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On a daily basis, I try to scan through all Active Rain posts that have been submitted over the previous 24 hours. Over the span of the last fifteen minutes, two posts have crossed my Dell Inspiron screen that motivated me to ask..........

Is the Short Sale Bubble about to Burst?

I've seen post after posts insinuating that SHORT SALES are the new niche. ‘If agents are willing to work, we can help homeowners in distress and make some money in the process.' Agents have responded in droves by showing their willingness to do the work. However...............................

 

 

What happens when Loss Mitigation Departments across the country aren't willing to do the work?

 What happens when they say.........

"If it goes to foreclosure, it goes to foreclosure?" (see Elizabeth Weintraub's post)

Will the Margot Cote-Murphy's of the world lose their Short Sale Broker System goldmine?

Will the time, money and effort to become an expert in handling Short Sales be for naught?

More importantly.....Will this be one more death nail for homeowners who find themselves in this uncomfortable and life changing situation?

Hey Active Rain Community! Please share your opinion on this post.

Am I overreacting or is the handwriting on the wall?

 

11 Comments on The Bursting of the Short Sale Bubble

David- We are highly successful getting our short sales closed and accepted. We are saving many homeowners and their credit too. We have lenders giving full and satisfied mortgage statements for short sales. It is a great business for us right now and we help a lot of people feel a great relief. Now, it is not for the faint of heart nor for the impatient agents. It takes a lot of skill, care and diligence. Katerina

03/21/2008 09:22 PM by Nestor & Katerina Gasset Realtors® Wellington Florida Luxury Homes (International Properties and Investments, Inc.)

David, I am trying to figure this out myself.  I know I am reading more and hearing more about it daily.  It does take skill and a lot of hard work.

03/21/2008 09:32 PM by Ray Nellum, Fort Smith Real Estate (Warnock Real Estate, LLC.)

Ultimately with the market the way it is, the mortgage lenders have found themselves in a real bind.  Sometimes cutting their losses makes sense...other times, it doesn't. 

Some companies will choose to play ball and do short sales, but some will not.  When someone hires me to represent them to sell their house and this is the only viable route to do it, then yeah, it's worth working it.  If it is being used improperly, then I'm not playing ball there anyway.

03/21/2008 09:35 PM by Ron Tarvin's Katy Agent Team-- Katy Texas Real Estate Agent (Real Estate Agent in Katy Texas with RE/MAX Grand)

no short sells in our areas

03/21/2008 09:38 PM by Brian Keller (Keller Realty and Auction)

Nice Post David and I really appreciate the links to other posts.  As long as there are very hungry agents out there willing to take on anything to make a small buck on a sale, we are going to have the short sales on the market.  Hopefully these agents will finally realize that it is not worth the time or the headache or liability to engage in these short sales.  The national statistics for shorts sales actually making it to closing are pathetic..roughly around 5% right now.

 I have adopted a Just Say No to Short Sales mantra and many of the experienced agents I know tell me they refuse to show them or list them.  The sellers are not the ones getting help here.  I advise anyone wanting to get into selling short sales contact their personal attorney to discuss the liability issues before taking a listing as a short sale.  Also, I strongly recommend that you advise any potential short seller to contact their own attorney to explore all their options before a short sale.  Deed in lieu of foreclosure handled through an attorney may often times quicker and better than a short sale situation.  But then, the agent doesn't get paid....so of course agents will try to sell people on listing their homes short...especially the very hungry ones....not necessarily looking out for the best interest of the seller...ugh!!!

03/22/2008 02:21 PM by Kristi Ross Palm Coast/Flagler County REALTOR (Hawk Beach Realty)

Krista- If you don't want to list short sales that is your decision. But I take offense to your comment that agents working the short sale market are just out to make a buck. We have saved many sellers from foreclosures. The lenders are turning down deeds in lieu of foreclosures and deeds in lieu will still have default judgments filed against them. 

We are doing our sellers a huge service. We are saving many of them their credit, their reputations and helping them get going in life again. Of course I love to make money but I also love to help people. In short sales I can do both.

We have not lost one short sale yet. But then again we know how to do them. We were doing short sales 10 and 20 years ago. There have always been short sales and lenders have approved them.

The problem is that agents don't know how to do them and the boards have stupid people coming in to teach a 1 to 3 hour class which is full of crap and stuff that is not applicable in the field.

If you are a buyers agent or working as a transaction broker for a buyer you can not REFUSE to show them short sales if that is what they want to buy or look at or if it fits into their criteria. Be careful with those words as those are violations of ethics. Also, many times a short sale buy for a buyer is the best deal for them. Our last listing short sale was sold to a buyer whose appraisal came in at over 50,000 of what the short sale lender approved for the sale! They were smiling all the way to closing! We have some awesome deals.

I think many agents don't want to do the work or wait that long to get paid! 

The buyers finally started coming in December of 2007 and we get multiple offers on all of our short sales. The ones in December closed in February! That is not a long time! 

We are working in the best interest of our sellers when we get them closed and have a short sale, we also help the economy and keep more foreclosures out of our community. 

If any of you don't want to do them, instead of poo poo on them, send them to us. We will be happy to help those sellers! We also have an attorney we work with in the very complicated situations.  

03/22/2008 02:33 PM by Nestor & Katerina Gasset Realtors® Wellington Florida Luxury Homes (International Properties and Investments, Inc.)

Nestor and Katerina,

I agree that you are a doing a great service to your clients in working with these short sales.  They can be extremely complicated but with determination you can become good at them like anything.  Glad to see you are having great success. 

03/23/2008 08:02 PM by Green Bay Homes Greg Dallaire (Micoley and Company Realtors)

Short sales are falling through all over the place in my region.

03/23/2008 11:14 PM by Carol Culkin (Century 21 - Anita Ferri Realty)

I am currently working with my first short sale now and this has all been greatly informative. Thank you!

03/25/2008 07:48 AM by Misty Thomas, Realtor Crosby, TX (Alliance Properties)

David, I certainly agree wholeheartedly with Katerina.  Short sales are very rewarding and can be done with a lot of hard work and persistence. Saving a homeowner from foreclosure is very rewarding. If agents don't want to handle a short sale with all their heart then they should find a local agent that will handle the listing and really that's the least that they can do. During this time of increasing rates of short sales and foreclosure, the agents who choose to represent these distressed sellers will be well rewarded for their chosen path. I don't feel that the trashing of short sales by agents who choose not to do them is helping anyone. As with anything you do, educate yourself and do the best that you can do or don't do it.

03/25/2008 03:29 PM by Lynn Pineda - Realtor in and around Coral Springs Real Estate (Keller Williams Realty)

David, As Katerina mentioned in her wonderful remarks, short sales have been around for quite some time and this is not anything new. Yes, there are many more than we have ever seen, but my experience has been the same now, as it was a few years ago. These are not hurry and get it sold situations. I let the buyers agent know up front that a scheduled closing could be postponed if they make an  offer and have them advise their buyer as such. I always contact my company attorney along the way, just to cover my tracks and have my sellers speak with him, or an attorney of their choice. I want them to have the best information possible. Sometimes, desperate people do desperate things and I never want a seller to regret their decision. I have closed a short sale for less than 1%, because of the lender. Buyers agent was furious, but it was stated under Realtor remarks in our MLS that all fees would be negotiated with the bank, depending on the offer. In the end, I felt good about being able to help them. My last short sale was due to serious health issues, so they were definitely worthy. They didn't simply over buy, they had owned this home for over 7 years and had never been late until his health took 'hold of him. I was glad to help them, and not upset about the lack of commission. I felt like I was "paying it forward".  Each situation is different, for sure!

03/25/2008 04:14 PM by Huntsville, Alabama Real Estate Agent Elizabeth Ramsey Cooper-Golden (Remax Huntsville/Madison)

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Real Estate Agent: Columbia SC Homes for Sale by David Patterson (Keller Williams Columbia SC)
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