Thanks to Darin Persinger of Productivity Junkies, I was recently turned on to Dan Ariely’s principle, which he calls The Ikea Effect. You’ve been to Ikea before… haven’t you? Ikea is a successful Swedish manufacturer with a cutting-edge catalog and stores throughout the world. They offer reasonably priced furniture, but the key is that you must assemble it yourself. And… it is a commonly held belief that a doctoral degree is required to complete the assembly of many of the household products sold by Ikea.

Taking that thought a little bit further, have you ever gone on Craiglist to search for a piece of used furniture? If you have, then you have no doubt seen many assembled Ikea items overpriced for sale on Craigslist. And, that is where The Ikea Effect comes in. The theory, according to Ariely, is that “when people construct products themselves, from bookshelves to Build-a-Bears, they come to overvalue their (often poorly made) creations.”

Eureka! That’s why some home sellers believe that their property is worth thousands of dollars more than market value—because they built a deck themselves, installed brickwork on a Saturday, or constructed a built-in bookshelf.

However, the same theory can be applied to the behavior of real estate agents. Agents may spend hours and hours creating their own websites, postcards, or marketing materials only to over value the quality of those materials. Agents may do their own short sale negotiating or transaction coordinating only to later realize that the time spent was not worth the effort.

When considering where your real estate business is going in the remaining months of 2013, why not carefully consider what you do best and focus your time and your efforts on only those activities. In a recent meeting, renowned real estate trainer and motivator Brian Buffini said, “To grow your business, you need to take things off of your plate.” However, he said nothing about whether those plates should be stacked on a table purchased at Ikea

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Each and every week, there are things going on that impact the short sale business. Sometimes there are big changes to federal and state policies that impact short sale processing and the distressed property world. Other weeks, there is news about government programs for distressed borrowers.

Read below to learn about some of the interesting stuff that went on this week in the distressed property arena:

Short Sales and the Credit Report This article discusses some of the inaccurate credit reporting of the short sale as a foreclosure and how those grievous errors will really (do really) have a terrible impact on the future of housing. Moral: Check your credit report monthly, and submit disputes as needed.

Is it Worth Walking Away? The pros and cons of walking away from your home and/or participating in a short sale are outlined for the lay person in this well written USA Today article.

Don’t Quit Your Day Job Inspired by some comments made at the Short Sale Expo, this article discusses reasons why you should not yet give up on the short sale market as a way to make a living in the field of real estate.

There’s lots going on in the distressed property arena. And, if you are actively working with ‘distressed’ borrowers, it’s important to keep up with all of the changes in the industry. Sometimes that’s hard, which is why we’ve provided you with a weekly recap right here.

What Is the HAFA Program?

The Home Affordable Foreclosure Alternatives Program (HAFA) is a government program that provides short sale and deed-in-lieu of foreclosure options to certain qualified distressed homeowners. It is one way to help those homeowners to avoid foreclosure. HAFA is a program that if offered by most of the short sale lenders; they will qualify you once they determine whether the investor on the loan actually has agreed to participate in the program.

Watch this video for a brief overview of the HAFA program. Then, read below to learn the main benefits of the program for California residents.

The main benefits to the program for residents of California are relocation assistance and positive credit reporting. Other benefits (such as anti-deficiency language) are already available to California homeowners through other state laws and policies.

If a borrower is approved to participate in the HAFA program and the borrower still resides on the property, then HAFA will allow $3000 in relocation assistance at closing. Also, if the property is tenant occupied, then the tenant can receive the $3000 at closing. This relocation assistance is paid through the closing agent and is typically delivered within 24 hours of closing.

The other big benefit to residents of California is the positive credit reporting. As of the middle of 2012, the HAFA guidelines have been amended to state that those short sale sellers that close a HAFA transaction will have the credit reporting to the credit bureau as Account Status Code 13 (Paid or closed account/zero balance) or Account Status Code 65 (Paid in full/foreclosure was started), whichever is applicable.

Sellers considering listing their home for short sale always ask about the impact of the sale on their credit score. Should the seller continue to make mortgage payments? How do missed payments impact the credit score? Can you do a short sale and not miss payments? Credit scores, in general, are one of the great mysteries in life (almost like which came first–the chicken or the egg).

Here are some of the most common questions and answers with respect to short sales and credit scores:

If I participate in a short sale, how soon can I buy another home?

A short sale or foreclosure are both similar derogatory events on your credit score.  However, a short sale will have a lesser impact on your future ability to borrow than a foreclosure or deed-in-lieu of foreclosure.

If you do a deed-in-lieu of foreclosure (turning in the keys) you will have to wait 4 years to apply for a mortgage with restrictions up to 7 years  If you let your home go to foreclosure, you will have to wait 5 years with even more stringent borrowing terms.

How many points will I lose if I sell my home in a short sale?

There’s not any easy answer to this question. One seller recently lost a total of 35 points after his short sale, and he held three mortgages. At the same time, another seller lost 148 points.

There are two interesting aspects to the short sale that impact the credit. First off, late or missed payments impact your credit significantly. That is, the more payments you miss, the more your credit score will be impacted in a negative manner. However, the good news is that HAFA offers some mechanisms of positive credit reporting. HAFA guidelines now state that they will report Status Code 13 or Status Code 65, depending upon your unique short sale situation. These two status codes can impact your credit in a more positive manner.

Can I do a short sale without missing any payments?

In many cases, you can participate in a short sale without missing a single mortgage payment. However, there are some investors with loans serviced by the big banks that may have guidelines which state that you cannot do a short sale unless you have missed two payments. Be aware that no real estate agent should advise a seller to skip or delay a mortgage payment. The decision is a personal one, and should only be made by the short sale seller.

Issues of credit score usually arise at the short sale listing appointment. The answers to these common questions provide good food for thought and should help short sale sellers to be better prepared for issues that may arise on their future credit reports.

Each and every week, there are things going on that impact the short sale business. Sometimes there are big changes to federal and state policies that impact short sale processing and the distressed property world. Other weeks, there is news about government programs for distressed borrowers.

Read below to learn about some of the interesting stuff that went on this week in the distressed property arena:

How Mortgage Forgiveness Impacts Housing Inventory This CNBC article discusses principal reduction as a mechanism for improving the economy. Read the article and let us know if you buy in to the argument.

Mortgage Re-Defaults Will Keep Short Sale Agents Employed One statistic alone from this article just blew me away. I’m not going to spoil it. Go read the article and see the incredibly high loan modification re-default rate. Your jaw will drop to the floor.

4 Ways that an HOA Can Kill Your Deal If you hit the Short Sale Expeditor® blog regularly, then you are probably already well-versed in the perils and pitfalls of the HOA. If not, this article is a Must Read.

By the way, Short Sale Expeditor® was at the Short Sale Expo last weekend in Palm Desert, California. Short Sale Expeditor® Founder Melissa Zavala presented in a panel of amazing women who know just about everything there is to know about short sales and distressed properties. Next week, we will provide you with a whole bunch of cool new ideas that were presented at the conference!

There’s lots going on in the distressed property arena. And, if you are actively working with ‘distressed’ borrowers, it’s important to keep up with all of the changes in the industry. Sometimes that’s hard, which is why we’ve provided you with a weekly recap right here.

Short Sale Expeditor® just returned from the Short Sale Expo in Palm Desert, California this past weekend. Melissa Zavala, Broker and Short Sale Expeditor® was part of a panel of four top notch short sale experts that were assigned the task of speaking on the top 5 things to avoid when working a short sale transaction.

Here’s what some of the other gurus on the short sale panel had to say on the topic:

Top 5 Things to Avoid When Working Short Sales

1. Multiple Offers. Short sale lenders prefer to work with one purchase and sale agreement at a time. If the offer is not accepted or the buyer walks, you can submit a backup offer. Never submit multiple offers. Submitting multiple offers slows down the short sale process.
2. Incomplete short sale packages. In order to assure that your short sale is processed as quickly and efficiently as possible, then it is best to send a complete short sale package—even if you have to wait a few extra days for an additional pay stub or bank statement. When the short sale lender reviews the package, if it is complete, the lender can work towards a quicker decision on the file.
3. Fuzzy Documentation. Nowadays it is not uncommon to see contracts that are faint due to lots of trips through the fax machine or multiple scans during the process. Make sure that the contract you submit to the short sale lender is clean, clear, and easy to read.
4. HOA Liens. HOAs have become the latest beast of burden in short sale transactions. High lien amounts can hamper a closing as can an HOA balance sheet that does not appear solvent to the buyer’s lender. To avoid learning right before closing that your deal has gone south, learn about HOA assessments early and make sure that your buyer or seller can deal with any troubles in this area.
5. Unopened Mail. Just the other day, I heard about a short sale seller that had no idea that her foreclosure date is scheduled in 7 days. That’s probably because she ignored her mail. In order to assure the best possible scenario, it’s a good idea to address and open all mail as soon as you receive it. That way, if you see something problematic, you can address it quickly and efficiently.

With those 5 tips from national short sale experts under your belt, you should be able to see much more quick and efficient short sale closings. And, if you need any help in that department, please do not hesitate to contact your friends at Short Sale Expeditor®.

Short Sale Expeditor® just returned from some “west and welaxation” (think Elmer Fudd) at the Short Sale Expo in Palm Desert, California this past weekend. Melissa Zavala, Broker and Short Sale Expeditor® was part of a panel of four top notch short sale experts that were assigned the task of speaking on the Top 5 Ways to Ensure a Quicker Short Sale Closing.

Here’s what some of the other gurus on the short sale panel had to say on the topic.

Top 5 Ways to Ensure a Quicker Short Sale Closing

1. Collect all documents at the listing appointment. If you collect all the documents at the listing appointment, then you will have everything you need in order to “hit the ground running” and submit your package quickly and efficiently.
2. Discuss exit strategy with the seller. Some sellers know that there is nothing short about a short sale. That’s why it is good to confirm that when the approval letter(s) arrives, the seller has a plan to actually move from the property.
3. Pre-qualify the buyer. It’s a good idea to make sure that the buyer is qualified to purchase the property. If the buyer is obtaining an FHA or VA loan, will the short sale lender be willing to cooperate? That may be something to explore early on in the short sale process.
4. List the property at market value. Some short sale agents are under the impression that the subject property should be sold for the amount due on the loan(s). Always make sure to list the property for market value.
5. Obtain repair bids prior to submitting the short sale package. If the subject property has some serious defects that could impact value, it’s a good idea to obtain repair bids early and take lots of pictures. Short sale agents need to be able to demonstrate to the short sale lender why the property may be worth less than market value.

With those 5 tips from national short sale experts under your belt, you should be able to see much more quick and efficient short sale closings. And, if you need any help in that department, please do not hesitate to contact your friends at Short Sale Expeditor®.

photo credit

Each and every week, there are things going on that impact the short sale business. Sometimes there are big changes to federal and state policies that impact short sale processing and the distressed property world. Other weeks, there is news about government programs for distressed borrowers.

Read below to learn about some of the interesting stuff that went on this week in the distressed property arena:

Short Sales and Credit Reporting I’ve never heard of Roadfish, but this is a great article about short sales and credit reporting that recounts why certain credit reporting methods may “suck” for short sale sellers.

Attorney General Settlement Checks Come with a 1099 This is obviously making everyone pretty darn angry. Not only were some the victims of foreclosure faux pas, but to have to pay taxes to boot. Read this awesome Agent Genius article for more information.

Independent Foreclosure Review Checks Here’s some interesting information on those Independent Foreclosure Review checks that are currently in the mail. One guy wrote Short Sale Expeditor® and said that he got $125,000 for a house that was worth $30,000. Not everyone is sitting that pretty, unfortunately.

By the way, Short Sale Expeditor® is at the Short Sale Expo today in Palm Desert, California. Tomorrow, we’ll be presenting sandwiched in somewhere between reveille (you know what that is, right?) and the Millionaire Real Estate Agent. Hope to see your there!

There’s lots going on in the distressed property arena. And, if you are actively working with ‘distressed’ borrowers, it’s important to keep up with all of the changes in the industry. Sometimes that’s hard, which is why we’ve provided you with a weekly recap right here.