me for a free, no obligation Market Analysis.  My goal is to provide the very best customer service to all of my clients from the first day we meet, through to the closing of the escrow and beyond.  I am here to serve YOU!

I am very proud to be one of the eight agents who have made Coldwell Banker so successful.  If you would like to information on any property in Big Bear, no matter who has it listed, I can help!  If you have property in Big Bear and would like to know what it is worth, please contact me for a free, no obligation Market Analysis.  My goal is to provide the very best customer service to all of my clients from the first day we meet, through to the closing of the escrow and beyond.  I am here to serve YOU!

This past week, Big Bear has experienced the largest snow storm in the ten years that I’ve lived here.  According to Ben’s Weather the storm dropped 57 inches of snow this past week and the total snow fall for the season is 102 inches.  With all of that snow dropping all within a one week period, you can only imagine how difficult it is to get around town.  Big Bear Blvd, which is a 4 lane highway, has been reduced to two lanes and most secondary roads are barely wide enough for one car.

Now that the chain restrictions gone from R-3 to R-2, we are seeing more and more people trying to make their way to Big Bear to play in the snow.  What people don’t understand is that when 2 out of the 3 roads leading into Big Bear are closed, and the only road open is under chain restrictions, we don’t get deliveries.  The CHP won’t let any large trucks up here, which means we don’t get mail, food deliveries, and gas.  At present, there is only one gasoline station open and they are almost out of gas!  What happens to these people who figure that they will gas up when they get to Big Bear?  I know that everyone wants to come to Big Bear to play in the fresh snow.  But please give us time to dig out and be prepared so that when you do come to Big Bear, you have an enjoyable time.

Most people think that the only way to Big Bear is to come up the 330/18.  That route to Big Bear is about an hour drive but once we get snow like we have had this past week, the trip home from Big Bear could take 3 hours.  What people don’t know is that there are two other ways to get in and out of Big Bear.  You can come to Big Bear by driving up hwy 38 out of Redlands or you can get here by driving up Highway 18 from Lucerne Valley.  These routes are longer in mileage, but your trip will be much less stressful by taking these other routes when the weather is as bad as it has been.

More and more, people come into my office at Coldwell Banker in Big Bear Lake, or the call me and ask me to help them buy a home that is listed for sale as a short sale.  So often, the buyer has the mindset that the best deals to be had are from the short sales.  I've had a remarkable amount of success in listing and selling short sale properties, but the problems arise when I represent the buyers.  The story that I'm about to tell you is unfortunately, true.

Near the end of May of 2009 a property was listed in the Moonridge area of Big Bear as a short sale.  This property had previously been listed at a much higher price and I had a client who was watching the property for price reductions.  As soon as it changed status from a resale property to a short sale, my client asked me to place an offer on it.

The one thing that I stressed to this client is that short sales take a very long time to get an answer on.  I also stress that even if you place a full price offer based off of the short sale asking price, there is no guarantee that the bank will accept the price.  The offer was presented to the listing agent and the waiting began.

Week in and week out, I would call the listing agent asking for updates on the process.  One week, I was told that we had a negotiator and the next week, I would find out that the negotiator never materialized.  This went on for months until finally in November of 2009; the listing agent called the corporate offices of this particular bank and complained about the lack of service on this file.  The bank promised to look into the situation and they asked that the seller's agent check back in 10 days.  We are now into December of 2009, some six months after submitting the offer and the bank has not given us any indication as to what they are thinking.

Finally, at the end of December, the bank finally responded to the offer, only to rescind the counter offer the next day.  The reason for the counter offer being rescinded was because the investor, Fannie Mae refused to grant another extension and they wanted the property sold! 

The good news for my client, after waiting over six months for the opportunity to buy this Big Bear Cabin is that as long as it doesn't sell at the auction, it will in all likelihood return to the Big Bear Real Estate market as a REO listing.  Depending on what the bank wants for the property, the buyer can still get the cabin of her dreams.

What I've just described to you is not an uncommon occurrence when it comes to short sales.  The short sales that I have had success with have all been where I have had the listing and I have had better control of the negotiating with the bank.  My advice to anyone looking for property in Big Bear or anywhere else is to not get involved in a short sale unless you know exactly what you're getting into.

How many other homeowners in Big Bear are behind in their mortgage payments and need to do something to avoid foreclosure?  How many homeowners in Big Bear are finding themselves owing more on their homes than they are worth?  What do you do?  You might want to look into the ideas of selling your home as a short sale.

What is a Short Sale?

Basically, a short sale is a process of selling your home for less than you owe the bank.  In these cases, the bank has agreed to take the proceeds from the sale as payment in full.  More and more, the banks are working with Realtors like me who specialize in the short sale process as a way to avoid foreclosure.

There is a misconception out there that you can buy a short sale property at a large discount.  This is not true.  In some cases, the home owner is desperate and will sign any offer that come along, but there is no guarantee that you’re going to get the property at your offered price.  While it is true that he bank would prefer to sell the home as a short sale rather than foreclose, the bank is not going to give the property away.  I’ve seen the bank walk away from a short sale offer that was $5,000 less than the value that was placed on the property by the appraiser.  Banks won’t give the property away, but they will agree to sell the home as a short sale as long as the offer comes in at value.

Whenever I get a call from a Big Bear home owner asking me for help with a short sale, there are a number of questions that I ask.  One of the many important things I want to find out is if there has been a notice of default filed against the property.  The reason I need to know this is because the once the notice of default has been filed, the sale date for the property is usually not too far off.

Just this morning, a homeowner called and asked me if I would help her sell her house as a short sale. After some discussion, I learn that the notice of default has been filed and the sale date is set for December 30, 2009.  I told the caller that unless the bank is willing to postpone the sale date then there isn’t very much that I can do to help.  I’m still going to speak to the bank and see if we can get the sale date postponed for these people. But it might be too late to stop the sale.

If you find that you’re getting behind in your mortgage payments on your Big Bear property, don’t wait until the last minute before asking for help.  The sooner that you ask for the help in selling your home, the better your chances are of finding a qualified buyer whom the bank will work with. 

Please feel free to contact me if you have any questions about the short sale process.  I am more than happy to sit down and discuss the short sale process with you. You might find that selling the home as a short sale might be the best way to go.

Previously Posted on Tony's REO Blog

The Home Inspection has always been pivotal point when buying a home in Big Bear Lake, CA.  The importance of this fairly inexpensive inspection has become even more important with the influx of the bank owned, REO properties.  When you buy a home in the Big Bear valley from a home owner, you normally get a set of disclosures.  But, when you buy a bank owned, REO home in Big Bear, you get very few, if any disclosure regarding the property.  This makes it even more important for buyer to do his investigations and to get a home inspection.

So, what do you do when the buyer doesn’t want to spend the money for the home inspection?  Here in Big Bear, the home inspection is not a required inspection, so how do you encourage the buyer to spend the money and get the inspection?  Perhaps the story that I’m about to tell you will help.

I am currently involved in an escrow with a buyer who didn’t want to spend the money for the home inspection.  After explaining the importance of getting this inspection, especially as he was buying a bank owned, REO property, he still said no.  That was ok, but I told him that I would need him to sign something stating that I had advised him to get the home inspection and he refused.  The thought of having to sign this paper was more than he was willing to do, so he agreed to come back up to Big Bear and do the inspection.  He is now very happy that he took the day off and came to Big Bear!

While the buyer was working with the Home inspector, I took a look at the plot map.  The way that the manufactured home sat on the lot compared to the other homes didn’t look right to me so I started looking into it.  It wasn’t long before I discovered that half of the house sat on the next door neighbors land.  Had I not noticed this problem and the escrow had closed, the problems that this would have created would have been unimaginable.

Needless to say, the buyer is disappointed that this deal won’t go together.  But he is very happy that we found the problem while he still had time to back out of the deal without losing his deposit.

None of this would have happened had we not done a home inspection.

Think you got talent? Maybe you do but you'll never know untill you try out at the Big Bear Lake Oktoberfest where a pretty faces alone won't win you an award. If you can carry 15 steins filled with beer, saw a log and limbo the lowest, then you may qualify as one of the finalists for the right to call yourself the Queen of 2009 Big Bear Octoberfest.  

Competitions at the 39th Annual Big Bear Lake Oktoberfest include log sawing, stein carrying, sausage eating, stein holding, O’Doul’s safe slam beer chugging, yodeling, and limbo dancing. Children’s fun and games include pretzel eating contests, kiddy mug holding matches and Midway carnival-style games.  

The main event of Big Bear Lake Oktoberfest is the Crowning of the Queen. The Stein Carrying Contest is the only one of its kind in the United States . The rules are simple, yet challenging and physically demanding. Each contestant must pick-up steins filled with water, carry them a distance of 30 feet and set them back down without spilling more than three ounces out of any one stein. Each stein weighs about 5 lbs. The preliminary round begins with 13 steins and increases with each round. The one who carries the most steins wins. In the past some participants have carried more weight in beer than their own body weight. The Big Bear Lake Oktoberfest queen is crowned the fifth weekend of the festival after competing in three preliminary events.   

Crowd favorites are stein holding events that take place several times a day. The object is to see who can hold a full stein with an outstretched arm, chest high without dropping their arm or spilling the stein’s contents. The log sawing contest is known to get roars from the crowd! This competition is a two person team sport for both men and women that test skills of strength, speed and technique.  O’Doul’s safe slam beer drinking races (non-alcoholic) awards winners who guzzle down liquid the fastest! This competition is great for “couch potatoes” who want to become instant stars. The limbo dance is a downright hoot. Anyone and everyone who has a little bend in their mid section vows to get down as low as they can to the sounds of polka music.  

Contests at Oktoberfest are just part of the fun. When contests are at a standstill, a huge dance floor is filled with revelers clucking away to the “Chicken Dance.” Continuous entertainment includes professional cloggers, polka dancers, yodelers and musicians. This year’s event features Die Franken Power Express Band direct from Germany . The band plays traditional polkas, sing-alongs, classic rock and a mix of country favorites. The band is scheduled to perform three weekends, September 26-27 and October 3, 4, 10 and 11. The headline band the other four weekends is the Express Band, known as Southern California ’s premiere German band.    

The Big Bear Lake Oktoberfest runs for seven consecutive weekends, September 19 through October 31 at The Big Bear Lake Convention Center, located at 42900 Big Bear Boulevard in Big Bear Lake . The times are Saturdays 12 noon to 12 midnight and Sundays 12 noon to 5:30 p.m. Ticket prices for Saturdays are $12 adults; $9 seniors (65+); $6 children (3-12). Sundays are $5 adults; $4 seniors (65+); and children (12 and under) are free. Group and tour package pricing is also available. For more information call 909-585-3000 or visit bigbearevents.com.

How many times have you heard Real Estate agents telling people that this is the best time to buy?  Isn’t that the response that you would expect to hear from your local Realtor?  After all, the job of the Realtor is to sell property.  In his eyes, why wouldn’t it be a good time to buy?

I was speaking to a colleague of mine at Coldwell Banker’s The Tim Wood Group in Big Bear just recently about this very topic.  The reason we were discussing this was because I had just taken a call from someone who bought their Big Bear cabin at the very peak of the market and now he desperately needs to sell.  Not only did he buy at the peak of the housing boom, he bought probably the most expensive homes in the neighborhood.  Needless to say, this guy was devastated when he learned that values of homes in Big Bear have fallen to 2003 levels.  The Realtor who sold him the cabin told him how good an investment it would be and how there was never a better time to buy than right now!  He had been told that he could keep the cabin for a year and easily sell it with a great profit.  In other words this guy was lied too every step of the way. 

The Tim Wood Group at Coldwell Banker has always been known for our brutal honesty.  We don’t sugar coat things and we tell clients the truth.  If this guy who called in had been my client, I would have asked a lot of questions before selling the most expensive home in the neighborhood.  Some of the questions that I ask my clients are.  Why are you buying in Big Bear?  Are you buying a cabin for a vacation home?  Is it going to be used for a vacation rental?  Are you buying the cabin with the intent of flipping it in a year or two?  Knowing the answers to these simple questions helps me pick the best area to look for a cabin for my client.  Had I been his Realtor and he told me that he wanted to buy the cabin, hold it for a year and then sell it for a profit; I would have told him not to buy.  Yes, you read that right.  I would have told him not to buy.  If he went forward with the purchase, I would make sure that he was fully aware of the risks associated with a purchase of this type.  But again, my advice would have been not to buy.

I believe that this guy is going to remember me for my honesty.  It is my hope that when the time is better for him to make this type of purchase; he’ll come back and see me.  I know that he is going to think better of me than they guy who sold him the cabin, telling him that it was a great time to buy.

This past weekend, I had clients come to see me who wanted to buy a cabin in the Fawnskin area.  For you who are not familiar with the Big Bear Valley, Fawnskin is a quite little community that sits on the north side of the lake.  After listening to what this couple wanted, I knew exactly what to show them.  There were a number of cabins that fit what they were looking for, but there was one in particular that I thought they would especially like.  I was right! As soon as they walked in to this cabin, it was obvious that this was the cabin for them.  After some back and forth with the seller's agent, we put the deal together and we are now in escrow. 

These clients are more than qualified to purchase this cabin.  Their lender has given me an approval letter, they are putting plenty of cash to put down and their FICO scores are through the roof.  Based off of comparable sales in Fawnskin, there should be no problem with the appraisal.  So, why am I so worried about this escrow closing?  The answer is "The Appraisal"

In the 5 + years that I've been selling Real Estate in Big Bear Lake, the loan process was basically the same.  Once the escrow was opened, I would always ask the mortgage broker to use a local appraiser for the appraisal.    The reason for this was quite simple.  The Big Bear Valley is made up of a number of smaller diverse communities.  Because the value of cabins in these smaller communities vary considerably depending on a number of factors, it would be necessary that the appraiser have a good working knowledge of the Big Bear Valley.  In other words, he needed to be Geographically Competent.

 As of May 1, 2009 the way appraisers are selected has changed.  In most cases, the mortgage broker can no longer select the appraiser. They must submit the request for the appraiser to an Appraiser Management Company (AMC) and it is the AMC who assigns the appraiser based off of the Home Valuation Code Of Conduct (HVCC).   The problem that we are seeing in Big Bear is that we are getting appraisers from places like Moreno Valley or Temecula.  Now I'm sure that these people do a great job in their local areas.  But bringing an appraiser to Big Bear who is not Geographically Competent is only going to spell disaster.  Time and time again, we are seeing appraisals come in low.  In each case, there are a number of recent comparable sales to support the sales price, yet the appraisal is low.  How can that be?  Quite simply, these appraisers coming to Big Bear are not Geographically Competent.  They don't know enough about the Big Bear Valley to be able to do their job competently.  The Mortgage broker can ask the AMC to send an Appraiser who is Geographically Competent but there is no guarantee that this is going to happen.

All good things must come to an end and the days of not having to worrying about the appraisal is a thing of the past.  Is it too much to ask for something as simple as an appraiser who is Geographically Competent?

This past weekend, I was thinking about what property I planned to show my clients.  My clients were driving up from Los Angeles to look at property in Big Bear and I wanted to make sure that I had the best properties picked out.  The day that my clients arrived in Big Bear, I noticed that one of the properties that I had planned to show had been withdrawn from the market.  This was a cabin that my clients really liked and so I called the listing agent to enquire as to why the cabin was no longer for sale.  I was rather surprised to hear that the seller had not been open with the listing agent and that the seller owed more on the cabin than they were selling it for.  How could this happen?

I see a number of short sale listings in the Big Bear area that will never close.  The reason I say this is because the bank is not going to agree to sell a property for less than it is worth.  For the bank to agree to a Short Sale, the sale must make good financial sense.  The bank is not going to sell a cabin in Moonridge for $150,000.00 when they can foreclose on the property and sell it for $200,000.00.  Yet time and time again, I see properties throughout the entire Big Bear Valley listed for sale with unrealistic asking prices.  Potential buyers see these prices and get an unrealistic picture of the market. A good example of what I’m talking about is this. Just today, I was speaking to a buyer who wants to look for homes priced at $400,000.00, expecting to buy the home for $300,000.00.  That is NOT going to happen in the current market in Big Bear.

I’ve been very successful in selling Short Sales in the Big Bear Valley. The success that I’ve had, has been because I ask a lot of questions.  I’ve never had to withdraw a listing because I have learned that the seller has been less than truthful with me.  More often than not, distressed sellers call me and asking me to help them sell their Big Bear property as a short sale.  Before I agree to take the short sale listing, I sit down and interview the property owner to see if they qualify to sell their home as a short sale.  I understand that talking about your failed finances to a stranger is not a pleasant thing to do and it’s easy to leave a few things out.  If I am going to be able to help the home owner, it is imperative that they answer all of my questions completely, honestly and truthfully.   Once I have answers to all of my questions and I’m confident that the home owner has been truthful with me, I can then determine if they qualify to sell their home as a short sale. 

So, if you see a home listed as a Short Sale and the price seems too good to be true, it probably is!

This past week I received multiple offers on one of my bank owned, REO properties in Big Bear.  The first offer to arrive was a full price offer with the buyer getting a loan.  The buyer was putting 20% down, was pre approved by a local lender in Big Bear, and showed proof of funds for the amount of money he was going to put down.  Generally speaking, that’s a pretty strong offer.  The next offer to arrive was a cash offer for far less than the asking price.  If you were the asset manager of this REO property, what offer would you take?

To make a long story short, the asset manager was much more interested in the cash offer than she was the offer with a loan.  After going back and forth with a couple of counter offers, the cash offer was accepted.  The asset manager could have received more money had she gone with the offer with a loan, but she chose to take cash.  Why do you think she did that?

Most buyers and sellers are not aware of the changes put into place for appraisers.  As of May 1, 2009 most appraisers must comply with the rules and regulations put forth by the Home Valuation Code of Conduct or HVCC.  In the past, the mortgage broker would simply call his or her favorite appraiser to do the appraisal for the new loan.  With the new rules put into place by the HVCC, the mortgage broker must now submit the appraisal order to an Appraisal Management Company (AMC).  It is the AMC that then orders the appraisal from a pool of appraisers.  Now this idea may work well in Victorville or San Bernardino where you have blocks and blocks of tract homes.   But when you try to this in Big Bear, it doesn’t work.  To start with, you want an appraiser who has Geographic Competence for the area that he is working.  Bring up an appraiser from Moreno Valley who does not have Geographic Competence for Big Bear is a disaster waiting to happen. 

Geographic Competence means knowing the difference between a cabin in Sugarloaf and a cabin in Big Bear Lake.  Geographic Competence means you know the difference in value between a cabin in Erwin Lake and Big Bear City.  After all, they have the same zip code!  Every day I hear stories from Realtors in Big Bear telling me how the appraisal came in low on properties.  These are homes that the realtor has multiple comps to support the value of the listing.  These appraisals are coming in low because the appraiser doesn’t have Geographic Competence.

With the new rules put into place by the HVCC, it is no wonder that sellers are more inclined to take a cash offer for less than the listing price over a full price offer with a loan.

In closing I want to state this as simply as I can.  CASH IS KING in Big Bear!

Like so many people in Southern California, you have no equity in your home and you can no longer afford to keep it.  Your first option is to walk away from it and let the bank foreclose on you.  Your second option would be to deed the house back to the bank in lieu of foreclosure, or you can try and sell your house as a short sale. As the first two options are self explanatory, I thought I would discuss with you how the short sale process works and what to expect.

When you speak to a listing agent about the price that they want to place on your home, don’t get hung up on the difference between what you owe on the property and the price that is being placed on it as you put it up for sale.  Remember, you are upside down and the house is not worth what you owe on it.  What IS important is that the price that is being asked is a price that can be supported with current comparable sales.  In most cases, the bank won’t do much of anything without first presenting an offer.  So, pricing it right is the first step.

When the offer comes in, you as the seller will sign off on the purchase contract just as you would in a normal sale.  Once you, as the seller sign off on the purchase contract, you now have a legal contract, subject to bank approval for the sale of your house.   What happens if a better offer were to come in a month after you signed off on the first offer?  This does happen from time to time and in fact, it just happened to me.   As your Realtor, I have an obligation to present any and all offers to you, no matter when they come in.  Does this mean that you should cancel on the first offer and go with the second one?  The answer is NO!  You have a legally binding contract between you and the first buyer for the purchase of your home.  The best thing to do is to place the second offer in a back up position in the event that the bank doesn’t like the price offered on the first offer.

While the short sale process takes time, the process is not that complex.  Every bank is different as to what they want, but besides the offer, the bank will need a hardship letter from you.  The hardship letter must describe why keeping the house will be a hardship on you.  They will also want some additional financial documentation.  This is all gathered by your Realtor and sent in with the offer in what is called the Short Sale package.  Once the lender receives the Short Sale package, it is scanned in to the system and assigned to a negotiator.  While that doesn’t sound like much, there is normally two to three weeks time elapsed between the time you send the Short Sale package in and you get to speak to your negotiator.

Once the negotiator has been assigned to the Short Sale, the first thing that they are going to do after reviewing the paperwork is to find out what the actual value of the property is.  This is done by either hiring a Realtor to do a Brokers Price Opinion (BPO) or by hiring an appraiser.  This can easily take another two weeks to get completed.  Once this is complete, the negotiator can then determine if the price being offered is at or above the value of the house.

If the value of the house and the offer are very close, then the negotiator will approve the short sale and the escrow can then be opened.  I have had some short sales that I have been able to complete in eight weeks and I have had others that took well over three months.

If you plan to get involved in a Short Sale, as either a buyer or seller, you must be prepared for a long haul.  Another thing to remember if you plan to get involved in a Short Sale is to make sure that your Realtor has a lot of experience in Short Sales.  If you are looking to sell your home as a short sale, ask the Realtor that wants to list the property how many short sales that they have listed and sold.  If you are looking to buy a short sale, ask your agent how many short sales he has closed for his buyers.

I was reading an article on CNN Money today that stated that new homes sales have increased by 11% in June of this year.  According to the report put out by the Commerce Dept, this increase is the largest increase in new home sales in eight years.  The reasons given for this dramatic increase are buyers taking advantage of the lower prices, great interest rates and the federal tax credit for first time credit for first times.

Real Estate and the weather have one thing in common and that is they are both local.  The weather forecast in San Francisco is going to be a lot different than the weather in Big Bear Lake, CA.  The same goes for the Real Estate market.  The Real Estate market in Los Angeles or San Bernardino is going to be a lot different than the real estate market in Big Bear.  How were sales in your area for June of 2009?

Let’s take a look at what sales were like in the Big Bear Valley in June of 2009 and compare it to the June of 2008

In June of 2009, the Big Bear Valley saw an increase of 25% in home sales over the same time period in 2008.  Land sales were another story.  As you can see, there has been a 75% decrease in land sales for the same time period.  In the past, general contractors would buy the land with the intent of building a spec home on it and selling it for a profit.  With home values decreasing, we are selling homes at 2003 prices.  The Contractors who would normally be buying the land for the spec homes are not buying the land because it simply doesn’t pencil out any more.  As a result, land sales in Big Bear are far and few between. 

From a buyer stand point, I don’t think you can find a better time to buy Real Estate in Big Bear.  As I mentioned, home prices are down to 2003 levels and the interest rates are still historically low. 

If you have an interest in property in the Big Bear valley or have property and need to sell it, please give me a call.  You can always contact me by email at tony@tonycard.com, or you can call me toll free at 800 468-6020

Short Sale is a hot buzz phrase in today’s Big Bear Real Estate Market. There are sellers who decide that their home won’t sell at the price they had imagined.  They often start to wonder if they should do a Short Sale. A short sale doesn't always solve problems, but it most assuredly can create problems. Short sales are not the "saving grace" some home sellers would like to believe.

What is a Short Sale?

Whether in Big Bear or anywhere else in California, a short sale happens when the lender is shorted on a mortgage, meaning the lender accepts less than the total amount that is due. A perfect example would be If the mortgage on your cabin in Big Bear is $100,000, but your home is worth, say, $75,000. You are $25,000 short, not including closing costs such as real estate commissions, recording fees or title and escrow charges.

In 2009, I have noticed that the lenders are willing to work with Big Bear property owners on a short sale much more than they were in 2008.  I would bet that they have figured out that they stand to lose less money with the short sale in comaoprrison to the foreclosure.  

Here are sample steps of a short sale:

·         Seller signs a listing agreement with a real estate agent subject to selling as a short sale with third-party approval.

·         The agent finds a buyer who makes an offer for less than the amount of the mortgage.

·         Seller accepts the offer

·         Seller's lender accepts the buyer's purchase offer.

·         Transaction closes when the buyer delivers the funds, the lender releases the lien and the seller delivers the deed.

In fairy-tale land, everybody lives happily ever after. Except the seller. There are consequences.

Qualifications for a Short Sale

There is more to it that just deciding that you are going to sell your Big Bear home as a short sale.  You need to consider the following to determine whether you may qualify for a short sale. If you cannot answer yes to all four requirements, you may not qualify for a short sale.

The Home's Market Value Has Dropped.

You must have documented comparable sales that show a substantiate decrease in the value of the home. 

The Mortgage is in or Near Default Status.

It used to be that lenders would not consider a short sale if the payments were current, but that is no longer the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems at the pass.   While it is true that you don’t have to be in default to sell your home as a short sale, I have found that the banks are much more eager to work with me when my client is behind in his or her payments.

The Seller Has Fallen on Hard Times.

This part is very important.  In order to qualify for a short sale, there must be a true hardship if you were to continue to keep the property.  The seller must submit a letter of hardship that explains why the seller cannot pay the difference due upon sale, including why the seller has or will stop making the monthly payments.

Here are a few examples that do NOT constitute a hardship are:

1.   Bad purchase decisions. Blowing your paycheck on a home theater system with surround sound does not qualify as a hardship.

2.   Unhappy with the neighbors. Even if every home on your block has turned into a marijuana farm, that will not qualify as a hardship.

3.   Buying another home. The lender will not care if you have decided the home is no longer suitable for you or your family.

4.   Pregnancy. Increasing the size of your family or starting a family is not considered a hardship.

5.   Moving into an apartment. If you decide to move out of your home, that is a lifestyle decision and not a very good reason to abandon your home.

Below are just a few examples of a true hardship:

6.   Unemployment

7.   Divorce

8.   Medical emergency / sudden illness

9.   Bankruptcy

10.                            Death

The Seller Has No Assets

The lender will probably want to see a copy of the seller's tax returns and / or a financial statement. If the lender discovers assets, the lender may not grant the short sale because the lender will feel that the seller has the ability to pay the shorted difference. Sellers with assets may still be granted a short sale but could be required to pay back the shortfall.

For example, if the seller has cash in a savings account, owns other real estate, stocks, bonds or even IRA accounts, the lender will most likely determine that the seller has assets. However, the lender might discount the amount the seller is required to pay back.

The seller can’t profit when he sells his home as a short sale.

Short Sale Consequences

A short sale is dependent on a buyer making an offer to purchase. If you do not receive an offer, you will not qualify for a short sale. Therefore, pricing the property is very important at this point.  Even if you meet all the other criteria, yet you don’t price the property right, it is possible that no one will buy the short sale.  Pricing is very important but you must be able to support the price.  The lender must accept the buyer's offer.  If the lender doesn’t accept the short sale, then the deal will not take place.

·         Tax Consequences

If the lender agrees to the short sale, the lender may possess the right to issue you a 1099 for the shorted difference, due to a provision in the IRS code about debt forgiveness. Many situations are exempt from debt forgiveness, according to the Mortgage Forgiveness Debt Relief Act of 2007

You should speak to a real estate lawyer and a tax accountant to determine the amount of short sale tax consequences and whether you can afford to pay those taxes, if any.

·         Blemished Credit Report

A short sale will show up on your credit report. It's a pre-foreclosure that has been redeemed.  Short Sales affect credit ratings. While the damage to your credit report may not seem as significantly bad as a foreclosure to you, creditors may not make the distinction. Experts say the drop in your FICO score is identical to a foreclosure reporting.

Always seek legal counsel before attempting to pursue a short sale. A real estate agent cannot give you legal advice.

You come to Big Bear to buy a vacation home and take advantage of some of the great deals being offered on distressed properties.  The banks are offering some great deals on their REO listings and buyers are buying them as quickly as they are listed.  As a listing agent for the banks, it is not surprising to get multiple offers on the bank listings within the first 24 to 48 hours.

Let’s take a look at what happens once your Realtor tells you that you’re offer is being accepted by the bank.

 No matter how good of an offer you and your Realtor write, the bank is going to send you an addendum making changes to the original purchase contract.  This normally takes a few days to get once the bank has said that they are going to accept your offer.  This addendum comes over unsigned by the bank and you, the buyer are asked to sign it and return it to the Realtor as soon as possible.  Now that the listing agent has the original offer and the signed addendum, it is returned to the bank for the final signatures. 

How long does it take for the bank to send the signed documents back?

This is a good question and there is no set time frame.  Every deal is different and so are the banks.  Some banks have a supervisor there on site that is ready to sign off on the deal and get it returned within a day or two.  Other properties are owned by Fannie Mae and they can sometimes take a lot longer to get back.  The reason the Fannie Mae properties tend to take a lot longer to get back is because they send the paperwork out to the investor for signatures.  I’ve seen Fannie Mae listing paperwork get back in as little as 72 hours.  I’ve also seen one Fannie Mae deals take six weeks to get the paperwork back. 

How does the delay in this paperwork affect my time frames agreed to in the addendum?

While you have agreed to close dates and inspection time frames in your deal with the bank, the time frames don’t start until “Date of Acceptance”.  Date of acceptance is defined as the day that the bank signs off on the paperwork and returns it to the Realtor.  If the delay in the paperwork becomes a problem with the previously agreed upon time frames, extensions can be asked for and they are normally granted.

In closing, if you are buying a bank owned home in Big Bear, or anywhere else for that matter, the bank is in the driver’s seat.  You have two options.  You can work through the process, realizing that at times, it may be a bit difficult.  The other option is to buy a home that is not owned by the bank.

Just recently, I wrote an offer on a bank owned property in the Big Bear valley for a client of mine. When I first me these clients, they were already pre-approved and ready to move forward once they found the home that they wanted. Well, it didn't take long for my clients to find the perfect cabin and we sat down to write an offer.  One of the requirements from the bank that was offering the property for sale was that the potential buyer needed to be pre-qualified through the listing bank. My clients were not very happy with the idea of having to go through the pre-qualification process once again, especially as they were pre-approved for far more than they were looking to spend.  Can the bank really require you to pre-qualify with them before they'll look at the offer?  The answer is Yes!

I've been asked by a number of people if the banks can make you pre-qualify through their lender, even when you plan to use your lender of choice. The answer to this question is simply yes.  Not only can the bank ask you to pre-qualify with their lenders, a lot of them won't look at your offer unless you are pre qualified with them.  If you want to buy a bank owned home, you're going to learn very quickly that the bank is in the driver seat.  If you want to buy a bank owned property, be prepared to jump through hoops that you may feel are a little odd. 

Nine weeks ago I wrote an offer for a client of mine on a property in Big Bear that was being listed as a Short Sale.  At the time that I wrote this offer, I stressed to them that they are going to need to be patient.  Short Sales are known for being very time consuming.  I don’t think that agents stress that fact strongly enough because I see a lot of offers made on Short Sales, but they are not completed because the buyer gets tired of waiting and backs out of the deal.  My clients have been very patient and have not complained to me about the time that the Short Sale process is taking.  But I know that it has been frustrating for them.  Every Friday I would check in with the listing agent for an update, I would get the same answer.  That answer was that they are working on it.  When I submitted the offer for my clients, I made sure that there was a time frame on how long the bank had to respond.  I do this to make sure that my clients have an “out” if another property comes on the market that they like.

That is exactly what happened to my clients.  Two days ago another property came on the market that caught my client’s attention. This property was in a much better location and it is bank owned instead of a Short Sale.  As the offer on the Short Sale has been taking so long and there is no end in sight, my clients have asked me to make an offer on their behalf on the bank owned property. 

We now have offers out on the Short Sale and the bank owned property.  We will wait and see who responds first, the short sale or the bank owned.   

I know that the loss mitigation dept. of the banks is very busy right now, but they need to do a better job of processing the Short Sales. Buyers don’t mind waiting, but they don’t want to be left hanging for months.   With the bank owned properties continuing to change, the buyer never knows when the perfect property is going to become available.  The last thing that the buyer is going to want is to be locked in to a never ending contract on a Short Sale that isn’t going to go together.