Short Sales - according to the banks there are new rules?

I wanted to share an audio conference on Short Sales called 'Understanding the New Rules of the Short Sale Game' that I recently listened to.  I was intrigued because what in heavens name could BoFA, Wells Fargo and Freddie Mac be doing so differently and was it really going to speed along the short sale process?  Most of the new changes I knew thanks to others here on AR that were also willing to share previously.

Lenn Harley did a post that included the new 'Equator' online document process from her local board and I believe this is relatively the same program.

Trends and Numbers in Short Sales ~

• Short Sales are increasing exponentially month over month and is now the largest 'buy' segment over 'damaged REO' and 'move-in ready REO' transactions.  As of January 2010 the number was 15.9% of the buy side.  (Page 14)
• Average Sales Price for Short Sale is higher vs. REO prices at $243,978.  The panel said that it would be 'more beneficial' to sell short sales because of the higher sales price and potential commission portion.  Their words not mine here!  (Page 15)
• Average Market Time for Short Sales - was a whopping 19.6 weeks as of January 2010.  Non-distressed sales were 15.0 weeks; Damaged REO 8.6 weeks; and Move In Ready REO is 6.9 weeks.
• Average Sales to Listing Price - 99% for Move-In Ready REO's; 95.9% for Damaged REO's; 94.4% for Non-distressed sales; and 91.3% for Short Sales.  I would have to say that this is definitely not the case here in my area.  Short sales are languishing on the market here and are the last to be snatched up by those supposed eager buyers waiting for a deal.  We have to 'discount' the short sale here and find the discounted 'hassle factor' for the short sale process.  Something I think the banks are finally coming to understand.  Buyers want to be compensated for dealing with them and not following thru on the transaction in a timely manner like a non-distressed sale.  (Page 16, 18)
• Average Number of Offers found was 3.4 for Damaged REO's; 3.3 on Short Sales; 3.0 on Move-in Ready REO's; and 1.9 for Non-distressed.  (Page 17)
• Average Commissions on the buy side and listing side.  Short Sales list side is 2.8% to the listing agent.  (Page 19)
• Who is buying all these properties?  Investor? First-time Buyer? Current Homeowner?  Largest buy side percentage is from the First-time Buyer purchasing a move-in ready REO at 58.9%.  Investors seem to go after the Damaged REO's at 53.6% there.  (Page 20)

In Summary ~

• Expect 4-5 months to sell a short sale.
• Expect 3 offers for every complete short sale transaction.
• Most short sales are bought by first-time buyers using FHA financing.

Bank of America ~

• BofA still doesn't get it.  You can tell from their presentation that they are using the correct words and enthusiasms for the process but have not really implemented any changes to speed the system along.  They seem to be banking on their 'homeownership retention solutions' and we know how well they have worked so far!
• BofA's guidelines state that the short sale offer must meet the 'current market value' and be an 'arms length transaction'.  
• BofA knows they have a low short sale success rate due to low ball offers and fake offers 'fishing' for a price.  
• 60-70% short sale fallout after approval for BofA.
• BofA will start using the 'Equator' system and increase staffing.
• BofA's short sale approach will be similar to HAFA (starting in April 2010) but 'wider in scope'.  This is a great line that really says nothing!

Wells Fargo ~

• Wells Fargo took a much more 'proactive' approach and seemed to actually initiate the short sale process with the homeowner vs. BofA.
• Wells Fargo will actually partner with local real estate agents & sellers for the short sale process.
• Wells initiated a 'Field Short Sale Team' that is currently being tested in California as a pilot program.  Provides homeowner with as much information and options (modification) as possible prior to the short sale process beginning.
• Promises 7 to 10 business days in short sale response time from local Short Sale Managers in the pilot program.  (This is where the hallucinogenics kicks in with their program!)
• Average closing from start to finish is 37 business days in the pilot program (baring no 2nd lien holders).
• $5000 seller incentive for short sale program
• 'Short Sale Marketing Letter' is initiated giving an estimated minimum net provided up front for the short sale.  This seems to be a pre-approved short sale!
• Numerous mentions where the listing realtor will negotiate and work directly with all Jr. Lien Holders. It's like Wells doesn't want to get their hands dirty talking with these folks! Picture them 'washing their hands' of that filthy problem and throwing it in your lap.

Audio Conference download



Understanding the 'New Rules' of the Short Sale Game