If you ask an average homeowner, most could not explain how the foreclosure process and timeline work. Sadly, there are also a number of Real Estate Agents who are just as misinformed. So I’m here to clear the air.
Given the number of foreclosures across the nation, it’s important to understand the timeline and sequence of events. Knowing your timeframes will help homeowners avoid the foreclosure trap. Here in California, for example, we have the highest number of foreclosures in the United States. Between January and June 30, 2010, California bore witness to approximately 340,000 foreclosures. That’s just foreclosures, folks. We haven’t even tapped into the Short Sale numbers, which run upwards of 50%, 60%, 70% of available inventory and higher depending on your neck of the woods.
Foreclosure just does not need to happen, and you can help by passing the information below to your family and friends.
FORECOSURE TIMELINE
Day 1: Notice of Default (NOD) Recorded. The official clock has started ticking and the countdown to foreclosure has begun. Homeowner enters the “redemption period” and has 90 days to bring loan up to date and out of default, including any penalties and fees. Homeowners will receive notification of NOD filing by mail. Always open correspondence from your mortgage provider.
Day 91: Notice of Trustee Sale (NOTS) is posted. This ends the redemption period and trustee sale date is set.
Day 112: Trustee Sale (TS) can be held 21 days after NOTS is posted. Property is sold to highest bidder at public auction.
Basically, in approximately 112 days (or less than four months) the home can be lost to foreclosure. In California, the estimated foreclosure timeline is a minimum of 120 days.
Now, I know what you are thinking. “So what! My neighbors house hasn’t been foreclosed upon and they’ve been trying to sell it through Short Sale for almost 2 years now. Banks just don’t follow that. And they’ve been living there for free.” We have all heard the stories and know how NODs aren’t always filed and there are delays once it’s been filed, etc.
While, yes, that’s true in a number of cases what most forget is postponement of the Trustee’s Sale DOES NOT STOP the foreclosure timeline. Given I’m not a lawyer and don’t know case law by hand, I want you to really digest that statement:
Postponement of the Trustee’s Sale DOES NOT STOP the foreclosure timeline.
I’m sure you can only imagine the problems homeowners are facing not realizing this piece of the puzzle. The timeline does not stop folks. Which means even though you have received postponements due to short sale or loan modification, once these dates have been reached your home can be foreclosed upon in a nanosecond. The banks can foreclose your property in an instant and the law is behind them.
For more information on laws that govern California Foreclosure, look up CA Civil Code 2924gf and 2923.5
So you’ve decided it’s time to sell your home. It’s a straight up sale, no short sale worries, etc. You have equity and it is time to either move up, or move down, or move away. Whatever the reason, you want to sell your home.
Now, I understand that you have all the modern upgrades. Perhaps a swimming pool, a nicely manicured landscape, large backyard, custom moldings, etc. And you tell me because of that, your home should sell for mmmm….$30-50K ABOVE what’s currently selling in your neighborhood. Stop right there…
I know, your house is beautiful and believe me, I want to sell it for you. But here are some straight up facts that we must hash out beforehand: When it comes to selling your home, focus on that which you can control, not that which you can’t.
You CAN control: The price at which you want to list your house.
You CAN’T control: The price that will be offered to you by a potential buyer.
You also CAN’T control:
- Market conditions and the Competition
- Interest rates
- The location of your property
- When the perfect buyer will show up
Let’s talk about these items in detail…
Market Conditions and the Competition
As you may know, the real estate market has taken a dramatic shift in the past few years. Five years ago property rates were climbing as high as 50% per year before it all came crashing down a few years later. Home prices (including yours) have declined, and that’s the reality. Even though news and realtor reports state claims of a ‘home inventory shortage’, it doesn’t necessarily mean a total seller’s market. You are now competing with short sales and bank-owned properties as well as other sellers who, like you, just wish to sell and find another place to live. Even though short sale and bank-owned homes are listed at Fair Market Value (FMV), their condition still dictates their final appraisal value. They are still considered comparable properties as they are the ones that have actually sold in your neighborhood, and there is a huge difference between what homes may be listed at, and what they actually sell for.
Interest Rates
Fortunately as of this writing, interest rates are at historic lows. Also, most buyers who have been pre-qualified by a lender are REALLY pre-qualified, which can be good news for you. An offer that comes in from a qualified buyer has the best chance of success and sale. That being said, we do not have control over interest rates and any number of national financial or economic issues can change that at a moment’s notice. Remember that the higher the interest rate, the less dollar amount the potential buyer can qualify for.
The Location of Your Property
Perhaps when you bought your home it was located in a lovely, quiet neighborhood that backed up to a wonderful meadow complete with wildflowers, bunnies and green hills. A few years later, developers and city planners build a road behind your home and a new housing tract goes up. Now your idyllic dreamhome backs up to another neighborhood and traffic.
OR…Maybe you bought that home on the street corner because of its lovely swimming pool, huge backyard and modern, upgraded interior AND…because it practically a STEAL! Now, consider that fact when you now have to sell your home that might not be as appealing from a location point-of-view.
When the Perfect Buyer Shows Up
Face it. When I list your home you will undoubtedly have a lot of people walking through your home, and you won’t know who that one perfect buyer is until an offer has been submitted. However, if your home is priced out of the market, you’ll never see that offer. A lot of times if your home is overpriced, other agents will show your home to compare it to the one down the street (possibly their listing) that’s more reasonably priced.
So what is the rule when pricing your home? Now, this goes against most sellers’ thinking, but the rule is to actually price it LOWER than your competition. Why? Here are some more factors affecting the price of your home:
- Availability
- Timing (AKA Your motivation to sell your home quickly)
- The condition of your home
- Terms
- Warranty
- Amenities
- Lot size, trees, views, privacy, etc.
The importance of pricing your home competitively cannot be stressed enough. In most cases, your first offer may be your best offer, and pricing misconceptions occur because sellers try to price their home based on any of the following:
- The amount of money you paid for the home.
- The amount of money you invested in updating your home.
- The amount of money you want or need to buy a new home.
- The amount of money you want or need to rebuild this home.
- What you neighbor told you he sold his home for.
- What another agent tells you he can sell your home for.
With that, the longer your home sits on the market, the less you may net from the sale of your home. Below is a graph that details how home pricing affects buyer interest:
Note that the more competitively you price your home, the more potential buyers you will have coming through your door.
More potential buyers=more potential offers=more potential counter offers from you=potentially higher sale price.
Just as the principle of value drives any other marketplace, the same principle applies in real estate. Listing your home above current market value WILL NOT get you a valid buyer…period!
I know, it sounds harsh. It sounds like obviously I might not be telling you what you want to hear. But my job is to get you the best price for your home through my education, experience and expertise; and not by providing you lip service or just taking your listing at any price just to plop a sign in your yard and sell everyone else’s home but yours (believe me, there are realtors out there who do this). These are the real facts and they WILL get your home sold fast! Trust me, I’m a professional! Now let’s list your home! Call me at 661.209.7447, or click here for your FREE Comparable Market Analysis of your home. I’ll give you the real deal and get your home sold FAST!
Lisa B. Kaul is a licensed real estate agent serving the Southern California communities of Santa Clarita, the San Fernando Valley, the Antelope Valley, Simi Valley and the Conejo Valley. Lisa also has a vast network of thousands of realtors who are ready to help you anywhere in the U.S.A. For more information, go to http://KaulGirl.com. For more information on avoiding foreclosures, go to http://Kaul4Homes.com
It’s been said time and again that “It’s all about Relationships” when it comes to your real estate transaction. As simple as that statement may seem, it’s also the most forgotten — especially when dealing with (dare I say it?) T H E B A N K S!
So, you are getting a Loan Modification and the only way to get your point across is to cuss and yell at your servicer. (ding, ding) Wrong Answer. When trying to sell your home through a Short Sale and your Agent calls with information from The Bank, do you start plotting your Agent’s and The Bank’s demise? Um, No! Or perhaps while trying to Avoid Foreclosure, you decide to avoid The Bank all-together!? As Dr. Phil would say: How’s that working for ya? I’m guessing it’s not. You are more frustrated than ever — just ready to give up and walk. It’s just not worth the hassle, you might say.
It’s time to take a step back. Breathe. Reassess your relationship with The Bank. Evaluate your expectations. Many have high hopes of being saved but very few understand the reality. Few understand The Bank.
Let’s look at a few ways we can help make our relationship with The Bank better, easier and get one step closer to Avoiding Foreclosure:
1. ALWAYS REMEMBER your relationship with your lender.
* It is not the bank’s responsibility to protect your interests.
* The bank is not designed to save you money.
* The banks have no legal duty to actually approve you for a loan modification or short sale.
* The banks have no legal duty to postpone your foreclosure while you are in a loan mod review process (unless you get it in writing).
* Do not rely on the bank to look out for your best interest.
2. Promptly open AND read all your mail involving your property … especially if it’s from your lender!
3. If you don’t understand the bank’s correspondence, seek immediate professional assistance (with emphasis on IMMEDIATE).
* However, don’t rely completely upon others to think and act for you.
* If you are working with a servicer immediately forward all correspondence to your service provider.
4. Carefully review anything you sign with your lender, to include loan workout agreements (forbearance/trial payment periods).
5. Document each and every conversation you have with your banking institution.
* Write down day, time, name, number, ID numbers, extensions, etc.
* Take detailed notes
6. Keep in constant communication with your lender and service provider.
* Noncommunication, like in any relationship, is a killer.
Lisa B. Kaul is a licensed real estate agent serving the Southern California communities of Santa Clarita, the San Fernando Valley, the Antelope Valley, Simi Valley and the Conejo Valley. Lisa also has a vast network of thousands of realtors who are ready to help you anywhere in the U.S.A. For more information, go to http://KaulGirl.com. For more information on avoiding foreclosures, go to http://Kaul4Homes.com
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