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Redfin's CEO asks the real estate community "What is your Short Sale policy?"

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Real Estate Agent

Glenn Kelman, CEO of Redfin, was quoted in a Wall St. Journal article today as saying that "Redfin represented buyers on 65 short-sale offers in the first quarter of 2008 but only expects to close two or three sales". As a result of this inefficient unsuccessful unfruitful closing history on short sales Redfin has enacted a Short Sales representation policy and in Glenn's blog post today, he asks the real estate community for feedback on this policy.

Here is an overview of Redfin's policy:

"What Types of Short Sales Does Redfin Support?
In many cases, Redfin will not be able to represent clients in a short sale. We’ve had plenty of clients, frustrated after months of waiting for bank approval, abandon their offers. For a short sale to have a realistic possibility of bank approval, the seller must meet several criteria, which we now insist on; this is the list that we’d like some feedback from other brokers about:

  • Only one bank has to approve the sale: .
  • The bank has confirmed receipt of the preliminary paperwork: the seller has stopped paying his mortgage, received a notice of default and sent the bank’s loss mitigation department the following:
    • a hardship letter and financial statements documenting the seller’s inability to pay his mortgage;
    • a preliminary net sheet showing what the proceeds of a sale could be after taxes and fees; and
    • a comparative market analysis (CMA) or an appraisal that establishes the home is being sold for a reasonable price.
  • There are no liens on the property:
  • The listing agent has experience or training in short sales:"
I also wonder if their lack of short sale success may partially be a result of their representation strategy?

 

Show All Comments
Patty Carroll
Vancouver, WA

What is surprising about the blog on Redfin is that they had 65 buyers but were only actually able to close 2-3 deals. This is not what one would have expected.

Apr 17, 2008 05:45 AM
Jon Washburn
Seattle, WA
Patty, I wonder if the other 62-63 buyers closed on other transactions, or will eventually close on them with Redfin.
Apr 17, 2008 05:53 AM
Celeste "SALLY" Cheeseman
Liberty Homes - Mililani, HI
(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE
We haven't had many short sales except for recently and in only a couple of areas. I was appalled at how many agents are listing short sales and have no knowledge. I like your simple list and those stats for taking listings and closing only a couple is appalling as well. Don't they charge an up front fee?
Apr 17, 2008 06:25 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

In this market, short sales are necessary to move properties and save some buyers from foreclosure.  They are also an opportunity for some buyers. 

Our record is a lot better than theirs, thank Goodness.  They are about  year late with their policy.  Not only that, their policy limits opportunities for consumers.

 

Apr 17, 2008 07:13 AM
Rich Jacobson
Fathom Realty West Sound - Poulsbo, WA
Your Kitsap County WA Real Estate Broker
Hmmm...so are you saying that Redfin may not be the purple pill to solve the world's real estate woes?...or that they may have limitations on how well that can represent some clients?....interesting...
Apr 17, 2008 08:49 AM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Jonathan, It sounds like RedFin agents are just not qualified to get the job done. Maybe it's time that attend some training or team up with some xpert short sale negotiators.
Apr 17, 2008 10:00 AM
Cyndee Haydon
Charles Rutenberg Realty - Clearwater, FL
727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes

Jonathan - working with many buyers of short sales I will say that we have closed several short sales and it has taken as much as 5 months to get an answer.

I think their list is on target with knowing how far the seller is in the short sale process and how prepared they are to shepperd the deal through on their side.

I agree that if there is a first and second mortgage - you can expect a much longer process;

You'd be surprised how many agents here list properties for short sale and haven't even begun the hardship package, etc.

We've done lots of work and had buyers wait month to month to see if property is going to be foreclosed on or bank will accept short sale offer. Of those who are buying a home to live in - we find few are prepared for the uncertainty and lack of control in the whole bank process - many have given up months after no answer (thankfully to buy another home with us)

The thing I see most often is people who think because it's a short sale it MUST be a good deal - I say buyers need to keep an open mind and often sellers with lots of equity, estate sales, etc. tend to be opportunities to buy well without the bank headache.        

 

  

Apr 17, 2008 11:20 AM
Mary Pope-Handy
Christie's International Real Estate Sereno - Los Gatos, CA
CRS, CIPS, ABR, SRES, Silicon Valley
I won't do any more short sales. I have been working with willing buyers, and we've gotten into contract with willing sellers, but the banks just DO NOT RESPOND. I can't tell you how maddening it is. The banks don't answer their phone, voice mail is full, or they wait 3 months to respond (by which time the home is no longer worth what the buyer offered). It's just not worth it to spend time on these transactions that never close.  It's never a "good deal" when it doesn't close.
Apr 17, 2008 04:42 PM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

Waiting for a short sale to get approved can be a long drawn out process. It takes time and being on the phone hours upon hours. Some agents and companies just don't want to deal with them. I have found help so am on my way. If we can't deal with them another Realtor will deal with them. So I found myself forced to learn in this market. I can't see Redfin doing them based on their model unless they hired a short sale expert to handle them.

Finally, we tell our buyers if they won't do purchase a short sale and have to be in a place soon, best not to write an offer on one because "time is of the essence" is not going to happen.  

Apr 18, 2008 12:02 AM
Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!

Redfin is not in the business of servicing clients IMO. Disclaimer: This comment is an opinion and not meant to be defaming in any way. I just do not feel their business model is in the best interest of buyers or sellers. 

We do close 100% of our short sales, so just bring your buyers to our listings and we'll get 'er done!

I think that this policy is not in the best interest of the buyer but is in the best interest of the agents.

Redfin's ratio of getting only a few short sales through only proves they are not experienced and not a vital part of the transaction. They probably just send the offer over to the listing office and leave it at that. How are they proactive in the transaction? 

I am SO sick of agents especially spilling out negatives about short sales. That is no better than the media preaching their doom and gloom.

Short sales are a great opportunity. Sellers are saved from foreclosure, buyers are getting great deals, banks are saving money by not foreclosing, the economy is being built up because inventory is being moved and good agents who know what they are doing get paid! I can't think of a better win/win transaction! Katerina 

Apr 30, 2008 10:05 AM
Grace Keng
Keller Williams Realty Cupertino - Cupertino, CA
CRS, CDPE (408) 799-8887

Short sales do close. Those success rate is kind of low. It could be the luck or...

If the 1st and 2nd by the different banks it WILL take longer and alot of time is those asset managers are overloaded.

It took my short short sale for 3 months and closed last year.

Grace

Aug 21, 2008 01:24 PM
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