SOLD! Pualani Estates Short Sale

Blog Update 12/10/12 – We closed on this transaction 12/5/12! See my blog post update to read more!

Pualani Estates’ resale market continues to be red-hot! As of July 25, 2012, there are 8 resale homes currently listed for sale. Of those 8 only 1 is currently available, the rest are in escrow!

Pualani Estates is a very popular single family home development by builder DR Horton in Kailua-Kona. Owners appreciate the central location, being in the Holualoa elementary school district, and the wonderful Pualani Estates community park!

Offering multiple floor plan and upgrade package options (central air, landscaping, appliance, security, flooring, etc) along with competitive price points, currently $300K-$430K, people LOVE Pualani Estates!

The developer is currently in the final, third phase of home building. The majority of resale homes we see coming to market are in the first two phases of development, and are typically short sale or bank owned properties. 

For example, I listed this short sale property in early July and within 21 days we had received multiple offers and put the home in escrow.

 75-6133 Haku Mele Street, MLS 255608, Offered at $352,000

This is the very well-kept 4bed/3bath,  Melia model home, that has a wonderful wrap lanai area with ocean views, central air, mature landscaping in place, and has additional storage area off the garage.

Currently we are in escrow, awaiting lien holder’s short sale approval.

Back up offers are being accepted, please contact me if you would like to arrange a viewing!

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Holualoa Short Sale – SOLD!

I love selling Holualoa real estate! I was raised in the beautiful town and live in the area currently. Over time, my property familiarity and the professional relationships I’ve developed have benefited many buyers and sellers.

I am happy to report  that  77-6128 B1 Mamalahoa Highway, closed recently!

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This short sale brought it all. The highs of multiple lien holder approval, and the lows that the bureaucratic short sale process can bring at times.

Along the journey, I put the property into escrow multiple times, and for one patient buyer, the dream came true. They secured a GREAT deal on a property, because of their patience and short sale preparedness.

The short sale process is changing dramatically right now as lenders are working to streamline their approval process.  As the listing agent of this property, I wanted to share topics of interest that were beneficial to the completion of our short sale . 

Proper Market Positioning

Different lenders are now establishing the list price of properties. One of Bank of America’s newer programs is their Preapproved Short Sale pricing. You and/or your listing agent contact Bank of America directly, and work with them to set the list price of the property. This is tremendously beneficial as it takes the guess-work out of what sales price the bank will accept. Check with your lender to see if this is something they offer. Be sure to emphasize that you want to hit the market competitive,  not overpriced!

Seller Financials

Be aware that the seller’s lender will require bank statements, retirement account information, tax returns, pay stubs along with any other financial documents that they see fit to examine. This is part of the process.

The sooner you can get these together for your agent to submit to your lender, the quicker your short sale will proceed.

Be prepared to update these documents as time goes by.

Buyer Preparation

As a purchaser, make sure you have a pre-approval letter from your lender certifying your purchasing ability. If  purchasing with cash, be prepared to submit “proof of funds”.  This can be a recent bank statement or letter from your financial institution certifying the funds are present and liquid. The listing agent will need either of these to submit the offer you present to the seller’s lender.

Realize that even as lenders work to expedite approvals, this transaction will take time. If you are in a rush to purchase, a short sale property may not be in your best interest.

Don’t forget, short sale properties do close. The better prepared all parties are, the more chance of a smooth and expeditious escrow!

Buyer Short Sale Tips: Preparing Yourself For Purchase

Short sales are a part of West Hawaii’s real estate inventory, and appear to be for the near future. There are a few ways you can prepare yourself before making an offer on a short sale that will improve your chances of securing that property.

Be financially prepared

Make sure you have spoken with your lender, know exactly what loan you are qualified for along with what documents and financial information you are going to need to qualify for that loan.

Your lender will be able to discuss what you can expect payments to be, the amount of down payment (if necessary) and exactly what price point your finances support.

You can request a pre-approval letter be issued to you, or you can wait until you have found the specific short sale property you intend to make an offer on. The seller’s lender will require a pre-approval letter to accompany your offer before they review it.

You want to be able to make a strong offer that you know can work for you financially. Valuable time is lost when people decide they like a short sale property, wait a few days to talk to their lender, see if they can get a loan, etc, etc. Meanwhile, that well priced short sale property you were interested in, is now under contract with another buyer, and also has an accepted back up offer.  I cannot stress enough how important this is. 

A large amount of cash on hand or earnest money down is not a necessity. When making an offer, a deposit of some kind is usually made as an act of  “good faith” by the buyer. This amount is individual to each transaction. There is no set norm, or minimum/maximum. Keep in mind, the larger the earnest money deposit, the more serious and vested the buyer seems,  however, you have no guarantee the short sale will be approved by the seller’s lender. You don’t want to unnecessarily over extend yourself. 

The more prepared you can be with your financing, the better.  

Don’t Make A Lowball Offer On the Property

The lender will have a good idea from multiple sources, as to what the relative value of the property is.  

The seller’s lender who will be approving the sale of the property will already have completed or will soon order a broker’s price opinion (BPO) on the property. This is a current market analysis provided by a licensed Realtor that gives the lender an opinion of value.

Along with that broker’s price opinion in some cases there may have already been an appraisal completed on the property by the lender.

In these buyer competitive times, you want to put your best offer forward, first. Making an outrageous offer, vastly different from what market conditions reflect is not to your benefit. 

The seller won’t accept your offer, another buyer will get the property, and you’ll continue looking. Be realistic. Make sure you have recent sale information for the neighborhood along with similar sale comparables to give you an idea of where a good offer point is. Your Realtor will be able to supply you with all of these facts.

On the chance that the seller does accept the below market value offer you have made, that contract will have to be approved by their lender.  After spending your valuable time waiting weeks or months for a short sale response, your original offer will almost certainly be countered at a higher price.  

 Patience is key

Short sales take time.

Once the purchase contract, seller financials and other necessary documents  are provided to the seller’s lender, the file is reviewed by the negotiator, loss mitigation department and investor(s) for approval.  These are all different steps in the process and accordingly, they take time.

If something is incorrect in the seller’s documents, or a document needs to be amended, re-signed or clarified the negotiator can put a delay on the file. This stops everything until the problem is addressed. Resending, refaxing, and resigning documents multiple times are things that do occur.  Banks have been overwhelmed with short sales, and they have struggled with to keep up with the volume.

On a positive note we are seeing much quicker short sale approval times. The key in all of this however, is the seller and their financial situation.

As a short sale buyer it is very important to know that the seller has their short sale packet ready to submit to their lender. You don’t want to be waiting for weeks as documents slowly trickle into the listing agent before everything heads off to the lender for sale approval. Before you write an offer have your Realtor inquire with the listing agent as to the seller’s short sale preparedness.  What you want to hear is  “seller has all their documents ready, we are just waiting for an offer to submit to the bank”.

As you wait for approval make sure your Realtor checks in periodically with the listing agent for updates as to where your are in the approval process.

While you can find value in short sale properties, make sure you don’t limit yourself in your property searches. There are traditional sellers on the market right now who realize they are in competition with short sale offerings and have priced themselves accordingly. Don’t get caught in the “I’m only getting a deal if I buy a short sale” mindset!

There is great opportunity in West Hawaii’s real estate market, let me help you find it!

Understanding Short Sales: Kailua-Kona Short Sale Information

Understanding Short Sales: Kailua-Kona Short Sale Information, Short Sale, Kailua Kona Short Sale, Kona Real Estate, Kailua Kona, Holualoa real estate,Holualoa, Hawaii Real EstateA short sale is a real estate transaction in which the lender agrees to accept less than what is owed.

For example: John Doe owes $400,000 on his mortgage, after discussing and listing his property with Marco, a buyer is produced at a $300,000 sales price. With lender approval, the sale is completed. The difference of what is owed vs what is paid by the new buyer is $100,000, hence the “short sale”. 

This difference in amount can be forgiven by the lender, or arrangements may be made for the seller to repay the difference. This a case specific decision, and can have tax consequences for the seller.

In all short sales, there must be a documented form of hardship on the seller’s behalf. This can be attributed to any number of things ranging from reduction in work hours, job loss, divorce, illness, etc that is affecting the seller’s ability to pay their mortgage. The lender will require this hardship to be outlined in detail in the form of a hardship letter.

Short sales are viewed favorably by sellers because there is less long-term damage to their credit as opposed to foreclosure. Also, lenders prefer short sales many times, as this is far less costly for them then going through the foreclosure process.

Navigating the short sale process can prove challenging as various lenders have different guidelines, requirements and lender specific forms to be filled out. Ideally, listing agents will have already been working with their sellers and the specific lender to accumulate necessary financial documents, etc that the lender requires before the property hits the market. 

After the buyer and seller come to terms, that agreed upon contract is sent off to the lender for their approval. The lender goes over the seller’s financials, short sale information packet, along with other pertinent information. The lender then presents that file to the investor and/or private mortgage insurance company (PMI) for their approval. If all agree to sales price, sale proceeds and terms, the lender will issue short sale approval!

Once approval is granted typically the buyer and seller have 45-60 days to complete the transaction.

Above all, patience is necessary. Institutions are overwhelmed with short sales these days as homeowners seek to avoid default. The above steps outlined can take anywhere from days to weeks, to sometimes months.  One of the key factors in the time a short sale takes is the seller’s preparedness and cooperation in providing their documentation.

Thankfully, as the process has gotten more streamlined, we are seeing quicker turn around times, which is great!

Currently I have three short sale properties in escrow, two of which I am the listing agent. Before you get involved in a short sale, be certain that you are working with a Realtor that has a firm grasp of the short sale process. In working towards sale approval, 80% of the work in a short sale transaction falls on the seller’s listing agent. You want to be certain the seller has their financial documents and short sale packet together and ready for submission, so their lender can approve the transaction!

I’ll be following up this blog with specific buyer and seller short sale tips on what and how one can successfully purchase or sell a short sale property, stay tuned!