I recently closed a very interesting and educational short sale transaction on a property with what was believed to be Noah’s Ark in the backyard.  Although no pairs of long-necked giraffes or African elephants were actually spotted on the boat, this 50-foot long piece of driftwood was just part of this property’s entertaining story in which a pair of valuable lessons were learned that I think are worth sharing.

Let’s start with the boat….
How did this boat actually get into the backyard of this property?  Despite the boat having a makeshift trailer attached, the driveway was way too narrow to navigate and the boat had no chance of squeezing past the dilapidated house anyway.  Maybe it just came to rest there after last month’s heavy rains .  Anyway, the most interesting part of the story is how we got the boat out from the property.

Amgen (AMGN), the FORTUNE 1000 biotechnology/pharmaceutical company located in Thousand Oaks, California, has decided it would rather foreclose on its employees carrying a mortgage with Amgen than allow these employees to short sale their home. This from a company with a relocation incentive encouraging its employees to take a low-cost 20% second mortgage with Amgen when making a new home purchase.  It’s like Amgen developed an irresistible foreclosure drug for its own employees. Sickening.

Did I mention that Amgen was ranked #39 in FORTUNE magazine’s Top 100 Companies to Work for in 2009?  You’d think they would go out of their way to help one of their own modify their mortgage, keep their home, and ensure a happy and productive workforce.  But it gets worse…

You heard it correctly, so pinch yourself if you need to. Just a few days ago, the FHA waived the much dreaded, poorly understood 91-day seasoning requirement for flipping properties. Basically, this new waiver is designed to address some of the illiquidity in the residential housing market by allowing investors to purchase property and immediately resell it to FHA buyers without holding title for a minimum of 91 days.

But should real estate investors be shouting from the rooftops or is this just more hot air from the government’s housing think tank? Check out the news story on HUD’s website or download the 3-page waiver. But first let me share a few of my thoughts….

There’s some interesting developments
happening in Washington D.C. designed to encourage and incentivize lenders and homeowners to play nice in the short sale sandbox. This follows a new trend lead by Wachovia and some more entrepreneurial lenders who have taken it upon themselves to find better solutions to rid themselves of their bad loans.

For instance, I recently received a short sale approval letter from Wachovia that gave the homeowners $6,500 (1% of the purchase price) for selling their home.  Better yet, it didn’t have any effect on the net proceeds due Wachovia per my approved settlement.  That’s a win-win folks.  What are your thoughts?  More information can be found in the Wall Street Journal article below…..

The image to the right is a view from my office during the 2010 Rose Parade…

When I reflect back on 2009, I’m very grateful for what my business was able to accomplish this year: we helped countless families avoid foreclosure and get a fresh start on life; we turned distressed properties into dream homes for many first-time home buyers; we stabilized or increased the value of neighborhoods by facilitating short sales and preventing REO sales; and we helped realtors earn a lot of money in the process. We even got the “thumbs up” sign from the Mayor of Pasadena, Jared of Subway restaurant fame, the girl riding the flying pig on the Trader Joe’s float, and Ronald McDonald as they cruised by my office during the Rose Parade. So I know we must be doing something right!

It’s late at night and I’m battling a nagging cold
but thought I’d write a quick blurb about the frequently misused term “short sale approval” and hopefully free up my mind for some zzzz’s.

If you scroll through short sale listings in the MLS or talk to realtors about their active short sales, you’ll often read or hear the words “short sale approval”.  This term is generally used to mean the following: “You can buy this property for $X amount and close quickly because the lender has already approved an offer of $X amount but the buyer either walked away or couldn’t meet the lender’s terms.” Is this true? Can you really step in as a buyer and pick up the property quickly for the advertised amount? Let’s take a closer look at what’s really happening here…

“Location, location, location” is often
thought to be the number one (yet most overlooked) rule in real estate.  Buy in the wrong location and all the structural, design and layout changes you make won’t move the property.  Its value is very much tied to its location.  While an interesting and popular premise, it is a very shortsighted view of real estate and possibly only 1/3 accurate.

In today’s short sale and REO-driven housing market, it is unmistakably clear that you must consider “timing and circumstance” as equally important as the location in which the property is located.

The short answer is: 
It depends who you ask. Or so you’d think…

–Most REALTORS throw their hands up in the air and say, “Who knows? It all depends on how the lender is feeling that day.”
–Most SELLERS say, “My house is worth more than anything else on the market.”
–Most BUYERS see a deal to be had and tell their realtor, “Let’s throw a low-ball offer in there and see if we can get a steal”.
–Most APPRAISERS say, “Real estate is real estate.  By the way, how much am I getting paid for this appraisal?”

My opinion? To say a distressed property is of equal value to an equity property is like comparing a dime store ring pop to the Hope Diamond. Let me explain…

In the short sale world, there is very little that scares me anymore. I have faced and overcome so many seemingly impossible challenges and so-called “deal breakers” that I actually relish the opportunity to put on my creative problem-solving hat.

However, there is one word in the short sale vocabulary that should scare anyone: “recovery”.  When you hear that a lender has moved the short sale into its “recovery” department or into “recovery” status, it’s as if your doctor just walked into the room and told you that your short sale has an advanced form of cancer that has metastasized. Why?  Because the survival rate of your short sale probably just dropped to about 20-33% (if you know what you’re doing) or is most likely dead if you don’t.  But not to worry, I have some recovery indicators to help you spot these short sale files early on and some tips to help you save them when they appear doomed for foreclosure…

Most realtors firmly believe that submitting the highest offer to the lender yields the best chance of getting a short sale approved.  This couldn’t be further from the truth.

In a traditional sale of real estate, the highest and best offer usually gets the property.  Unfortunately, many realtors mistakenly apply this same logic when dealing with a lender who is less concerned with how much the bank is getting (offer price), and more interested in how much less they are losing (evaluating net sales proceeds of short sale against fair market value of property versus costs incurred if property becomes an REO).  It’s like trying to give the bank the nicest orange on the tree when all the bank wanted was someone to make them orange juice.