Doug and Lorena Foster's blog titled, "When The Wolf is Running The Hen House" struck a nerve with me.
"They are over and done with..." Despite their thoughts, Short Sales are going to be around at least through the end of 2012 when The Mortgage Forgiveness Debt Relief Act expires. If you need some background on the subject read my blog titled, "Short Sales 101 - Introduction."
"Is this our new job? We don't think so!" Short Sale listing agents are doing two and three times the work per closing but the end result is so satisfying. When I first meet with distressed homeowners and they realize there is a light at the end of the tunnel, it's like the weight of the world is lifted off their shoulders. If this is my role for the next few years, I can live with it.
"Ultimately 9 out of 10 fail." Trained and experienced Short Sale agents close 9 out of 10. The bigger problem is so many agents don't have a clue how to list and close Short Sales and should not be attempting to provide services they are clearly not qualified to provide. Not on do they do a great disservice to their clients but they harm the profession and violate the Code of Ethics (for REALTORS®).
We've closed Short Sales in as little as 64 days from listing to funding. Do they all go that smooth? No, they do not. There are so many variables that can impact the timeline.
We've had buyers tie up a home in a contract while they looked for another property. We had a buyer enter into a contract and fail to disclose they had a home to sell. They were betting on months to get the short sale approved. I'll bet both the agent and the buyers were choking when we had the sale approved in 22 days! Both terminated their contracts after we gave them notice the sale had been approved and left us to start the process again.
I've sold some properties four times to find a buyer who could close. I'm to the point that I interview every selling agent who brings me a contract. Do they understand the process? Have they prepared their clients for it as well?
We encourage homeowners across the United States to get educated on the options available should they become financially distressed. Short Sales are a great tool, providing relief to all parties.
Just remember to choose a REALTOR® with a proven Short Sale track record to negotiate on your behalf. Making the right choice can mean the world of difference to your financial future.
Tom Branch and Gina Branch, The Branch Team with RE/MAX Dallas Suburbs, service the greater North Dallas suburbs including Dallas, Plano, Allen, McKinney, Frisco, Lewisville, and Carrollton. While Gina concentrates on traditional listings and buyer/tenant representation, Tom specializes in assisting distressed homeowners to avoid foreclosure. Tom and Gina have published two books (Achieving Rock Star Status and The Field Guide to Short Sales) and are available for speaking engagements in the greater Dallas - Fort Worth Metroplex. Subscribe to The Branch Team Blog.
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20 Comments on Short Sales - Distressed Homeowners Deserve Help
Tom, you are so right about sellers choosing a Realtor who specializes in short sales. A Realtor not equipped for the task can cause irreversible harm for years.
Sellers: This is not the time to worry about offending your Aunt Sally or your high school buddy who happen to be Realtors. You are in survival mode and you need the best professional you can find.
"We encourage homeowners across the United States to get educated on the options available should they become financially distressed."
And we buyer's agents encourage lenders and investors across the United States to develop guidelines for short sales that do not treat the buyers like mindless sheep who have no life other than wait months and months for a crumb of communication and progress on a contract of sale that the buyer entered into with the goal of having a HOME.
Tom. Well I guess you know I'm on your side. Short sales do close and they close often. It's the impatient buyers and their agents that really make our jobs difficult. If all parties fully understood the process and were willing to give us the time to do our jobs then short sales would close most of the time. Lack of education is the number one probelm. The banks are doing the best they can in most cases. Can you imagine how much crap they have to deal with?
Tom:
Buyers need to enter the process of buying a short sale with their eyes wide open. Most clients that I have worked with just do not want to deal with the process so they pass on to another property. But, that has to be their choice after being given all of the facts. They are going to be in for a long wait - so it has to be worth their while to do so.
Depending on the given market, short sales may very well be with us for many more months... perhaps years. If working in a market such as ours where many more foreclosures are predicted, it seems we will be assisting distressed sellers for quite some time.
At first our goal was merely to "adjust" to the market but that "adjustment" has turned into a commitment to provide a whole new and higher level of service than ever before. It is true that we work harder and longer on short sales and we do so for far less financial compensation but we are all in the same boat and the choice is ours to make as to how we respond to our environment.
Fortunately, it seems that most lenders are improving their systems and we are getting quicker and more efficient response and action than ever before. In Jacksonville, we are certain that we will be helping sellers with short sales at least through 2012 and probably even longer.
Tom: well said. As much as a short sale sucks for the buyer, imagine (or as many of us already know) or consider what it puts the seller through.
I think our collective righteous indignation should be channeled into forcing lenders to streamline the process instead of making sellers who are making a good faith effort to suffer for it.
I have known a few occasions where the listing agent ruined the transaction because they didn't know how to handle short sales. Thankfully some of them were able to be preserved by working with an attorney that specializes in them.
Tom, there is really no reason a short sale should be so complicated and time consuming. I do agree the agents should be well versed in short sales. Banks should also be more cooperative in getting them through in a timely manner.
Short Sales are really not all that complicated. Those of us who have processed a loan find this to be an easy process. You do have to be diligent in your follow-up just to keep things moving in the right direction.
It gets a bit more complicated when you find multiple liens or other oddities that make the process more difficult.
Having done short sales for the past 4 years, I can tell you the banks are getting far better at getting them done. My biggest problem these days is with the small second lien holders and PMI companies rather than the large banks.
Tom
Tom, thank you for spreading the word. We indeed have to keep educating ourselves -- this market will be dominated by short sales for a while, and the trends change daily. (By the way, anyone who thinks short sales are gone in 2012 haven't looked at the numbers. 5-yr option ARMs peak in Sept 2012. We could easily expect another 2-3 years beyond that to help distressed homeowners).
The sooner that we agents stop complaining about how tough short sales are and actually focus on getting better at negotiating them and closing them, the sooner banks will stop rolling over the vast majority of hapless agents.
Tom:
I totally agree with you, one of my short sale listings that closed last month only took 21 days for approval and 29 days to close! I ALWAYS get my FHA short sales pre-approved prior to placing them on market, so that I know that we'll have a speedy approval process. Most of the time on my FHA ones, all I have to do is request a variance for the 3% closing costs (which only takes two days) and then we're ready to close!
Brian #10,
I suspect The Mortgage Forgiveness Debt Relief Act and HAFA will be extended beyond 2012.
Next year's bubble will ride out in future years. I wrote a blog on this:
http://activerain.com/blogsview/1822887/housing-recovery-on-hold-
Tom
I learned something today which I had not thouhgt of doing and that is to interview the selling agent.
I have just had a very quick approval from Bank of America and set to close on 9/20 only to find the buyer never applied for her mortgage because the selling agent forgot to ask for closing help on the contract from the beginning. I cannot prove it but I am 99% sure the agent dropped the ball on this one. Interviewing agents is an excellent idea.
I completely agree. It's not just important for investors or real estate agents to be educated about the possible options out there, but it's important that we educate homeowners about all of their available options. Whether they need help or not, it's important for them to know what to do in any case scenario. It really is a great feeling to relieve the stress of a homeowner, though!
Thank you Tom for a decent post...
Only in America can something that has failed become famous and profitable in a strange way. What is a short sale anyway? The banks have a leakage problem in the running of their business. Instead of curing it like other businesses do, they get bailed out from having to learn or suffer. Consequently, the right way is delayed and this "short sale" mentality is the substituted. We now know that the lenders get almost all their money back when a borrower defaults......so how does selling short really help anyone?
Tom--The end result for the Buyer is reflected in the price. Anyone who thinks a short sale will be easy should not enter the arena.
Tom,
I am working now on 4 short sales where I respresent the Seller and 2 where I represent the Buyer. It is 80% of my business. Although it is hard work, I am helping my sellers out of a bad situation and I feel that they are very grateful.
I agree that there are too many buyers agents that do not know the process and are trying to wing it based on what they are hearing from others. I think that if it is a niche that you feel comfortable with, great. I have done three this year so far and I have taken the SFR course, but that is just the tip of the iceberg for the information to be a good short sale counselor to these sellers. You are right also that it is very satifsying to see it close and for the sellers to be able to move on. Thank you for sharing.
Tom, we have been very successful closing our short sales but I shudder when I hear some agents' lackadaisical approach to how they handle and respond to communication from the bank.
The process is getting much easier ... however it still has a long way to go. Thanks for sharing
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