Agent Profile
My job is service...service to you and your real estate transactions! How can you benefit from my 25 years of experience and expertise? What can I offer to make the process more productive?
* Current information on available housing...comparative and competitive market pricing and analysis
* Daily involvement in the local real estate marketplace.
* Thorough, comprehensive knowledge reflecting years of helping others complete their real estate business.
* Extensive network of professional resources to make the process as smooth as possible.
My commitment is to you! Being available to you...returning your calls...answering your questions...addressing your concerns...respecting your money...matching your timeline...meeting your expectations...helping accomplish your real estate goals!!
JANEESE JACKSON: 503-709-0802 or jj@janeesejackson.com
young song writer, Anica, sings an original composition: “Escape Reality”.
I’m sure we’re all tired of hearing about “Short-Sales” (attempting to negotiate with the existing lender to accept less than is owed on the property) and “Foreclosures” (the bank has taken ownership of the property) and we’d like to escape the reality of this present real estate market. However, short sales and foreclosures are heavily impacting values of Portland real estate (and across the country) and they surface in almost every real estate search at all price points! So, unfortunately we can’t ignore them. There is always some fact and some fiction that emanates from these unfortunate situations. My personal experience with short sales is that the banks are getting more difficult with which to negotiate in the SS process and foreclosures are typically very competitive situations, but if your offer prevails…it’s an easy close!
This is one of the better articles I’ve read of late from a client, lawyer and real estate professional. She now resides in Florida, the “eye of the storm” for short-sales and foreclosures, some might say! So, if you think you might be interested in pursuing purchasing either a short-sale or foreclosure OR you might be considering attempting a short-sale, this would be a very interesting, timely and informative article.
Cheryl Reynolds Linck is Vice President of Business Development/Corporate Counsel at Illustrated Properties Real Estate, Inc. and Broker at South Shore Properties where she oversees the Distressed Properties Sales department.
Rumor vs. Reality
EDUCATING BUYERS OF DISTRESSED PROPERTIES
By Cheryl Reynolds Linck, JD, GRI, CRS
There is no doubt that buyers are coming back into the marketplace in Florida in light of lower interest rates, reduced prices, and a large inventory of distressed properties (bank-owned or pre-foreclosure short sales). But, these buyers often have unrealistic expectations about purchasing distressed properties. It’s imperative that buyers and agents educate themselves about the reality of these transactions and dispel the rumors that could undermine the deal and even jeopardize the buyer-agent relationship.
RUMOR: Buyers are attracted to short sales (pre-foreclosure) and bank-owned (REO) properties because they believe they can “steal” them.
REALITY: A buyer can indeed purchase a distressed property for a great price today, but there are often hidden costs in time and money that go along with it. Prior to submitting an offer for a distressed property, the buyer should be given a disclosure that outlines exactly what is involved to complete the transaction. In addition, the agent needs to search the tax records and discuss the seller’s situation with the listing agent of a short sale to determine chances for success. If the listing agent is not forthcoming or is not experienced in selling distressed properties; or if there are multiple liens on the property and just one lender or lien holder refuses to negotiate or can’t be found; or the seller is not cooperative or just disappears, the chances of the deal closing are slim to none. The buyer needs to be told that these are the risks of making an offer on a distressed property.
RUMOR: Buyers (and their agents) think that the lenders and lien holders who encumber the property are parties to a Contract for Sale and Purchase of a short sale property.
REALITY: Only the buyer and seller are parties to the contract. Approval of the contract and purchase price by ALL of the lenders and lien holders is a contingency to the contract because their agreement to reduce, remove, transfer and/or forgive their liens on the property or against the seller are necessary to close the transaction and transfer clear title to the buyer.
Most buyers are impatient and have a hard time waiting for approval of their contract from the lenders and lien holders, which can sometimes take months. To speed things up, buyers often ask their agents to negotiate directly with the lenders and lien holders, or the buyer even tries to contact them directly. The agent must make it clear to the buyer that only the seller and his/her representative has the authority to negotiate with the lenders and lien holders.
RUMOR: It’s a good idea to submit a low-ball offer to the seller of a short sale property just “to get the ball rolling.”
REALITY: Banks and their asset managers are starting to wise up to this practice by delaying or refusing to approve a contract when the offered purchase price is less than 85-90% of the current market value as determined by recent comparable sales and appraisals. Agents on both sides of the transaction should advise their clients the same as if the transaction didn’t involve a distressed property: The Contract of Sale and Purchase should be between a bona fide qualified buyer who offers close to market value and deposits sufficient monies to show good faith, and a seller willing and able to accept such an offer and transfer good title subject to approval (not acceptance) by the seller’s lenders and lien holders. Anything less is a waste of everyone’s time and sets up unrealistic expectations.
RUMOR: There is no need for the seller of a short sale property to sign a Contract for Sale and Purchase in order to submit it to the lender and lien holders for approval.
REALITY: In order for a Contract for Sale and Purchase to be enforceable in Florida, it must be in writing and signed by all parties. Submitting a contract that is unsigned by the seller to the lenders and lien holders is pointless as they have no authority to sign the contract on behalf of the seller without the seller’s consent, and most lenders and lien holders won’t even look at an unsigned contract.
RUMOR: No earnest money deposit is required with an offer to purchase a property, and in a short sale, it’s OK for the deposit to be due after lender and lien holder approval.
REALITY: The buyer should deposit a sum substantial enough to prevent him/her from walking away from the contract, especially in a short sale situation where it could be months before the contract is approved. Collecting a deposit from the buyer is sound business practice in order to bind the buyer to the promises made in the Contract for Sale and Purchase, impress the seller, lender and lien holders that the offer is genuine and made in good faith and increase the chances of the agent earning a commission.
RUMOR: The seller is obligated to give the buyer of a primary Contract for Sale and Purchase (first buyer) notice and opportunity to renegotiate when a back-up contract is signed by the seller for a higher price.
REALITY: If there is no language in the primary contract that obligates the seller to give the first buyer an opportunity to negotiate better terms when a back-up contract is signed by the seller, then the seller can sign back-up contracts with other buyers and submit them all to the lenders and lien holders for approval without the first buyer knowing about it. This can cause a lot of problems with buyers so make sure the buyer will be notified if the seller signs a back-up contract. The IPRE Addendum gives the buyer the right to be notified in the event the seller signs a back-up contract for a higher price.
RUMOR: Buyers can make offers on multiple properties and cancel the ones they decide not to buy or are taking too long for approval.
REALITY: Buyers with substantial means can sign contracts to buy as many properties as they are willing and able to fund and close. Buyers can only cancel contracts when a contingency stated in the contract is not satisfied within the time period allowed. When an agent writes a contract, the time allowed for lender and lien holder approval should be no longer than the amount of time the buyer is willing to have their deposit tied up. This may conflict with the seller’s position to allow as much time for approval as possible.
RUMOR: Buyers should wait until after ALL lenders and lien holders have approved the contract before doing inspections or obtaining financing so they don’t incur any unnecessary expenses.
REALITY: While it seems reasonable from the buyer’s perspective to delay an inspection and applying for a mortgage, sellers who have good representation and lenders and lien holders who have their act together seldom approve a contract with contingencies that remain unsatisfied after lender and lien holder approval. When a buyer has the right to cancel a contract after lender and lien holder approval and actually does so, the seller has lost precious months to sell the property and avoid foreclosure. Plus, the lenders, lien holders and seller suffer from the probability that the value of the property has depreciated further during the time the buyer tied up the property. Lastly, many lenders are now charging the buyer a per diem charge until closing, which is an added expense to the buyer.
RUMOR: Bank owned properties (REO’s) are much easier to close than short sales transactions.
REALITY: Since the bank is actually the seller, it’s easier to negotiate a Contract for Sale and Purchase with the bank or its asset manager since market value has already been determined by an appraisal or broker’s price opinion. But, buyers of REO’s should be advised that they should make their very best offer up front as there are often multiple bids on these properties. Buyers should also obtain legal representation as agents are not licensed to 1) review and interpret the many documents that the bank/asset manager requires the buyer to sign, 2) require the asset manager to prove through a Power of Attorney that it has the right to sell the property for the title owner bank, or 3) give an opinion regarding possible title defects excepted in the title policy prior to closing.
RUMOR: Once the seller of a short sale signs a Contract for Sale and Purchase, and the buyer satisfies all contingencies, all the buyer has to do is wait for approval from the lenders and lien holders to close.
REALITY: The buyer needs to understand that the closing of a short sale is a moving target and the outcome is uncertain. The seller may decide to modify his/her loan and the deal will die from lack of lender and lien holder approval. If one or more lenders or lien holders doesn’t approve the contract, it may not close unless the buyer contributes additional money. A back-up contract may be signed by the seller and approved by the lender and lien holders without the buyer’s knowledge. The buyer may need to pay for utilities to be turned back on to preserve the property. If the contract price and lender’s appraisal or BPO are miles apart, the buyer may have to hire an appraiser to show that the contract price is appropriate. Sometimes the seller strips the property of fixtures, cabinets, and anything else of value or won’t move out. (Hint: the buyer should take photos of the interior and exterior of the property at time of contract to get the benefit of his/her bargain at closing.)
In conclusion, since sales of distressed properties are the “new normal,” every agent working with buyers of these properties should educate themselves and their buyers about the realities of completing these transactions. When it comes time to make an offer, the key to success is determining in advance the probable outcome of that specific transaction based on the agent’s research, and then disclosing it to the buyer so an informed decision whether or not to proceed can be made. Buyers will appreciate an agent who is thorough, keeps them informed at all times and discloses the reality of the situation up front. Then, if the deal doesn’t close, those buyers will remain loyal to that agent and another property can be found.
About the Author | Janeese Jackson
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