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Short Sale...Reality or Urban legend???

I just wanted to chime in on the new buzz word in real estate "Short Sale" It seems like every one has them, but I just checked the MLS here in Ocala, and only 3 have closed in the last 6 months. I searched both public & agent only remarks for "short sale", and "subject" since if agents don't put the actual term short sale, they put "subject to bank approval"

I read a speech given by the head of the loss mitigation department for Countrywide Home Loans that he gave to a recent REO broker convention and he stated that they are only approving 20% of the short sale offers presented to them and he made an educated guess that other major lenders were about the same.

I just got 2 approved for sellers that I represent and they are scheduled to close in April! In my office I am finally starting to hear other say they the banks are finally starting to approve their listings that are short sales. Other agents in our area that I am talking to on a daily basis still are stating that theirs are not getting approved, even with full price offers. Is the tide starting to turn where the banks are realizing that our prices HAVE fallen that much and they will be much better off just accepting the short sales, or are the ones I got accepted and the ones in my office just the luck of the draw? Only time will tell.

Make it a great day!

Michael Veri

Realty Executives Ocala, FL

352.504.4661

http://www.buyocalahomes.com/

Posted by Michael Veri on 03/25/2008 12:30 AM

Comments (5)

5 Comments on Short Sale...Reality or Urban legend???

MAR

2008

Our market here is doing really well but I can't imagine short sales being successful. I mean either there are buyers or there isnt. If the market was doing well they would'nt have to do the short sale.

I sell in Northern CA, there have been quite a few lenders approving contracts and they do close escrow. We are in violation of our MLS if we do not state short sale in the conf remarks. If there is more than one loan on the property a short sale cannot happen unless all lenders agree to the short sale. The lenders for the most part get it now!

In Florida the lenders have the right to sue for any deficiency amount after they would sell the property in foreclosure. From my understanding, in CA they can not sue for any deficiencies. Do you know if that is accurate?

I sell in Santa Barbara, CA . We have seen a very few short sales go all the way to closing in our office. The issues for short sales have been, for us, the bank just doesn't respond to offers until a "Notice Of Default" has actually been filed. The properties that are not in default yet are just not their priority. We have seen offers sit on bankers' desks and have tried to get through to an actual person for months, literally. Of course, during that time, we have lost the buyer for another property. We have seen offers rejected out of hand because someone just doesn't want to see the loss yet...kinda silly really...We actually received a response back from one asset management department that they would rather take the property to foreclosure! They're going to lose more money by waiting and chasing the market down as they spend lots and lots of money on lawyers to take it all the way to a trustee sale....after that, Provided they still own it, they have to get BPO's from brokers, find an agent to list it as REO and so on and so on. The administrative costs have to be staggering! Having spent 10 years in banking and lending, through the late 80's and early 90's, it was my experience that banks don't always seem to make sense...The folks in the "Short Sale" departments for the asset management companies (banks) are usually hourly people with very little "empowerment" to actually get the short sale done...and they are inundated. Unless you have a "real live" contact...it looks like getting through to a "bank" person on a short sale can to be a frustrating waiting game. The sellers in these situations really need us to assist them with this. Otherwise, they are looking at a disaster. By the way, don't let the banks intimidate you out of your commission! You can be pretty firm on this point!

I'm a realtor in Connecticut and I have been doing short sales for the past 4 years for my own deals and for other realtors. You can be successful with short sales as banks will accept them. However, in my experience you can't always tell which deals the banks will accept and which ones they won't.

I have noticed that banks do not like to give money back in seller concessions. Because of this, I always talk to the buyer's agent and often ask them to rewrite the contract if they are asking for seller concessions.

If there is a 2nd mortgage and their loss is really significant, it is difficult to get a short sale accepted. Their attitiude is that $1,000 or $1,500 that the first lender allows to them is not enough to make it worth their while. I have seen this change a little but it can still be difficult.

Also, I think that it is really important to set the stage with the buyer about the length of time a "typical" short sale takes. Usually, we are looking at 2 months to get approval. If the buyer knows this up front, they will more often than not stick around. If you don't set the stage at the time of the offer, they will think something suspicious is going on.

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