Tempe Gardens HOA causes short sale to become foreclosure

When you do a lot of short sales, every now and then you are going to run into a situation where a foreclosure happens and there is not much more you could have done to prevent that. Luckily that does not happen much, but when it does we like to tell about it here because there is usually a lesson to be learned.

We had Tempe condo we took the listing on earlier this year. When we took the listing, the condo development, Tempe Gardens, was FHA approved. We accepted an offer that was an FHA offer.

When we got the approval the buyer started to go through their loan process and we discovered that the Tempe Gardens had allowed their FHA certification to expire just a couple weeks before we got our approval and we now had an issue where we needed to get it recertified.

Now this is not an impossible task. The lender was working with us and the buyer to get this thing closed and we believed that we could do it. We made the request for paperwork from the HOA board at Tempe Gardens and they told us to talk to their management company. So the lender went to the management company who took forever to respond. Finally after many requests the management company sent over documentation. The problem was, it was only partially the documentation requested and even some of the documents they sent were not complete.

The management company told us they had provided everything they had from the HOA board at Tempe Gardens. So we went back to the HOA board and of course they once again said said talk to the management company. After many weeks of back and forth with both organizations, and calls from the angry homeowner who had paid close to $200/mo to this HOA board over the last few years, the buyer realized it was not going to happen.

We had been informing the servicer all along what was going on, and they had even granted us an extension to allow time to complete the process. But after dozens of hours, there was nothing we could do and the servicer nor the investor would allow us another extension and this condo, even though receiving approval for a short sale, went to foreclosure.

What should be really frustrating to the homeowners in Tempe Gardens is this unit was going to sell for $75,000 as a short sale is going to end up selling for much less than that as an REO property. Shouldn’t the HOA be helping to increase property values?

So I guess the lesson learned is not only check if your condo development is FHA approved when you take a listing, find out when it is expiring and if they are planning on renewing it.

If you were a defendant would you have the prosecuting attorney represent you too?

If you were a defendant in a court case, would you hire the prosecuting attorney to represent you? Of course not. So why would you do the equivalent in real estate.

Dual agency is illegal in some states, and if it were up to me it would be illegal everywhere. How can one agent really represent and give the best advise to both sides of the transaction? Sure there are some good agents, some good friends of mine, who practice dual agency. I am not saying they are doing anything wrong, but I don’t think the consumers are really thinking about it.

I used to think dual agency in short sales was alright because really it was the buyer and the seller against the bank. But then I saw things go wrong. We do not, and will not practice dual agency. In a short sale there are many things that can go wrong for the seller with approvals, contributions required, deficiency language, all things that you need to make sure your agent is looking out for your best interest.

Just think of this scenario for a moment. You are considering short selling your home and interviewing agents, as you should. One of the agents comes up to you and says they work with an investor who will put an offer in on your house day one. You don’t need to worry about showing, you don’t need to worry about the buyer sticking around and you don’t need to worry about the house going to foreclosure because a buyer cannot be found.

Sounds great right?

now step back a moment and think about it some. This agent has this investor he works with. They probably have offers on dozens of houses and there is a good chance after the investor buys this house they will use the agent to list and sell the house. If there is a gray issue, who do you think the agent is really going to look out for the most. Do you think the agent is likely to do anything that may upset this investor who does dozens of deals with?

Now things may go smoothly, but in the end if I were short selling my house I would want someone I know was loyal to me.

We currently have three houses under contract where the current buyer came to us and asked us to write the offer. We declined and all three are currently represented by another agent. We could have taken the full commission, but we think it is more important to make sure without a doubt we are doing everything we can can for our client, the seller, to fully represent them.

Three biggest myths in todays Phoenix East Valley real estate market

http://www.youtube.com/watch?v=qn8KAUQFCWc

My partner Kristin LaVanway did a video about the Phoenix real estate market. This is a follow up video talking about the three biggest myths in today’s East Valley housing market.

Myth number 1: This is a buyers market. This one could not be further from the truth. With an active inventory of roughly two months, and no signs of growing, this is very much a seller’s market. If you are a buyer be ready to come with highest and best and do not be surprised if that full price offer is not accepted because you were beat out by three other offers, two of which were cash investors.

Myth number 2: Shadow inventory will drive prices down again. Yea, yea, yea. I can remember clearly the first time I heard about the tsunami of shadow inventory coming. Was over two years ago. While there has been a steady flood of homes hitting the market, in no way were we hit nor will we be hit with this shadow inventory. Even if there was a huge supply of houses, there are plenty of buyers out here who would be more than willing to snatch them up.

Myth number 3: Short sales are getting easier. Short sales are moving faster now in some cases because both the short sale agents and lenders have better systems in place, but in no way are they getting easier to get completed. Banks are starting to make more and more demands on the sellers, buyers and agents. Banks are fighting for every penny they can get, and in a way you cannot blame them. So while we are still getting over 85% of our short sales closed successfully, the banks are in no way making it easier to do.

What you hear on the national news does not always meet the reality of what is going on in Chandler, Gilbert or the rest of the Phoenix market. Remember, all real estate is local, and the real estate market is always changing.

Fannie Mae stubborn for no reason

East Valley Team member Dean Ouellette talks about how short sale deal almost dies dozens of times because of Fannie Mae.

If this short sale deal was a cat it would have been dead a long time ago, this had way more than nine lives. So many times we heard no on this deal and so many times Fannie Mae refused to help up. They fought us on many aspects of this deal for for months. In the end, they agreed with us, but had wasted hundreds of man hours.

Mythbusters: Short sales are getting easier

East Valley Team member Dean Ouellette talks about how short sales are not getting easier.

There is a common perception out there that short sales are getting easier. The truth is, while more short sales are getting completed, and some banks are now now a lot easier to work with than they were before, short sales are not getting easier. Banks and mostly investors are pushing back harder and saying no a lot more than they were 6-8 months ago.

Chandler weather, much like short sale success

East Valley Team member Dean Ouellette talks about how short sales are a lot like the great weather in Chandler Arizona.

The weather in Chandler Arizona is the best, sunny 330 days a year, but it is not perfect. Today it is raining and windy in Chandler which aggravates us, but really we need to keep it in perspective. Just like the weather, even with the best short sale agents things will not work out 100% of the time, but they will get short sales closed 80-90% of the time vs. the industry average of under 40%.