Are Foreclosures on the Decline?

The latest statistics suggest that foreclosures are on the decline and short sales are on the rise. According to research from Moody’s Investors Service, in August 2009, short sales accounted for 8% of bank distressed property sales. As of mid 2011, short sales have jumped to more than 25%.  Meanwhile, the time it took for a borrower to go to foreclosure grew from an average 14 months in early 2009 to 24 months in mid 2011.

Why are short sales on the rise and foreclosures on the decline?

  1. Foreclosing Has Become a Challenge: Banks began stopping the foreclosure process in October 2010 in order to correct forged documents and mishandled foreclosure paperwork as part of the robo-signing scandal. Since then, new regulations from federal agencies and still ongoing negotiations between the state Attorney Generals have made foreclosing on property difficult.
  2. Short Sales Save Banks Money: Banks saved an average of 10% by opting to sell through a short sale over taking the property to foreclosure. Factors such as shorter time frames, reduced legal costs and foreclosure expenses as well as short sale buyers paying more than foreclosure buyers all contributed to the savings.

Short sales are still not a quick sale process however. The average time to complete a short sale transaction remains around 12 months. But for banks, this is far better than the alternative.

For borrowers, short sales can be a terrific alternative to foreclosure. The damage to a borrower’s FICO credit score is far less with a short sale (50 to 200 point drop) compared to a foreclosure (as much as 400 point plunge.) Borrowers can usually buy a new home within 1 to 2 years after a short sale whereas it can be a 5 to 6 year purchasing moratorium after a foreclosure. Plus, many borrowers claim that knowing that they will be selling their property through a short sale is far less stressful than the uncertainty of letting it go to foreclosure. (Although some borrowers would disagree and have opted to live for free as long as they can, trading the uncertainty of foreclosure with the money saving technique of not paying their mortgage.)

What do you think about all this?

Is HAFA Helping Short Sales?

Is the Treasury Department’s Home Affordable Foreclosure Alternatives (HAFA) program helping short sales? It was introduced to help borrowers who couldn’t qualify for the Home Affordable Modification Program (HEMP) complete a short sale (as well as expedite the process…which is an oxymoron in and of itself; the government helping private enterprise be more efficient, ha!).

Now, after 15 months, the $4.1 Billion program has disbursed $9.5 million and accounted for only 8,541 short sales. To put that in perspective, during that same time frame, nearly 500,000 short sales were completed across the country. Meaning, a whooping 0.01% of short sales were completed through the HAFA program.

Why so few HAFA short sales?[like-lock]

  1. Lender Lack of Participation: Lenders are not allowed to collect on loan balances when short sales are handled through the HAFA program.
  2. Borrower Lack of Participation: In order to qualify, borrowers must have lived in their home for the past 12 months (no investment properties), have documented and qualifying financial hardship (no strategic defaults), a first mortgage less than $729,750 obtained before January 1, 2009 (sorry California) as well as a host of other requirements.

Ironically, both Lenders and Borrowers stand to gain financially from HAFA short sales. Lenders receive $1,500 for participation in the program and borrowers can receive up to $3,000. A testament to it’s effectiveness…it’s having trouble paying people to participate!

The program is due to expire at the end of next year. Director of policy Laurie Maggiano says the “complex machine” of HAFA will take time to change, but that change is finally, “beginning to happen”.

What do you think?

Is this a good use of our tax dollars? Paying $4,500 for each completed short sale transaction?

Does it need policy reform, or should it be canceled all together?

Is HAFA helping with short sales?[/like-lock]

10 Ways to Be More Productive in Real Estate

Here are 10 ways to be more productive in real estate.  Most are very simple, yet all are extremely powerful when applied to daily life. May these hallmarks of efficiency help you close more deals, make you more money and allow you more freedom and free time:

1. Value Your Time
It’s cliche, but true, you can make more money, but you can’t make more time. Value your time. That means, don’t waste it…they’re not making more of it. Treat it like it’s the most valuable currency you have, because it is.

2. Run Your Day
Run your day, don’t let the day run you. Meaning, plan out your day and stick to your plan. Avoid letting little, unimportant tasks, eat up your precious time. Run your day.

3. Have a Schedule
Some real estate professionals, especially investors, have this desire to do what they want when they want each day. That’s the opposite of productive. Have a schedule and stick to it. If you want to wake up at 11AM each day, that’s fine, but have a schedule during your awake hours of how much time you are going to spend working, with family, etc.

4. Recharge Your Battery
At least one day per week, do not be at work (mentally or physically). Your mind and body need a day to recharge…it makes you more productive the other 6 days of the week. This can be especially difficult with real estate because real estate can be a 7 day a week business since the weekends are when most buyers and sellers are available. You must be diligent in following this or you risk being less productive the next 6 days. Your day of rest does not need to be on Sundays either, it can be any day, but it needs to be at least once a week.

5. Avoid Distractions
Distractions destroy real estate productivity. Set blocks of time each day whereby you check email and pick up incoming calls and set other times when you don’t. Certainly allow for the occasional emergency call but be aware how insidious distractions can be.

6. Prioritize
This is one of the biggest mistakes real estate professionals make; they don’t prioritize their actions. The night before, write down the list of the items that need to get done the following day and then prioritize them in order of completion, starting with the most money producing action first. If you never get to the other ones, oh well, at least you got to the actions that are going to get you paid. 20% of your actions produce 80% of your results. Always be adjusting your actions to the most money producing tasks first; do the 20%. And keep this in mind as well, the most uncomfortable conversations you need to have, are usually the most important, so don’t procrastinate uncomfortableness!

7. Get It Out of Your Head
Instead of trying to remember everything, get it out of your head and into a place where you can retrieve it. Contacts, notes, to-dos, everything needs to be written down, and by written, digitized so you have access to it anywhere. The more you get out of your head, the clearer you can think and the clearer you think, the more creative you are to finish tasks faster. We use ePartner for this, and also, have your daily plan typed into your smartphone so it’s easy to access and adjust.

8. Work with “Cool” People
Working with un-motivated sellers or the wrong team members can be a time vacuum, sucking your life away. Be very selective of your team (mortgage people, closing company, agents, contractors, etc) and only work with those who are solutions driven and don’t waste your time. These are “cool people” that “get it” and don’t have to be taught every little step.

9. Choose Your Deals Wisely
Although this does not apply to beginners, since they should just be getting “reps in” by working on any deals until they get over the fears of talking to people, getting contracts signed, managing deal flow, and the like; for the intermediate and advanced real estate professionals, heed this advice: choose your deals wisely. You may love short sale flips and hate rehabs. You may love rehabs but hate rentals. You may want to just wholesale junkers in the ghetto. You may want to just take on listings. Do what makes you the most money and is also the most enjoyable and then assign the other deals to someone else. We teach on all real estate styles for a reason…everyone is different! Beginners won’t know what they want to do yet until they experiment so for beginners, work with any motivated seller and then over time, it will become strikingly clear what you want to do and what you don’t want to do. Choose your deals wisely.

10. Get Your Life Priorities Straight
Your Family and your Physical Health is far more important than your Financial Health. Limited time is NOT an obstacle. In fact, it can be helpful. Studies have shown that humans will complete a task in the amount of time they have been given to finish it. It’s not how much time you have, it’s how you use that time. When your life priorities are in line, you will operate at maximum capacity and your working hours will be the most productive.

Apply the above 10 ways to be more productive in real estate.  and you’ll have made some dramatic strides towards making the best use of your time.

What do you do to be more productive?