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Stinking up the place...

By
Real Estate Agent with Real Estate One

Today’s issue of RealtyTimes contains an article titles “Short Sales Still Irritate” by Bob Hunt. It cites a recent survey by the California Association of Realtors (CAR) that not surprisingly showed continued and growing frustration on the part of Realtors with the short sale process and the banks involved with them. I suspect that “Short Sales Still Infuriate” would have been a more apropos title.

 

The Hunt article discusses the work that CAR (supported by NAR) has done to try to get changes mandated to the banks, thus far to no avail; and their recent spate of advertising imploring the lenders to get their act together. It also gives statistics from the CAR survey that indicate that the overwhelming majority of survey respondents have had unsuccessful or unsatisfying experiences trying to do short sales. At the end it also cites that the survey says that the vast majority of the Realtors surveyed said that they would never recommend the lenders that they’ve had to deal with on short sales – as if the lenders cared.

 

Therein lies a part of the problem – the lenders just don’t care. They don’t care if Realtors don’t like them or their process. They don’t care if their own clients don’t like them or their process. The only people they care about are the politicians that they buy to make sure that they are kept whole in the current economic mess. The article pointed out that legislation backed by CAR to mandate specific decision timelines for short sales - H.R. 1498, "Prompt Decision for Qualification of Short Sale Act of 2011" - is bottled up in some House sub-committee in Congress, where undoubtedly some loyal lender-sponsored toady will probably keep it off the agenda until it dies.

 

So, being dissatisfied and unhappy with short sales is, and will be, a fact of life for Realtors and their clients on both sides of the deal for the foreseeable future. I guess we need to get over it and get on with things.

 

For Realtors who just don’t want to deal with them directly, short sales will be like the skunk that walks around your house at night. You may not have dealt with it directly, but the smell is always there and it stinks up the whole area. Short sale lenders are our skunks as Realtors. Some Realtors will figure out ways to work with them without getting sprayed. Some will try and back off after getting sprayed a time or two and many will just have to continue to do business in the area surrounded by the smell of the skunks that they don’t deal with directly. It stinks, but it is reality.

Posted by

 

 Norm Werner

Real Estate One

 

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Norm Werner 2009-2011 All rights reserved

Comments (17)

J. Philip Faranda
Howard Hanna Rand Realty - Yorktown Heights, NY
Associate Broker / Office Manager

Vote with your wallet is all I can say Norm. Smaller community banks. Big box lenders and large monolithic institutions do nothing for me and have yes, infuriated me dozens of times. They should hire Lilly Tomlin as their spokesperson. They don't care. 

Aug 08, 2011 11:47 PM
Lorraine or Loretta Kratz
Crescent Moon Realty, Inc. & Land N Sea Auctions. - San Marcos, CA
Certified Negotiation Consultants

Norm:

Being from San Diego, California ---CAR has tried to break the logger jam that all California agents are experiencing when doing short sales. Unfortunately, as you point out in your post, not the right palms are being greased. The seller is the one that I think takes a beating emotionally, with all the hoops they jump through and in the end who knows which way the wind will blow.

Aug 09, 2011 12:05 AM
Kimberley Kelly, SFR, HAFA, GREEN
HK Lane, Christie's International Affiliate, 760-285-3578 - La Quinta, CA
I do Real Estate like I played polo-to WIN!

I list and sell Short Sales in Palm Springs, CA.  I agree Norm.  I also agree that althought the stench becomes overwhelming at times, if there is no other way to get them done, you have to wade in with your noseplugs on. I have found the Short Sale process to be improving over the past few years..I did my first 5 years ago and I always keep that experience in my mind..it keeps me moving forward because NONE of them that I do now are as awful and just plain stupid as that one was..

Aug 09, 2011 12:16 AM
Fernando Herboso - Associate Broker MD, & VA
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

I guess I'm a skunk slayer. . . .and that beats being in an open house safe . . and not a fly comes by. .

Aug 09, 2011 12:59 AM
Keith Lawrence
Christie's International - Mahwah, NJ
ABR, SFR

Interesting comparison.

There are lenders that will administer short sales quickly and those that you will get sprayed by.

Aug 09, 2011 01:05 AM
Paul Francis
Francis Group Real Estate - Las Vegas, NV
Las Vegas Real Estate Agent - Summerlin Homes

Everything you mention does not just apply to California... that's for sure. ESPECIALLY for Fannie Mae and Freddie Mac owned short sales.... Lots of PR talk... no action.

Aug 09, 2011 02:57 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Imagine, if you will, a climate in which a short sale agent does little else but talk with short sale banks and work on closing short sales day in and day out. Oh, wait. That is reality. Welcome to my world.

Aug 09, 2011 03:11 AM
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Nice analogy with the skunk, although too bad for the skunk. It's the reality now, but for how long? I hope it does not become the 'normal.'

Aug 09, 2011 03:45 AM
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

Big Picture Here Norm- Short sale agents seem to focus only with the mechanics of the deal. Let's back up and look at the Structural Problem with the whole system. I'll use BAC as an example;

BAC is hemorrhaging gallons of capital--they are a corpse that is twitching. The very last thing on their plate is a short sale or loan modification. Why, once the SS or Mod takes place 2 things happen,1. They MUST write down the loan. 2. They MUST replace the loss to their Tier 1 capital generated by the SS or Loan Mod. BAC is in no position to raise Private Capital. Where do you think the "new capital" will come from?

Next, BAC is facing a mountain range of "put backs" from investors(Fannie & Freddie included) over the MBS that BAC sold. BAC does not have the necessary "legal battle" reserves to go the distance on this one issue.(Neither do the other TBTF's)

Here's the real kicker; the FDIC can't write the check to break up any one of the TBTF's. If the FDIC issued BAC a cease & desist operatioons order, they would be hard pressed to find a buyer for the junk on their books for anything less than 0.10 on the dollar. Guess who underwrites that ?

Yesterday, BAC lost 20% of its market value. Are SS on the front burner?? BAC only answers to their shareholders, period.

SS agents might be thinking about Plan B if one of these TBTF's goes down. When I say Plan B, think of the chaos if you had a SS listing or in the process of negotiating a SS during a TBTF FDIC shutdown. Finding a buyer for the assets, diverting a bank run will be first & foremost for the FDIC, not a SS. Talk about lost paperwork...

I know what I have put forth will be discounted by anyone in the SS market. However, it's the Big Picture. Like many issues I see on this site; If you don't open the closet, you don't see the monster...

Norm, thanks for bringing this to the sunshine.

 

Aug 09, 2011 04:02 AM
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Norm, the don't caring to REALTORs or to the clients is an abomination but they are looking at it as pure business rather than good service and they have those two parties over a barrel.

Aug 09, 2011 04:14 AM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

I just blogged on something similar. What a sad state of affairs when we argue more about the dollar that spending it. Good post and thank you

Aug 09, 2011 04:53 AM
Norm Werner
Real Estate One - Milford, MI
Helping the first time and every time

All, thanks for the comments. There is little way for a Realtor in the market today to avoid getting some of the smell on themselves. even if you totally avoid buyers and/or sellers who want to do short sales, the smell from those sales drift over to your "normal sales" market in the form of lower home values and unreasonable buyer expectations.

To Mike (#10) - I don't think that there any TBTF banks anymore. Once the U.S. debt lost its magical status as to big to downgrade anything and everything became possible. It's just a matter of time, now. Remember that decisions are made in strange ways in Washington. Blowing up one or two of them might be "justified" the same way that blowing up a levee or two upstream on the Mississippi River was justified - flood the few to save to many. A few thousand wet, angry voters was better than a few million wet angry voters downstream.

Eventually some genius in Washington will come up with a creative way to give the banks relief through an accounting trick that will allow them to take the losses without taking the capital requirement hit. Guess who will end up holding that bag?

Maybe they should get Jeff Skilling and Andy Fastow out of jail and have them create an off balance sheet solution for this mess. We need a few smartest guys in the room working on this. 

Aug 09, 2011 05:01 AM
Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Banks turn down short sales then spend more money foreclosing, just to sell the house a year later for less than the short sale offer.

Happens all the time. Verifiable.

Aug 09, 2011 05:17 AM
Georgia Perez
Windermere Real Estate / WSI - Seattle, WA
Broker, ABR, CNE, Seattle, WA 206-356-9872

Norm, this is a difficult issue. I list and close short sales and REO's all the time and I have found the process improving slightly. But it is difficult and persistance and details are very important. I guess where I'm of 2 minds is this:

1- I care about the people I'm serving and when they are in distress and trying to find a solution via the short sale or loan mod, one wants to help and hopes to prevail. The big bad bank seems the ogre in the equation and aren't they just terrible for not being responsive or taking that loss. I feel for my clients, I really do.

2- as a business person I have to recognize that the lien holders (not always the banks servicing the loan) are looking at this as a financial transaction and it has to "pencil out". Mike brings a lot of that up in his comment. The lender - paid that money out on the borrowers behalf already and it was based on the value at that time and or the persons qualifications to buy at the time (for the sake of this cooment let's not get into whether someone should have qualified). If you took out a morgtage for 400k the bank paid the seller that 400K. The fact that what you bought is now worth 300k or is outside of your means to pay for monthly now, does not change that the bank is out that amount. If you were the bank, could you just keep writing off the loss? Would you literally be able to just say yes to accepting less that you paid. You'd be out of business if you did. 

So it's hard at times to have perspective on this issue. Care about the people, yes! Blame the banks for not just going along with accepting the loss - harder to do. It would make my job easier. But, I understand why that's not really as fair as it seems.

Aug 09, 2011 08:50 AM
Norm Werner
Real Estate One - Milford, MI
Helping the first time and every time

Shoot Georgia, I was hoping that there was a simplistic solution to this complex set of problems - something that would fit in a 15 second sound bite on the evening news, since that appears to be the national attention span sometimes.

It's interesting that we kind of force the homeowner into accepting the reality of the loss on his major asset, but allow the banks to continue to carry it at whatever the old value was years ago when the homeowner borrowed to buy it. The assessors have reset values and the appraisers have reset values and the Realtors have reset values; it's just the banks that refuse to reset the value that they have these assets on the books for. There is certainly precedent in business under various FASB rules to force the lenders to revalue the pool of assets that they hold to current market values and take the write-offs.

Those who think that they are not doing that because of their concern for the stockholders; remember that Allen Greenspan once believed that the managment of the banks could not do bad loans because of their concern for the stockholders. He was wrong and has since admitted his error in judgement. They don't care about the stockholders, only about their own outrageous bonuses, which would be harder to justify (thought certainly not impossible for some of these clowns) if their capital base is wiped out and they are forced into bankruptcy. Give them an out that saves their own hides and they would throw the stockholders under the bus in a heartbeat.

Aug 09, 2011 10:19 AM
Margaret Goss
@Properties - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

Dave #14 - that's exactly what's happening to me right now - and ultimately the bank will get considerably less as a foreclosure.

Aug 09, 2011 10:33 AM
Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

Norm- thanks for your thoughtful comment. The fed, today, telegraphed us that there are still TBTF's. Two more years of ZIRP ?? Mr. Brenanke has now set up Treasury obligations,agency mbs as "money good",but principal and interest will be repaid with "bad money", eg. debased dollar. All in hopes to re-blow the housing bubble and save the TBTF's. In truth, the fed has now abandoned all monetary policy except; keeping the Equity(Stock)Market Pumped. At the expense of the dollar which, in turn, royally screws the middle class.

I don't like to make perdictions. There is NO WAY we can go 2 years without inflation. Then we get the double whammy; debased dollar that won't buy anything. This was a world record can kick!!!! Folks, welcome to JAPAN. 'Cause that's where we are at as of today at 2:30 EDT today. I know, what does this have to do with the housing market or SS ? Just ask Japan how their housing market has been for the last 20 years.

Here's my suggestion to get the economy going; the fed board of governors, treasury sec.,commerce sec.,head of HUD,FHA & VA,FHLB,SEC, FDIC all resign in mass as of noon tomorrow. Don't let the door hit you in the ass on the way out. But, that's not going to happen.

I'm throwing in the towel. They WIN.

Aug 09, 2011 03:24 PM