The Real Estate Boys: Boy, I don’t know how you guys do it but you seem to be ahead of the game.  Many weeks ago you wrote about funds for buying foreclosed homes in bulk from the large banks and a few weeks later I read about it in Time.  You both seem to have the pulse of the market — or at least you talk a good game!  So, what’s coming up for us amateurs to watch out for when buying or selling?  I enjoy your fun articles. Keep it up.

— Krystal Ball

Well, Krystal, that’s some right nice words you just said about us and we thank you for them.  It’s not easy being right once in a while.  So, you want to know the future of real estate?  Or, what are we in store for in the coming months?  I think we’ll attempt predicting what’s coming in the next few months rather than too far into the future.  We’ve gotten ourselves in a bit of trouble saying the market wouldn’t balloon in 2013.  Look how smart that comment was. 

Something about foreclosure sales has popped up recently in our office and we’re sure it will continue.  One of our office mates was representing a couple on a purchase of a new home (new for them).  About 10 days prior to closing on a nice sale for the Realtor, a lien was found by the lender that didn’t seem to be present when the lender ran the pre-approval credit report.  Seems this couple had a foreclosure in their not too distant past. Now, the couple had not hidden the foreclosure from their lender.  They were up front and the lender pre-approved them for purchasing a new home.  Buyers with short sales or foreclosures in their past, if it has been three or more years ago, may try and buy a home again. 

This young couple had been foreclosed upon four plus years ago and had worked very hard to clean up their credit.  Well, this lien that popped up was from the second mortgage that they had behind the “too big to fail” lender.  Now the second shows up with a lien of $40,000 and they want their money before they’ll remove the lien.  The interesting thing here is that the first Deed of Trust filed the foreclosure and got the house back.  It’s Larry and Lloyd’s understanding that once the first mortgage foreclosed on the house the second is just spilt buttermilk and goes away. 

The foreclosure process was brought about by the first mortgage and after foreclosure, the first lender now owns the property free of any liens.  At least that’s what we thought.  I was just informed that the selling agent and the buyers spoke with “too big to fail” bank and have worked out a payment plan.  The old lender was not going to give in and the couple wants to move on with their purchase.  We also are of the understanding that the “too big to fail” lenders a year or so ago started ramping up on office space and employees for the push to hit the old owners of short sales from a few years ago when they applied for loans to purchase.  Buyers and sellers beware out there, it’s a jungle.

The next little trick we just heard  was that again the “too big to fail” lenders are dragging their feet on short sales. Duh, that’s not news Larry.  Just hold your horses, Lloyd.  After months of tedious work by the listing agent, dealing with the short sale lender, the Realtor finally gets the approval letter he or she has been waiting to receive.  Once the approval letter is in hand  the sellers’ Realtor opens escrow and the buyers’ Realtor gets the buyers’ lender to begin the process of ordering the appraisal and preparing the loan documents for title.  The pest report is completed, the whole house inspection is done. The buyers’ excitement of finally getting a house to own builds.  This buyer has had their Realtor write 25 offers before this one was finally accepted.  After 25 rejections, don’t tell me they aren’t excited.  Then, all of a sudden the seller of the property gets a letter from their lender, whether it be from the actual lender or whomever services the loan, that the owner of the listed property needs to sign a new listing agreement with I-Serve or Auction.Com. One of those companies then takes the home that is already listed, has an accepted offer and is waiting to open an escrow if the silly “too big to fail” would take their finger out of their eye. 

The agent and the original listing agent and the seller then are pretty much out of the picture until the auction.  If the home gets an offer that is acceptable at auction, it goes to the bank for a look see and is approved or denied.  If it’s approved the buyer will have to place 5 percent up front, non-refundable, to pay the buyers’ commission to whichever auction house sold it.  Non-refundable folks!  The new buyers then have three weeks to get their loan in closing position or lose everything they’ve paid for in the transaction so far.  But if the auction offer is denied by the bank, the original offer via the original listing agent may be accepted.  There’s a lot more to this than we can write about in the space we are limited to here.  And we just learned about this folks. 

The rumor came from a very reputable agent in Stockton who told us they have the listing agreement from the auction company.  The point here is that the banks are changing the way real estate is sold every day.  No punches pulled here; they have changed real estate over the last six years by taking the ethics out of this business.  When dealing with the banks in a deal it’s their way or no way.  

— A little about us, Lloyd is a retired farmer of 27 years and a realtor for about 10 years.  Lloyd is an active member of the Central Valley Association of Realtors and sits on the CVAR Board of Directors.  Lloyd is a long time member of CVAR’s Master Club for his sales production.   

Larry has been involved in Turlock real estate for 30 years and has been a broker for almost 27 years.  He is also active in CVAR activities and is a past president of CVAR.  If you have questions please call Lloyd at 531-4853 or Larry at 484-4216.  E-mail questions for future columns to: lrblackman@earthlink.net or lndrumbeck@aol.com.