A Complete Guide to Buying Foreclosures and Short Sales

1. A Complete Guide to Buying Foreclosures and Short Sales Presented By: www.ShortSales-Online.com Presenter: Beryl Gosney Contact Information: Phone: 425-344-2222 Info@berylgosney@aol.com

2. 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 Buyer’s Agent • A Complete Explanation of Short Sales • A Complete Explanation of Foreclosures • Wrap up and Take Aways

3. 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

4. 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, what’s next? • Becoming a home owner

5. Common Terms and Definitions • Get Approved for Financing • Income and Asset Documentation • Pay stubs / VOE / W2’s / 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

6. 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

7. 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

8. Common Terms and Definitions • Offer is Accepted, What’s 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!)

9. 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 – 24-48 hours • Record loan – Next day usually

10. Congratulations! You are a Home Owner • Once escrow has confirmation that your loan has recorded………..You get your Keys!

11. 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 • Seller’s Agent – Represents seller’s best interest • Buyer’s Agent – Represents buyer’s best interest • How a Real Estate Agent is Paid • Seller offers % of sales price to Agent • Seller’s Agent offers to split this commission with any Agent that bring buyer that results in the sale of the home

12. 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, email, cell phone, IM • Websites vs. Blogs • The social media phenomenon • Who are they as opposed to What they do

13. 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 • Don’t be afraid to expect a high level of service • You are not obligated to stay with one buyer’s agent – avoid Buyer’s Agent Contracts • Stick with an Agent that does a great job for you • Do not allow anyone else to write up offer

14. 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

15. 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

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

17. 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

18. 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

19. 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

20. Tips to Find the Best Deals and Make Strong Offers • Work with a buyer’s agent – Fiduciary duties require that your best interests are represented • EXCEPTION: Short Sale Seller’s 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

21. 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 it’s worth – Be aggressive if you like the home