Right now some of the top banks are testing these so called Short Sale Incentive programs in different states to see what the response is, and to see if they can branch out in more states nationally. Here are some of the details for these programs:

•JPMorgan Chase went national with short-sale incentive offers last year, paying up to $35,000 in some cases.

•Bank of America is testing incentives from $5,000 to $25,000 in Florida to see if they should be expanded to more states. The Florida program began last fall, spokesman Richard Simon says.

•Wells Fargo's incentive offers range from less than $3,000 to $20,000, spokesman James Hines says.

(These examples are directly from the article By Julie Schmit, USA TODAY)

I've also heard of certain cases in Southern California from fellow Short Sale Specialists, that banks were giving large sums of money to their clients to conduct and complete the short sale process. It's been very sporadic as far as which homeowners are offered these incentives and for how much. Yet the fact that even on a small scale this is taking place, is telling me that lenders DO NOT want to go through the foreclosure process as it can be more costly than the short sale process.

In our industry it's a known fact that foreclosures will costs banks more money and time than a short sale. For example, Freddie Mac at one point said that a foreclosure costs on average $60,000 for a lender. There are various factors involved that increase or decrease the cost of a foreclosure for any bank, yet on average it's still more than the short sale process.

This is a main reason why I know this is a smart move on behalf of the lenders to offer these incentives from $3,000-$35,000 because it's less than the cost of a foreclosure for them!

Yet, will this work in California and our local Orange County Real Estate Market both for the lenders and the homeowners?

Of course it will work for the homeowners! For the majority of homeowners who are contemplating the short sale process, it's because they are in some sort of financial hardship that holds them back from making there mortgage payments on time and consistently. So if they heard of a program that offers them a $3,000-$35,000 to short sale there home, wouldn't you think that it would easily lead them to put there home on the market ASAP as a short sale?

But, what about the lender? See... in Florida for example over 50% of the loans that are in foreclosure are over 2 years delinquent in payments! This is because foreclosures in the state of Florida go through the courts, which can delay the process.

But in Calfornia, a Non-Judicial Foreclosure is the most common type of foreclosure, and this does not require court approval to complete. Which means that a lender, from start to finish and per the legal guidelines, can foreclose on a homeowner within 150-170 days from the initial delinquency.

To sum it up, on the average, I don't believe that lenders will see serious reason to provide these incentive programs in Orange County or anywhere in California.

Do you agree with me on this or do you think that lenders will see reason?

Option 1: Irvine, CA Condo

• Market Value for Rent: $1,700/Month
• $328/Month are the HOA Dues
• Property tax rate is 1.04%/year

205 Stanford Ct 5, Irvine, CA 92612 (MLS # S685548)

Lovely carriage unit over its own garage. Lots of light; walk to UCI and University HS; shops and restaurants. Easy drive to John Wayne Airport. Lowest price in the Princetons.

Property Type(s): Condominium, Residential

Last Updated	2/16/2012	Tract	Princeton Townhomes (CP)
Year Built	1985	Community	University Town Center
Garage Spaces	1.0	County	Orange
Total Parking	3	Walk Score ®	63

Schools

Additional Details

Features

Location

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Janet Moon DRE# 01782554, Coldwell Banker Co-Listed with Diane Miller, Coldwell Banker

(view all details for MLS #S685548)

Option 2: Lake Forest, CA House

• Market Value for Rent: $2,200/Month
• $0/Month are the HOA Dues
• Property tax rate is 1.03%/year

24511 Highpine Rd, Lake Forest, CA 92630 (MLS # S637859)

Three Bed Two Bath Large yard room for boat on the side or RV parking Lots of room to grow.

Property Type(s): Single Family, Residential

Last Updated	2/15/2012	Tract	Laguna North (LN)
Year Built	1965	Community	Lake Forest South
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	82

Schools

Additional Details

Features

Location

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Dale Schrieber DRE# 01249265, Century 21 Award

(view all details for MLS #S637859)

So after reading the details of each property, which

would you buy? Place your comments below!

• The three basic components of your purchase offer are price, terms and contingencies.
• Price is the dollar amount you are approved for, willing and able to pay.
• Terms cover the other financial and timing factors that will be included in the offer.
• Contingencies are clauses that let you out of the deal if the house has a problem that didn't exist or which you weren't aware of when you went under contract. They specify any event that will need to take place in order for you to fulfill the contract.

1. To get the best deal you can
2. To get the house

• Give to get. By holding a hard line early, you can make it seem as if you care about certain terms that don’t really mean that much to you (remember that list?). Then you can let the seller have his or her way on those terms in exchange for other concessions.
• Focus on issues you can solve. If in each round of negotiation you focus on what you can solve rather than what you can’t, you can build up momentum and goodwill and make big issues seem smaller.
• Always ask for a trade off.
• Taper your concessions. Don’t compromise the same amount every time, make your concessions smaller and smaller.
• Never offer to split the difference. Let the seller make that offer. THEN offer to split the difference between what they’ve just conceded to and your original offer.
• Never allow the negotiation to be narrowed down to a single issue. There is always a winner and a loser in a single-issue negotiation. If things have gotten to this point, introduce more issues!
• Don’t assume that price is the only issue. Your seller may be more interested in a specific closing date or in some other issue.

Option 1: Laguna Niguel, CA Estate

31681 Isle Vis, Laguna Niguel, CA 92677 (MLS # L37112)

Gorgeous Custom Estate in the prime, upper area of the prestigious guard-gated community of Monarch Point. This beautiful, fully remodeled home is an entertainer`s dream! You and your guests will be treated to stunning unobstructed ocean and city lights views from both floors. Feast in the gourmet kitchen with built-in Sub-Zero refrigerator and wine cooler. View the latest movies in the spacious theatre. Relax using the back yard built-in BBQ area, complete with sit-down bar. Invite your guests to continue their stay overnight in the first floor bedroom with private entrance. YOU will enjoy the luxurious Master Bedroom with large walk-in closet and decadent bath. The wood paneled Office allows you to work and study in undisturbed peace. YOUR GUESTS will be comfortable knowing that all bedrooms have their own en suite private baths. Truly lovely ocean view from this wonderful home

Property Type(s): Single Family, Residential

Last Updated	2/11/2012	Tract	Monarch Point Custom (MPC)
Year Built	1991	Community	Laguna Niguel West, N Of Crown Vly, W Of Niguel
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	22

Price History

Schools

Additional Details

Features

Location

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Suzi Dailey DRE# 01746768, Prudential California Realty

(view all details for MLS #L37112)

Option 2: San Clemente, CA Manufactured Home

1880 N El Camino Real 84, San Clemente, CA 92672 (MLS # S621858)

Tastefully decorated and meticulously maintained beachfront cottage on the sand. This manufactured home still looks new, is turnkey and ready to move-in to enjoy the summer. Two bedrooms plus an additional 3rd bedroom/office. Very unique community with 90 cottages on the water where the land is owned by the 90 owners without a lease. Walk to the San Clemente pier, surf outside your front door and watch for the frequent dolphin sightings. This is one of the best priced beach front cottages on the sand in Southern California. #40 closed this year for $2 million. Not nearly as nice or as new.

Property Type(s): Residential

Last Updated	2/19/2012	Tract	Custom (CUST)
Year Built	2004	Community	San Clemente Central
Garage Spaces	n/a	County	Orange
Total Parking	n/a	Walk Score ®	55

Schools

Additional Details

Features

Location

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Ken Ross DRE# 01393033, Luxre Realty, Inc.

(view all details for MLS #S621858)

So after reading the details of each property, which

would you buy? Place your comments below!

When a homeowner is behind on their mortgage payments, heading toward foreclosure, filing for bankruptcy, or has any sort of financial or health related hardship that is holding them back from making their mortgage payments consistently and on time…they will and should attempt a short sale.

See, this short sale process is very extensive and thorough. It may take several months to complete. Think about it this way….Let say we use the following for our example:

Seller: Jon Doe

Bank: Bank of America (BofA)

Property address: 123 Front St.

Mortgage Balance: $500,000

Market Value: $300,000

Let’s say that Jon Doe lost his job and has no way of making his mortgage payments on time anymore, so he is heading towards foreclosure. An alternative to a foreclosure is a Short Sale, so once the property is placed on the market for sale and an offer is received, then the offer and the completed Short Sale package will be sent to the lender for review.

From here the bank looks at various items, including all of the seller’s financials to determine if he/she really does have a strong case for a Short Sale or not. In our example we said that our client owed $500,000 and let’s say that the offer that came to us was for $300,000. We would communicate with BofA in this situation and continue to provide to them whatever information they require. During this time an appraisal has also been done by the bank to see what price they would agree to sell this property for.

Once the bank has come to a final decision they will send us and the escrow company a Final Short Sale approval and we can then, close out the transaction just like any other deal.

Since the bank, BofA, would be taking a large loss on this property they have to take their time and review all the details of the short sale. This is a HUGE reason why short sales take as long as they do.

In the majority of cases a Short Sale is a much better solution for a struggling homeowner than letting the property Foreclose.