Are Foreclosures Really Like Day Old Bagels?

Real Estate Broker/Owner with Broadpoint Properties Cal BRE #01324959


Short SalesA few days ago, I read an article in the Los Angeles Times that discussed a proposed settlement that would force certain lending institutions to permit short sales for delinquent homeowners.

After a little bit of  further research, I found out that the meeting written about in the Times article was a meeting of government types and bank mucky mucks that took place on March 30th—as a result of the great robo-signing debacle of 2010. You recall the robo-signing debacle, don’t you? Banks (most notably, GMAC) were accused of signing off on hundreds of thousands of foreclosures without confirming the validity of the debt. As a result of this issue, GMAC, Chase, and Bank of America spent some time reviewing and re-evaluating their internal processes.

No disrespect to the journalists who wrote the article, but it is a little bit vague. The meeting that was reported about was planned to address settlements as a result of the robo-signing deal, yet much time is spent touting the benefits of short sales.

There’s a funny quote in the middle of the article that compares a foreclosure to a day old bagel. “Short sales just command a better premium than foreclosures. It’s like day old bagels. They never sell for the same price.” A pretty interesting analogy. Second to New York, Los Angeles (where the article was written) is probably a bagel mecca—which only makes the quote a little bit more amusing.

It’s true, too. In a home that sits uninhabited for any period of time, things start to break. No water runs through the pipes. No electricity. No gas. Things get old, dry, and start to break. In most of the short sales that I negotiate, the short sale seller stays until the bitter end. The homes are well-cared for; they are fresh and smell good—just like the full-price bagels at the deli.

According to the draft of the robo-signing settlement agreement obtained by DSNews, “servicers agree to stop ‘dual tracking,’ or proceeding with a foreclosure while a borrower is under review for or in the process of completing a loan modification. That’s darn good news; I have often reported that this “dual tracking” leads to nothing but sadness and foreclosure. 

The other bit of good news that comes from the draft of the settlement is that “servicers will not adopt compensation arrangements for [their] employees that would encourage a foreclosure over loss mitigation alternatives, and … servicers will provide a single point of contact for borrowers throughout the loss mitigation process, short sale process, or forbearance process.”

But, just like HAFA and HAMP and every other program that’s come our way, we will just have to sit back and see what really happens. We cannot rely on the government to be able to control how the banks operate. It doesn’t matter, though. Bad or good, fresh or stale - that bagel will probably taste better with cream cheese.


Photo: flickr creative commons by ezra.wolfe




Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Marsha Montoya Mayer 04/02/2011 04:44 AM
  2. Lori Lincoln Team 04/03/2011 02:45 AM
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Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond
I'm just waiting on the day old bagels right now & they're become harder to digest...
Apr 02, 2011 02:00 AM #7
Anita Clark
ColdwellBanker SSK Realtors ~ 478.960.8055 - Warner Robins, GA
Realtor - Homes for Sale in Warner Robins GA

Melissa...vacant too long and they become stale, like the bagels.  Enjoyed your post, thanks!

Apr 02, 2011 05:00 AM #8
Deborah Byron Leffler BzyBee Real Estate Lady!
Keller Williams Realty Boise - Nampa, ID

The wait and see is the hard part...but great analogy!   and yes the longer a house sits the more likely there will be major problems!  

Apr 02, 2011 06:01 AM #9
Lee Bothast
Coldwell Banker Residential Brokerage - South Pasadena, CA
2nd Generation Pasadena Area Realtor

Another LA Times article with hyped up misleading headlines - so what else is new - glad you got past that and gleened positive information and direction from it. Thank you for the post!

Apr 02, 2011 06:42 PM #10
Sidney Kutchuk
Property Management & Sales at REALTY WORKS TEMECULA, CA 92590 (951) 217-6745 - Temecula, CA
Property Management & Sales Experts 951-217-6745

OK you planted the vision of bagels in my mind.
Guess what I'm going to have for breakfast tomorrow. Bagels and NO Real Estate.

Apr 02, 2011 06:44 PM #11
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY

Apr 03, 2011 12:21 AM #12
Randy Harden
Wieder Realty, Inc. - Pompano Beach, FL
Melissa, in my market (South Florida) the foreclosures are being priced right so much so that the banks are repeatedly receiving multiple offers and therein selling higher than list price. So now it's becoming harder to sell them when a buyer doesn't want to overshoot the list price by a few grand when it's a good deal.
Apr 03, 2011 01:35 AM #13
Irene Kennedy Realtor® in Northwestern NJ
Weichert - Lopatcong, NJ


Buyers in my area still shun short sales over foreclosures.  Everything gets stall during long waits for bank approval.

Apr 03, 2011 01:53 AM #14
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Melissa, the comment comparing foreclosures to day-old bagels was quoted by Glenn Kelman, chief executive for online brokerage Redfin, IMO, is simplifying the issue. I'm all for short sales, that's the major part of my business. However, foreclosures are not day-old bagels in my market. REOs are listed high and they sell high. What's good about short sales are all the points you make. Short sales save the banks money in the long term.

Apr 03, 2011 01:57 AM #15
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

J. Philip: Thank you for the song. Never seen that before.

Pamela: The quote is simplifying the issue; I agree. In fact, the whole article over-simplifies thie issue implying something in the headline which is fairly inaccurate.

Apr 03, 2011 02:42 AM #16
Jeanne M. Gavish
Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL
Keller Williams Realty Elite Partners - CIPS,GRI,S

In my area of Florida, there are almost as many abandoned short sales as foreclosures, and they are subject to vandalism more often because ther is no management company checking on them.  Foreclosures are more desireable due to the length of time to close, and many lenders are paying to have them cleaned and fixed to get better prices. 

Apr 03, 2011 02:56 AM #17
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Melissa, stopping 'dual tracking' and a single point of contact will help out a lot. Let's hope it continues.

Apr 03, 2011 03:00 AM #18
Rosi Green
AmeriTitle - Silverton, OR

Thanks for sharing this post the the perspective Melissa.  We recently crunched some numbers in our area (Marion County, Oregon)   A look at one month of sales revealed 46% Regular Sales - 44.7% REO Sales  - 6.7% Short Sales.  (See my recent blog for the whole report.)  This confirmed what I had been "feeling" in that the short sales are falling out of fashion due to the difficulty and time it takes to get them approved and closed.  While it's a bit sobering to see that nearly half of the sales were Bank Owned - these sales have been very smooth to close.  We're looking at the bright side and feeling good about this inventory moving. 

Apr 03, 2011 03:36 AM #19
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

No fair using bagels on is like Kryptonite and I go weak all over.....There was one in my crib waiting for me on my first day in....I used to trade baseball cards for a good poppy seed....As to your post, I cant focus right now

Apr 03, 2011 04:20 AM #21
Linda Humphrey
Humphrey Home Connections Realty, Reno, Nevada - Reno, NV
CRS, Broker/Owner HHC Realty
Agree with Dave #4, foreclosures are more like year old bagels, especially if the bagels have mold! Hope they follow through with the reported changes! Let's get this lingering monkey off our backs and hopefully minimize the damage in the process.
Apr 03, 2011 04:56 AM #22
Mike Yeo
3:16 team REALTY - Frisco, TX
Thanks for sharing the post. Great analogy using the day old bagel.
Apr 03, 2011 06:59 AM #23
Carla Muss-Jacobs, Principal Broker (503) 810-7192 | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time - Portland, OR
Buyer Focused ~ Buyer Results

Yup, foreclosures are hard to cut through . . . just like the day olds!

Apr 03, 2011 08:19 AM #24
Sussie Sutton
UTR Texas Realtors - Pearland, TX
UTR TEXAS Realtors - Rep for buyers and sellers.

I am not very happy with banks right now...but I do like bagels even if they are a day old.

Apr 03, 2011 04:20 PM #25
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Melissa - Short sales do tend to be in better shape than the foreclosures.  As you say, we'll have to see what happens with this new program, and I just had to laugh at your last sentence.  I want to know what is the cream cheese on the short sale and foreclosure bagel?

Apr 08, 2011 04:10 PM #26
Daniel H. Fisher (704) 617-3544 - Charlotte, NC
MCRP - Charlotte Real Estate, NC or SC
interesting analogy and astute observation that - "In a home that sits uninhabited for any period of time, things start to break".
Jun 25, 2011 03:51 PM #28
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Melissa Zavala

Broker, Escondido Real Estate, San Diego County
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