Santa Barbara Real Estate Voice » Short Sales

What Part of the Santa Barbara Real Estate Market Sees the Most Foreclosures and Short Sales?

kevinschmidtchen — Mon, 20 Jun 2011 02:58:57 +0000

Since the peak of our real estate market in 2007 and 2008 (Montecito until 2008), property values have fallen on average here in Santa Barbara around 35-38%. Certain unique homes have fallen somewhat less in value, while certainly other pockets of the market have fallen more in value upwards of around 40-45%.

Because of this reality, many people have unfortunately lost all their equity in their homes and have had to go the route of foreclosing on their homes or trying to sell their homes as short sales.

Often I am asked about distressed properties here in our town and depending on what you are looking for, you might be hard pressed to find them as they seem to exist mainly in certain price points.

What parts of the market have the most Foreclosures and / or Short Sales?

Over the last few years, the majority of our foreclosures and shorts sales have taken place with:

single family homes generally around the $350,000 to $800,000 price point
condos and town homes generally around the $190,000 to $550,000 price point

I would say that upwards of 80% of our distressed properties seem to fall within this criteria. We obviously have distressed sales across the board at all price points, but as you go higher in value, they are much less common.

What this definitely does not mean is that as you go up in value people are not in trouble. It is simply the reality that most of what we are seeing on the market as distressed properties are overwhelmingly in the lower end price points.

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For information on Real Estate here in Santa Barbara, Montecito and/or our surrounding areas, as well as any other aspects of life in our area, please don’t hesitate to contact Kevin Schmidtchen at Sotheby’s Int’l Realty.

Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

What are The Most Crucial Components when Buying a Short Sale or Foreclosure here in Goleta, Santa Barbara and Carpinteria?

kevinschmidtchen — Thu, 05 May 2011 23:49:14 +0000

The obvious lure from a buyer’s perspective of both short sales and REO (real estate owned) properties is the chance to get a property at a discounted price.

Here in Carpinteria, Goleta and Santa Barbara, this opportunity does exists, but not without its pitfalls. The best way to deal with these pitfalls is to get educated about the most common “issues/nightmares” that come with these deals. Although there are many factors to consider…the biggest for most tends to be TIME.

TIME - The most crucial asset we have in life. When dealing with both short sales and foreclosures here in the Santa Barbara area, time is of the essence.

When it comes to any type of distressed property, the transaction will most likely take anywhere from a few weeks to a few months (bank owned) longer than a normal sale. With the case of short sales, this can be 3-8 months longer…also unfortunately without even the guarantee that you will close on the property. The reasons for this are numerous from the extra signatures, to supervisor-level approvals, to apathy on the banks end as well as investor involvement required to get the deal done. Banks 100% do not have/show the same sense of urgency that individual home sellers do.

One of the biggest issues with this “time suck” is that if you are getting a loan, your terms are usually only good and your rate is usually only locked for 45 days.

The key for you if you go the route of looking to buy any distressed property is simply “Expectation Management”.

Other Key Factors seem to be:

Banks generally will not take “low ball” offers. Banks owe their shareholders and investors a duty to get as much as they can for these properties. Bank owned is not code for “I can get this at a fraction of what it is worth.” Banks will price homes at or just below the fair market value and if they do not sell they will slowly reduce the price, not take some far fetched low ball offer. You can and will waste a lot of time, spin a lot of wheels and lose out on a lot of properties making low ball offer after low ball offer on distressed homes.
Last minute cancellations or extensions. Distressed property transactions have an uncanny way of being delayed at the last minute or never going through at all. Things just happen and I could give numerous ludicrous examples.
The mystery of it all. When you submit an offer on a normal home, you are likely to know what the outcome will be within a day or two and sometimes even hours. If things happen to take longer there is usually a normal reason and you know of the reason. With REO’s and short sales, you live in a mystery sphere for sometime. Also, no amount of your agent calling, pleading, prodding or nudging will push things further along in getting you the information you need.
Double standards. In normal sales, both the buyer and the seller are obligated to meet various time lines and you will be informed of these by your agent. Disclosures delivered and returned on a certain date, home inspection and contingency removal on a certain date, loan completed on a certain date etc. With REO’s and short sales, buyers are often dismayed to find that while the bank has taken weeks or months to sign or handle its side of the deal, you will then be expected to handle many things on your end in just a few days. Also if it is not done properly and you have to go back to the bank, you essentially start over and cost yourself some more time and frustration.

These are just some points to keep in mind. In no way am I trying to persuade anyone either way on whether to buy or not to buy a distressed property. Information is key and the simple reality is that you as a buyer have to be patient and expect delays, frustrations etc. if you go the route of distressed properties.

Further Reading:

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Are you an Ideal Candidate for a Short Sale here in Goleta CA?

kevinschmidtchen — Tue, 08 Jun 2010 20:57:50 +0000

Tips to Avoiding Foreclosure: Who is the Ideal Candidate for a Short Sale?

The reality for people that are unfortunately facing foreclosure is not something that is taken lightly. The prospect of not just losing your home, but dealing with all the emotional and financial realities that come with it can be more more than overwhelming.

Fortunately, certain people may be in a position to avoid this legal, financial, and emotional turmoil by going the route of a short sale.

Do you qualify to obtain relief through a short sale of your home?

Here are some of the qualifications a bank is looking for when determining whether you might be able to go the short sale route and get relief from your loan obligations.

Keys to what the banks are looking for are people who:

Have lost their job and are unable to obtain comparable employment.
Have serious long-term medical conditions that impact their current financial and future financial situation.
Have experienced a true family hardship.
Are required to care for a relative that has moved into their home.
Have not refinanced their original purchase loan.

Before you go the route of foreclosure and hobble your credit, find out if you are a candidate for a short sale by contacting the bank and asking the above questions.

If you have further questions and are looking for more concrete answers, please feel free to contact me. I will be happy to assist you in guiding you through the best course to take for your personal situation.

Further Reading:

Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

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Basics of a Short Sale with Regards to Real Estate in Santa Barbara CA.

kevinschmidtchen — Mon, 24 May 2010 03:56:34 +0000

If you are in a financial position that you are behind on your mortgage payments or are simply considering not making these payments because the value of your home has dropped below the open market value, then you are most likely considering the potential option of a short sale of your home. If so, then most likely you are also wondering how the whole process exactly works and how it will unfold. There is no need to feel confused as most of the steps are very basic.

Deciding that it is best for you to sell your home and get “out from under your payments”
Getting in touch with a Santa Barbara Real Estate agent such as Kevin Schmidtchen that has true knowledge of the short sale process
Put your home on the market at a low enough price to encourage buyers to make an offer on your home
Once an offer is accepted by you the seller, it will then be sent to the bank for consideration
Bank will then assign a negotiator to your “file”
Bank obtains Broker Price Opinion (BPO)
Approval process takes place
Bank determines if they are going to sell the property at the offered price
Once a short sale receives approval by the bank, the property is in a normal escrow that will close in roughly 30 to 60 days

Note…This entire process can require anywhere from three to six months on average. During this time, feel confident that as a short sale specialist, I will communicate with you and walk you through every step of the process. The goal is to make the process for you the least stressful and hectic as possible and to help you avoid foreclosure.

Further Reading:

Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

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Tips to Avoiding Foreclosure Here in The Santa Barbara, Montecito, Goleta and Carpinteria Areas

kevinschmidtchen — Wed, 05 May 2010 19:22:56 +0000

As a Santa Barbara real estate agent, one of my main focuses is to keep people first. As I have grown in this business the last 9 years and the community as a whole, I have become more dedicated to my clients than ever before. A great example of this is my desire to help clients who have found themselves in a financially distressed situation with the possible loss of a home that they have worked so hard to earn.

In order to help, I have tried to learn as much as I can about the foreclosure and short sale process over the last 3 years. Through all my research, study and hands-on experience, I have obtained a vast amount of tools and knowledge regarding the overall process and programs offered by lenders to help homeowners (you) keep possession of their homes.

If you find yourself in a position where you are struggling to keep your home, please feel free to give me a call if you would like to talk about the processes and introduce you to various options you may have. I will help however I can.

If you unfortunately do end up in a situation where a short sale or foreclosure seems the likely course, I can also guide you through the lengthy and complex processes so that you will not find yourself in a place that is potentially worse off than the one in which you are currently in now.

The possibility of losing your home is a huge deal, especially to you. If you would like to work with a Santa Barbara real estate agent like myself who has the knowledge and compassion to be of help, please feel free to reach me at anytime.

Trying to Avoid Foreclosure?
Contact Kevin Schmidtchen Today (805) 689-6877 or kevinschmidtchen@yahoo.com

Further Reading:

Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

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The Consumer Bailout For Home Owners That Nobody Seems to Know About

kevinschmidtchen — Sat, 04 Oct 2008 16:20:56 +0000

Here is a great article I just came across that I wanted to pass on to potentially help some home owners that are struggling right now here locally in Santa Barbara as well as nationally.

I have copied and pasted below the first section of the article exacty as it appears on the RISMEDIA website.

“RISMEDIA, Oct. 1, 2008-As congress considers various bailout proposals for the financial system, there is a little known ‘bailout’ for home owners that has already been enacted into law, according to Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. Section 1403 of the new housing bill that was signed into law on July 30, 2008 (HR 3221) requires mortgage servicers to modify loans for homeowners and help them avoid foreclosure as long as three requirements are met:

1. Default on the mortgage either has already happened or is “reasonably foreseeable”

2. The home owner is living in the property as his or her primary residence

3. The lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure

“The fact is that this law is effective immediately, and most distressed home owners are simply not aware that they have this option,” Nicholas said. Borrowers make their monthly payments to mortgage servicers, and servicers keep a portion of the payment as their profit while sending the rest to the Wall Street investors who actually own the mortgage. “This law requires servicers to act in the best interest of all their investors and obligates them to modify your loan if you can afford the modified loan terms and if they are likely to recover more for their investors by working with you than by going all the way through the foreclosure process,” Nicholas said.”

Read Full Article

Further Reading:

For information on Santa Barbara Real Estate, Montecito Real Estate and/or our surrounding areas, as well as any other aspects of life in our area, please don’t hesitate to contact Kevin Schmidtchen at Sotheby’s Int’l Realty.

Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

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Are Short Sales a Good Path to Santa Barbara Real Estate Ownership?

kevinschmidtchen — Tue, 22 Apr 2008 16:04:07 +0000

At the beginning of 2008, I wrote a few articles about short sales and foreclosures in our local areas here in Santa Barbara, Goleta and Carpinteria. At that point, we had only seen a handful of foreclosures in our areas and most of these were in the entry level condo market from the $300,000 to $650,000 price point as well as track homes from the $590,000 to $800,000 price point. Short sales were also just starting to creep up in our local areas within the same market and price points.

Now in the last several weeks, we have started to see a definite increase in short sales with many sellers looking at short sales as a great opportunity to attempt to sell their home and many buyers looking at short sales as a great opportunity to get into the market here in the Santa Barbara area.

Here is the Catch: Not all short sales are actually going to be sold…in fact most won’t from what we are seeing. Ruth Simon and James Hagerty have written a very informative article in the Wall Street Journal talking about this fact.

I myself have now represented both buyers and sellers with short sales here in that last few months and here is what I can recommend:

1) You have to be patient. Start to finish can take 3-4 months or more and offer many headaches.

2) Look at what the seller currently owes on the property. If they currently owe a lot more than the asking price (for example $650,000 and they are trying to sell if for $550,000 and you write an offer for $500,000), most likely the investor that buys up the loan from the lender will not accept your offer.

3) There is a definite difference if the seller has only a 1st or a 1st and a 2nd on the property or has refinanced the property or owns the property as a second home / investment.

4) If you are currently an active buyer, continue to look at properties for sale and don’t just count on the one property that you have an offer in on if it is a short sale. You don’t want to pass up 6-10 weeks of properties coming on the market to then learn that your offer is not going to be accepted.

If you have any questions…I would be happy to talk and share what I know.

View: Current Inventory of Short Sales in Santa Barbara

Further Reading:

Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

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Any Great Short Sale Opportunities in Santa Barbara and Goleta CA?

kevinschmidtchen — Wed, 02 Apr 2008 16:41:05 +0000

Over the last 4-6 months we have started to see an increase in the amount of short sales and foreclosures here in the Santa Barbara area…especially in the Goleta and Carpinteria areas. Almost all of these have predominantly fallen into the price point from $250,000 to $800,000.

Question - Is a short sale a great opportunity to buy a home for cheaper than market value?

Answer – It can be if you have the time, patience and the wherewithal to deal with a lot of potential frustration, uncertainty and waiting?

What is a short sale? – A short sale is simply an unfortunate situation where the current owner of the property owes more on the loan than what the going market value for the property is or can be sold for. For a buyer, this can be an opportunity to purchase a home at a definite discount. But it is not as easy as it seems on the surface.

Steps taken for a short sale:

1) The owner has to first contact the lender to let them know that they have learned (via comps and/or their Realtor) that the market value for their property is less than what they owe on the property. The seller then lets the lender know that they can no longer make the payments on the home and thus need to sell the home as a short sale. Lenders are obviously not excited to hear this and will do all they can to encourage the owner to keep making the payments if possible. Only once the owner finally says that they will not be able to continue to make the payments and need to sell, is it then determined that the home will now be a short sale.

2) The owner now has to market the property for sale, but herein lies the Catch-22 and the start of the waiting and headaches. At what price do you market the property for sale and at what price do you “accept” an offer since no one knows the exact price the lender will accept. To officially go into escrow, the lender has to approve of the purchase and the terms of the contract. If you then call the lender to talk about this, they will give you absolutely no guidance. Here is where the headaches start to manifest….the cart before the horse.

The lender will only respond to you about pricing, terms and the sale of the property once you have:

an explanation letter and proof of the hardship of the situation of the owner
an “accepted” purchase contract
proof of the buyer’s ability to purchase the home
copy of escrow instructions
estimated closing costs
previous tax return slips from the seller
employment paychecks from the seller
copy of a TDS
past bank statements and potentially several other documents from the seller

And here is where the headaches continue. Once you have all this documentation you have to fax it into the lender. There is still no point person for the entire transaction. Just fax it in to the number given and hope all goes well. The waiting now builds. After about 1 week you will most likely get a call from someone at the bank who lets you know that they have received all the correct documents that they need and a negotiator has been assigned to your case. Say thank you if this happens. If they don’t have all the correct documentation, one missing signature etc., you then have to obviously get this to them and then again wait for several days for a response. Finally they have everything and the real wait begins.

Over the last 6-10 months, the amount of short sales and foreclosures has increased so drastically for the lenders that it can take 5-9 weeks to get an accepted offer. Usually the listing agent will be called within 2 weeks after submitting all documentation to simply be notified that the case is progressing and a negotiator will call you “soon”. Finally after around 3-5 weeks they will send out an appraiser to do an official appraisal. This then will take another 1-2 weeks at least. Once the lender then determines that the appraisal is OK and the price and terms that the seller has “accepted” is OK, the lender still has to get approval from the investors who will be buying the loan. The investors ultimately determine whether the price and terms are acceptable and whether you now officially go into escrow. If they do not accept the terms then they will counter the buyer and you go from there.

Note* – During this entire 5-9 week period of waiting, any other offer(s) can be submitted at anytime and the bank will look at these. The potential buyers have no idea of whether their offer is acceptable or not, or whether one buyer has written only $1,000 higher than the other. The banks then have no obligation to accept either offer, or to counter one offer vs. the other.

If you do get your offer accepted after a general 5-9 weeks of waiting, then you have roughly a normal 30-45 days escrow to close on the property. And…the property is sold as is. Hopefully now you will not discover during a home inspection any repairs that are needed that are not acceptable to you based on your offer. Additionally, the buyer will have to stay in contact with their lender during this time to make sure that the loan they were “getting” is still a go. Most lenders can only lock a rate for 30-45 days and so your loan situation might change during this entire waiting period.

So…yes, if all does go well and you can deal with the waiting and potential headaches, you most likely will get an accepted offer at somewhat below market value.

View: Current Inventory of Short Sales in Santa Barbara CA

Further Reading:

Thank you for reading. I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts.

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