The Problem With Short Sale/Pre-Foreclosure Listings Is...

The same thing is happening in Miami. Many listing agents don't know the process to be fair to all parties, so they end up wasting everyone's time. It would be very helpful to have a list of agents that have successfully achieved short sales or have been certified in some way. That way, buyers' agents will know who it is useful to do business with and who to avoid.

It is very frustrating. I wonder if there could be a separate MLS attribute which tracks certain key details about the short sale.

I've seen many that list these homes dirt cheap without ever even asking the banks opinion on it. They do so in the hope that once they have an offer in hand the bank will go for it. It's getting out of hand. They're fantasy listings.

I had a short sale listing where the bank said they would consider a short sale.  We were told how to present the offers but there wasn't good communication until my 3rd offer was faxed to them.  We weren't given a price range, just told that they wouldn't accept less than 20% of the value of the property, but they would not establish that value until they received an offer.  The 1st two offers we received had to wait around 2 months.  The 3rd offer was presented a week before the 2 month period and was accepted in about 2 weeks.

So that buyer thought the short sale procedure was great.  The 1st two buyers waited around 2 months to be told their offers weren't accepted.

I am now waiting over 1 month for buyers I am representing to see if they "win" the short sale bidding war (4 contracts last I heard).  The listing agent did not say it was an actual short sale on the listing but stated "ATTENTION ALL AGENTS ALLOW AMPLE TIME FOR SELLER LENDER'S APPROVAL ON ALL OFFERS."

Since I've been on the listing end I can understand that some banks leave a lot to be desired with short sales.  I've heard others say the same thing, that they can't get an actual approval from the bank that they will definitely accept a short sale offer but they will only consider it.  

In fact, while waiting for an answer for my buyers we noticed that the agent reduced the list price.  I called to inquire whether that meant the bank would not consider my buyer's offer.  He insisted that wasn't the case but he had to show the bank he was trying everything possible to get the house sold.

I'm assuming that different banks handle their short sales their own way and some might be more forthcoming than others. 

We will be discussing short sales and foreclosures with a fellow Rainer - Tisza Major-Posner - on The Exeter Group Real Estate Talk Radio Show tomorrow, Monday, March 10, 2008 from 12:00 noon PST to 1:00 PST.  Tisza will be our second guest.  You are all more than welcome to call in with your questions as to how Tisza handles her short sales.  You can visit our website at http://www.exetergroupradio.com to see how to call in with questions and to access the internet radio show.  Hope to hear from you.

That would be frustrating and I have not seen ridiculously low prices in my area.  In fact, the prices I've seen are about what the homes would appraise out for or just a little lower.

On the short sale listing I had I kind of figured out what it would appraise for and lowered the price to where I thought the bank would consider accepting the short sale based on what they told me.  I got 2 full priced offers and one $6,000 over asking price.

As an example, I had reduced the condo to $250,000, a price I figured it would at least appraise for, without much activity (there were showings but no offers).  Once I started the short sale with a price of $230,000 I started getting action with the 3 offers (I got a 4th offer at such a ridiculously low price I forgot about it).  It sold for $236,000.    

In a perfect world you would know with absolute certainty what the bank will accept. And in that world the bank would be very willing AND able to communicate it's needs. Unfortunately, it isnt possible for the loan servicers to give you a yes/no answer on every property in regards to wether or not it will do a short sale. I think you are missing the true volume that these loan servicers are experiancing in regards to forclosures. Your area may not have that many forclosures, yet, and I can see how you would not know the magnitude of the situation. But the fact is that nationwide there is a tremendious amount of homeowners facing the decision to do a short sale or not and not enough agents that understand the process to advise them on their options.

To summarize, the loan servicers are forced to take this approach in most cases... "Show us a purchase contract and we will make a decision as to wether or not we can do a short sale in this case." It is tragic but true.

In northern Calif I noticed that practice a couple years ago when things began to go wrong...sh sale LA would undermine the neighborhood active prices and cause buyers to ignore the normal sales, and wait for the short sale price to drop or lowball that low asking price, send in the one offer and wait eons for no bank response because it was a ridiculous offer, meanwhile buyers think the whole market will go that direction so they wait to buy....you are on the beginning edge of what happened here. Now values are about 40% OF the 2006 values! We went from an average of $286/sf to about $112/sf now in some areas.