What Are Buyers Asking?
I was fortunate enough to be chosen to represent Sotheby’s International Realty at a University of California Santa Barbara (UCSB) discussion panel hosted by Coastal Housing Partnership this last Wednesday. The panel was held for the benefit of the faculty and staff of UCSB. The panel consisted of five agents one from each of the stronger agencies in town: Steve Epstein of Coldwell Banker, Mary Layman of Prudential, Gail Shannon of Village Properties, Berni Bernstein of Re/Max, and myself, Richard van Seenus.
One of the observations I made is that the panel was an excellent opportunity for individuals to speak with real estate agents, and get some important questions answered, without being overrun by an eager sales person. It was an opportunity to drop the protection and ask the questions they had. Therefore I thought I’d pass on some of the questions the attendees asked with my answers.
Q. What is the difference between a short sale and REO?
A. Both represent financially distressed properties. A short sale is a property that is on the market and ultimately sells for less then the current owner owes on the loans against the property. In a short sale the owner accepts an offer that subsequently needs to be accepted by the banks holding the loans. It’s important to know that the banks approval can take any where from 1 to 9 months if given at all. Also, it should be known that short sales are typically reserved for properties when a foreclosure is imminent.
An REO (Real Estate Owned) is a property that has already been foreclosed on and is owned by the bank, also known as a Bank Owned Property.
Q. What is the volume of foreclosures that Santa Barbara is experiencing?
A. Based on the Santa Barbara MLS, the first three months of 2010 had 585 closings of those 74 (12.65%) were Short Sales and 71 (12.14%) were REO’s. This indicates that one out of every four closings is financially distressed.
Q. How are Real Estate Agents paid?
A. Agents are typically paid by the seller of a property; the commission that a seller agrees to pay is usually split between the listing agent and the buyer’s agent. As a buyer you will not need to pay a real estate agent commission unless you agree otherwise. You should keep in mind however that when it is time for you to sell, it will be your turn to pay a commission if real estate agents are involved.
Q. What is a pocket listing and how are they accessed?
A. A pocket listing is a property that is not in the Multiple Listing Service or MLS, which is the primary database for properties, on the market. Technically a property is a pocket listing when the seller has signed a listing agreement but has chosen to exclude it from the MLS. A property can be excluded for a variety of reasons, two of which are; 1) the seller not wanting their listing to be public or 2) the Seller wants to make some improvements before the property is actively marketed. To access pocket listings in Santa Barbara, ask your agent to send out a pocket request. The Santa Barbara MLS system allows agents to bulk email everyone in the MLS with such a request letting other agents know that there is an need for a particular kind of property.
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