A low-ball offer typically involves a contract submitted to a seller where the price proposed by the purchaser is 25% or more below list. Low-ball offers increase sharply when there’s a glut of properties available, asking prices are out of sync with local economic realities and values are depressed or uncertain. Buyers figure: Hey, why not? Maybe I’ll get lucky.

Based on the latest survey results, that sort of strategy is not a winning move in many communities this spring. In fact, in local markets where inventories are tight and competition for homes rising, realty agents say that buyers looking to steal houses by low-balling their offers are ending up at the back of the line — their contracts either rejected out of hand or countered close to the original asking price.

In high-demand, high-cost markets that have rebounded from recession slumps, sellers are now firmly in control; they pay scant attention to low-ball offers. Jayne Esposito, an agent with Coldwell Banker Residential Brokerage in Los Gatos, Calif., said multiple offers are “the rule, not the exception,” in her area, and many transactions end up with final contract prices higher than the listing.

“Sure, I’ve had a few buyers try to low-ball and they wouldn’t listen,” she said, “but that didn’t work out well for them.”

Similar trends are underway in more moderately priced markets. Wes Neal, an agent at Prudential Olympia in Olympia, Wash., said, “Low-ball offers are down a lot because we’re seeing more homes come on the market that are more realistically priced” — sellers have absorbed the hard lessons of the recession years about what the market can bear.

Even when buyers submit shockingly low bids, sellers no longer are so insulted that they send the contract back without a counteroffer. Now they negotiate aggressively and the final number ends up close to the original asking price. For example, Neal said, a buyer recently came in with a bottom-fishing offer of $150,000 on a house listed for $250,000. Although the seller was irritated, after a series of negotiations the low-ball buyer settled for a final price of $230,000.

Outside Washington, D.C., in the Northern Virginia suburbs, well-priced houses in good locations move fast, sometimes pulling in multiple offers within 48 hours of listing, said Chris Ann Cleland, an agent with Long & Foster Realtors. Sellers who encounter the occasional outrageous low-ball offer reminiscent of the recession years tell listing agents “don’t even bother” with them. After all, there’s an excellent chance there will be a realistic offer shortly — maybe more than one.

In the suburbs south of Chicago, Judy Orr, an agent with Classic Realty Group in Orland Park, Ill., said low-ball frequency and efficacy depend on the specific neighborhood or town. “We still see them, and we try to work with them” in communities where prices are soft and the effects of tough economic times persist, she said.

Elsewhere, although low-ball offers are down, Orr urges sellers to stick with it and negotiate. Recently a low-baller came in $40,000 below the asking price. Through negotiations with the buyer, Orr managed to close the gap to just $2,000 below asking.

Marnie Matarese, an agent with J Wood Realty in Sarasota, Fla., said that while low-ball offers are far fewer this spring, some out-of-town buyers still appear to be under the impression that all Florida real estate remains depressed. They insist on submitting offers that make no sense in today’s environment. But Matarese has no problem with this — “you can’t blame a buyer for trying to get a good deal,” she said, but the fact remains: They usually risk losing the house.

The take-away here: Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012′s environment — at least in rebounding markets — it could be counterproductive if you truly want to buy.

Source: “Low-ball Offers Decline in Some Housing Markets ,” Los Angeles Times (April 22, 2012)

HOME EQUITY LINES OF CREDIT

A home equity line of credit, sometimes called a HELOC, is a loan which the lender agrees to lend using a borrowers home equity as collateral.  There is a maximum amount an an agreed period of time (term) involved and this varies from lender to lender.  Many homeowners will use home equity lines of credit for large expenses such as education, home repairs or medical bills.

TITLE TRANSACTIONS & HOME WQUITY LINES OF CREDIT

Often during a title transaction the (seller or borrower) will have an open Equity Line of Credit.  Prior to closing any file where there is a Equity Line of Credit involved the line of credit must be FROZEN.

If the account is not frozen the title company will hold the available credit until they are able to verify the account has been paid and closed or frozen.  It normally takes 2 days to verify if the account has been paid and closed.  Once this has been done, title will release the hold (available credit) to escrow.

In the case where there is a zero demand meaning there is no money owed and no fees on the LOC (Line of Credit) then the account must be CLOSED.  Title will hold the LOC amount until they get a letter stating the account has been closed or title can verify on the phone the account has been closed.  The reason for holding the LOC amount is because the account can be unfrozen at any time by the borrower.

If the demand title receives requires a signature to CLOSE the account, title must have the demand signed.  If title does not have a signed demand and the file closes, title will not wire any proceeds to escrow until they are in receipt of the signed demand.

La Quinta vote marks second cost hike in two years

LA QUINTA — The La Quinta City Council on Tuesday more than doubled the cost of resident cards used for discounted golf at the city-owned SilverRock Resort.

The increase was passed in a 3-1 vote with Councilwoman Linda Evans dissenting. Mayor Don Adolph was absent.

The three-year cards initially cost residents $70 or about $23.33 a year.

Now, when the measure takes effect in three months, the cards will cost $150 for three years, or $50 a year.

Residents can purchase only the three-year card.

Tuesday’s vote marked the second fee increase for the card in two years.

In 2010, council raised the price of the card from $15 to $70.

The card allows La Quinta residents to get a round of golf that normally costs $165 for $55. It also allows them to buy food and merchandise at discounted prices.

Envisioned as a moneymaker for La Quinta, SilverRock is still being supported by taxpayer funds.

The golf resort owes the city general fund roughly $4.5 million, which is accruing interest, officials said Tuesday.

City leaders had initially considered a plan that would have raised the resident card to $210 for three years.

However, Evans and Councilman Lee Osborne said they would not support an increase.

Evans favored holding off on a vote until the council could look at all city fees, not just the resident card.

Osborne said an annual fee of $70 for the resident card was too high.

“That’s an extraordinary increase to the residents who have already paid for SilverRock,” Osborne said.

It was Councilwoman Terry Henderson who proposed trimming the hike to $150 for three years.

Council justified the increase by noting only 28 percent of the cards in the past year were sold to full-time residents.

The bulk of the cards are purchased by part-timers.

City staff expects a dip in the number of cards purchased annually, but not a drastic decline.

“We did see some drop- off in the number of people when it went from $15 to $70, but most people understand the benefit,” said Edie Hylton, community services director.

“If you like to play golf, it’s a great deal.”

The city sells roughly 1,500 cards annually. About 6,000 residents have purchased the discount card. No residents spoke against the increase during public comments.

The increase goes into effect July 1 or once the current resident card expires.

The number of U.S. home short sales surpassed foreclosure deals for the first time as banks became more agreeable to selling houses for less than the amount owed on their mortgages, according to Lender Processing Services Inc. (LPS)

Short sales accounted for 23.9 percent of home purchases in January, the most recent month available, compared with 19.7 percent for sales of foreclosed homes, data compiled by the Jacksonville, Florida-based company show. A year earlier, 16.3 percent of transactions were short sales and 24.9 percent involved foreclosures.

“It’s a fairly recent phenomenon that short sales have been increasing,” Jonathon Weiner, a vice president in the applied analytics division of Lender Processing Services, said in a telephone interview. “Short sales should be the dominant way of disposing of assets” in distress, he said.

Lenders are catching up to short sales after being slow to provide the staffing and incentives necessary to complete the deals, Weiner said. The transactions typically fetch a higher price for banks than sales of homes that have gone through foreclosure. In January, foreclosed homes sold for an average of 29 percent less than comparable non-distressed properties, compared with a 23 percent discount for short sales, according to Lender Processing Services. The gap has narrowed as short sales become more common, Weiner said.

The growing percentage of short sales, which don’t require going through the drawn-out foreclosure process, is a sign that the U.S. is making progress in working through its inventory of distressed properties, Weiner said. The increase in short sales also may help values find a floor quicker.

“Our baseline scenario is that home prices will hit a bottom at the end of this year,” he said.

Cash Incentives

Banks including Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) last year began giving cash inducements as high as $35,000 to selected homeowners who agreed to a short sale as a way of speeding up the process.

Bank of America Corp. paid $19.9 million in the first two months of this year for 22,534 homeowners to relocate after short sales and deeds in lieu of foreclosure, when borrowers agree to return the property deed in exchange for debt forgiveness, the Charlotte, North Carolina-based company said March 16. Its short sales rose 31 percent in January and February from a year earlier.

Banks have struggled to reduce losses from delinquent mortgages. Almost 4.4 percent of homes with loans had received a notice of foreclosure sale at the end of 2011, the 11th consecutive quarter the rate has been higher than 4 percent, according to the Mortgage Bankers Association .

Falling Foreclosures

Foreclosure filings , including notices of defaults and bank repossessions, fell 16 percent in the first quarter from a year earlier after lenders under legal scrutiny slowed actions against delinquent homeowners, RealtyTrac Inc. reported April 12.

Lender Processing Services, a 2008 spinoff from title- insurance companyFidelity National Financial Inc. (FNF) , counts short sales by tallying mortgage and property transfer documents filed with county recorders, Weiner said.

Other reports haven’t shown the same magnitude of short- sale growth. The National Association of Realtors reported that 13 percent of transactions were short sales and 22 percent were foreclosures in January. In February, short sales increased to 14 percent and foreclosure-related transactions declined to 20 percent, the group said March 21.

Showing an ‘Uptick’

The Realtors collect their data from transactions on the Multiple Listing Service, a database of homes on the market, and a survey of about 3,000 members, saidWalter Molony , a spokesman for the association.

“The February data is showing a bit of an uptick,” he said in an e-mail fromWashington . “We’re hearing the process is going a bit more smoothly now, so that comes as no surprise.”

The U.S. Department of Housing and Urban Development reported a preliminary 19,600 short sales in January, compared with the Lender Processing Services tally of 48,721. An April 6 HUD report showed that the number of short sales rose 4.3 percent from a year earlier as the number of real estate owned, or REO, sales — another name for foreclosure sales — fell 39 percent.

Before agreeing to accept a loss on a short sale, lenders usually require homeowners to show evidence of hardship, such as inability to afford their mortgage payments or the need to relocate for a job, said Weiner of Lender Processing Services.

California, Arizona

Short sales outnumbered foreclosures in states with some of the largest shares of homes facing foreclosure, such as Arizona , California, Florida , Nevada and New Jersey , Lender Processing Services reported.

In New Jersey, short sales have exceeded REO deals every month since June 2010. In January, short sales accounted for more than 15 percent of the 3,033 New Jersey homes sold, compared with 3.9 percent for foreclosures. It took 966 days for banks to repossess a home in New Jersey, second only to New York , according to RealtyTrac. Both states require judicial hearings for foreclosure approval.

In New York, where it takes 1,056 days to repossess a home, 7.9 percent of purchases in January were short sales while 2.3 percent involved bank-owned properties.

“In general, markets where larger incentives are provided usually have extended foreclosure timelines, such as Florida,” Tom Goyda, a spokesman for Wells Fargo, said in an e-mail from Ellisville, Missouri . Wells Fargo, which doesn’t disclose its short-sale totals, offers homeowners as much as $20,000 to relocate, he said.

Florida Short Sales

In Florida, the number of short sales has exceeded foreclosures since July, according to Lender Processing Services. That’s about nine months after banks imposed a moratorium on home seizures amid allegations they used improper documentation and forged paperwork to claim title to properties with delinquent mortgages. The five largest loan servicers, including Wells Fargo, Bank of America and JPMorgan, agreed in February to a $25 billion settlement of the allegations.

In California , which has the largest number of homes facing foreclosure, short sales have outnumbered sales of bank-owned homes since August. In January, 37.2 percent of homes sold in the state were short sales compared with 25.8 percent for foreclosures, according to Lender Processing Services.

Banks have sped up the short-sale approval process, requiring less paperwork to prove hardship, especially for homeowners who haven’t made a mortgage payment for months on their primary residence, said Ethan Gregory, a broker with First Coast Realty Associates in Jacksonville, Florida. Banks have offered his clients as much as $13,000 to relocate, an incentive that gets the homeowners engaged in selling the home, he said.

Banks “embraced it before the settlement, but the settlement pushed them to do more streamlining,” said Gregory, whose firm handles about 50 short sales a year. “They understand it’s really the best exit for them.”