Tuesday, November 16, 2010

It Can Happen to Anyone...

Selling your home can certainly be a lesson in patience. We found this out the hard way this past week...

As a seasoned professional I have always worked to dot "i"s and cross "t"s and to look for and mitigate any red flags that come my way and may prevent my clients from closing on time. Of course I would do the same for myself. My "fallthrough" rate is extremely low compared to the average...usually only one to two each year.

After only a couple of months on the market and lots of daily, last-minute cleanings and showings, we had a couple of offers. The offer that we accepted seemed solid, dates were in place, their home was on the market but going under contract within the next few days and the buyers seemed to love the home. Inspections were immediately ordered since that is typically where you get most of your issues, the appraisal followed close behind....all was good. During this time, the conversations between us and the buyers were friendly and we exchanged information on measurements, systems and personal property that we would be willing to leave behind.

My husband, the consummate planner, rented two storage units and started the task of boxing and moving items so that the buyers could move some of their items in three days prior to closing. We felt like it would be a nice gesture so that they would not have to rent a storage unit for a 24-48 hour period if we could be out over the weekend.

I was in constant contact with the lender and buyer and all seemed to be moving smoothly until the last week. The friendly banter ended, no returned phone calls regarding curtain rods or pool furniture. You could tell in the tone of the buyers and the lender that something was amiss. Red flag flapped violently in the breeze...there was a storm a-brewing.

Without getting into the nuts and bolts of the lending process, the bottom line is this:

You shouldn't find out three days before your closing that the buyer can't secure a loan! We as agents are seeing this and several of us, personally experiencing this, more and more frequently. Not a proponent of additional regulation, this is certainly an instance where our elected officials could work with the regulators to flip the process on it's head. What would be the harm in a buyer not getting just pre-approved or approved with conditions, but actually approved for a loan, documents submitted, verified and signed off on by underwriters, before they ever set foot in the first house? Then the contingencies would be only based on satisfactory appraisal and final verification of employment. As it stands now, there are too many what-ifs and not enough confirmations.

No one should have their entire life boxed up weeks prior to an anticipated closing. The time and money spent to get to that point is unbelievable. The buyers walk away with several hundred dollars in inspection expenses and certainly don't have a home to move into, but the sellers are left with virtually nothing but "maybe" an earnest money deposit, an upside down home, storage building expenses and a healthy fear to go back on the market.

The upside is this, it has given me a renewed empathy for my sellers and a fire lit under me to work with our representatives to encourage the system of lending to be more proactive on the front side.

Finding buyers in this economy is certainly hard enough without everyone getting to the final hour and returning to square one.

Have you or someone you know gone through this recently? Could anything in your opinion been done to prevent the situation...post below so that we can pass these stories on to Washington!

Thursday, November 04, 2010

Foreclosure 101

Questions and comments swirl in the media, coffee shops and living rooms across America regarding short sales, foreclosures and how they work. You hear of folks living in their homes months, sometimes years after not making a payment. You hear of others who miss one payment and are never able to rebound. So what is the skinny on the foreclosure process?

*Missing one payment does not constitute foreclosure. It can take months or years from the first missed payment for the bank to repossess the home and make the borrower leave.

*According to the NC Commissioner of Banks, over half of foreclosure proceedings that start, actually are foreclosure sales.

*When a buyer misses a payment, the bank starts by sending threatening and ominous letters. These letters include notions of accelerating the loan balance, phone numbers of credit counselors, information for military service, etc.

*Sometime around the 90 day mark, the bank contacts a trustee. This trustee is supposed to make sure that everyone receives proper notice of the pending foreclosure and the proceedings to follow.

*Once notice is given, a date is set to establish a hearing. This usually takes place at the "courthouse"--most of the time in the Clerk of Courts office.

*Proof must be given at the hearing that there is a debt to collect and that all outlets have followed the proper guidelines to get to this point.

*Once the home is foreclosed on actual eviction can occur forcing the borrower to vacate the property. More and more often, borrowers are leaving their homes well before this process occurs.

*Because there are more "strategic defaults" (folks walking away from their homes because continuing to make payments doesn't make financial sense) we are finding more of these foreclosures in better condition than in times past.

*Foreclosed homes that are in good condition are becoming competitive with homes that are owner occupied listings, thus driving prices down and resulting in a vicious cycle of depreciating values.