Cindy  -  Good counter point.  I think the frustration comes from trying to deal with lenders ( and 3 rd party servicers ) who seem quite unresponsive !

Cindy,

I agree with your concept.  NAR is not here to discriminate against property owners, be they families, banks or trusts. Your points regarding short sale listings is refreshing.  I personally dislike dealing with unprepared short sale listing agents.

Ray

Sorry Cindy I don't agree.  I just lost a buyer and a deal because I was told that we would not get a response for 3-6 weeks and the buyer got frustrated and went out & bought another house.  There was a misunderstanding involved on his part but it sure put my back against the wall.  I totally enjoy multiple offers and bidding wars, however I have made it an active & responsive event, not a dragged out manipulative situation.

Local Associations, not NAR should require proper and accurate info be given to selling agents.  This nonsense of commission being determined by the bank post contractual is ridiculous.   It should be determined and agreed upon aforetime.

I agree that lenders need a wake-up call concerning the inability of their staff to handle the backlog.  I would be interested to see how a meeting with them would turn out.   

Cindy - I agree but, I feel that the L/A needs to do their job and list the info on the listing and buyers agents need to inform their client that it's not going to be a 30 day close. It's all about communication.

This is a multi-faceted issue. Up in my neighborhood it's not uncommon for agents to take a short sale without preparation because they know that a) the bank will take forever to help them get prepared and b) some banks will come back with "when we see the offer, we'll go from there" and c) if the house is in halfway decent condition it might actually sell to a buyer willing to wade through the red tape.

You know what puzzles me about this whole mess?  During the "frenzy" people had money to cover closing costs and and amount above the appraisal they needed to pay in cash. Now they can't come up with the few thousand they may need to either bring their mortgage current or pay the difference at the table.

Back in the day (the late '90s) Sellers who needed $5,000 to bring to the table got the money and closed. It wasn't pleasent but it got done.  I'm assuming these short sale Sellers have money to hire a U-Haul and the first and last month's rent somewhere.

As I mentioned to you at Pat Kennedy's great DC AR party (and it was a pleasure to meet you).  This is one niche of the real estate market I never had a taste for.  Thank God, there are still lots of Sellers out there with equity in their home!

Ken - most of the ones I've got now would take 30-40k to get out of the hole they dug themselves in, and are in it because of refi's. 

I don't think NAR can do anything about it, but we really do need to have some sort of talk with these banks.  Some of these get ridiculous.  Give me a foreclosure over a short anyday.

I can choose not to list them, sure.  And I can choose not to show them to my buyers, who then promptly find another agent to show it to them and lose all my work up till then.  So I'll grin and bear it, but I don't like them, sam I am!

Sharee -- You have a point.  Most of the Sellers are in so deep that can't see ground level. I always tell my buyers who are looking for the "deal" with short sales that they need to be prepared to take 3 months to go through the process.  That usually turns them off...and if they go to another agent, so be it.

Cindy,
You wrote - "NAR has no right to determine whether a property owner who is in financial trouble can list their home for sale."

I don't know where you or others heard that NAR even thinks that way?? Must be some urban myth going around. Ha! But as a Continuing Education Instructor at the Northern Virginia Association of REALTORS and a REALTOR for 33 years, I can certainly understand why many REALTORS might be upset with "Short Sales" these days.

First off, as you even wrote, there is a huge training problem in our industry when it comes to Short Sales - at the sales manager/broker level AND at the agent level too. Many supervising broker don't really understand the short sale process (or sometimes even care to know). Many listing agents don't have a clue as to the correct process to guide their upside down seller through the process either. "Gee, there is a Short Sale Package with contact authorization and lender information that I'm suppose to get?" So unless an agent has taken a special course on how to handle these properties, most have no idea.

Second, some of these home owners were "river boat gamblers" too... using their home like it was some giant ATM machine every time they had a whim to buy another grown up toy and thinking that real estate would only continue to go up and up. Whoops! Sometimes even real estate prices go through a "correction" after 4 to 5 straight years of 15% - 20% appreciation. We all knew this couldn't last and many of us were just shaking our heads in disbelief. I certainly didn't have any friends of mine getting 20% pay raises each year to keep up with these real estate prices. Yet these same home owners are now hoping we can bail them out. Well, our standard real estate contracts might disclose that the brokerage firm may from time to time engage in the insurance business, the home warranty business, etc., but I have yet to see where the brokerage firm aslo engages in the "Miracle Worker" business. ;-) Its not our job to save sellers from themselves.

Lastly, the lenders (called "3rd party creditors" today) are taking advantage of the our real estate community too - even though we didn't create this problem for them and their borrowers. The lenders were the ones who offered 110% financing with no qualifying documentation... thinking that the "go go" real estate market would just continue forever. "Wow, buy a house and get a check!" For those of us with not so short memories, we remember the 18%, 19% and 20% interest rates of 1980 and 1981. We also remember the S&L Bailout of 1990 too when sellers were upside in their houses for several years in the early 90's too. We knew that this market couldn't last. Why didn't they?

But now not only do these lenders not want to negotiate by countering the buyer if the offer is not to their liking - like a normal seller would so that they can afford to pay our brokerage fee - they insist that all of us real estate agents are just making way too much money and that we need to work for a smaller brokerage fee to help them out! And guess what? Some agents are willing to do just that rather than defend their fees and insist the lender make a counter offer to the buyer (who is probably more than willing to come up an additional 2% in the contract price to cover the lender and seller paying us).

Your last statment is something I can completely agree with - "if you and your clients aren't ready for the hassle then just avoid them." And more agents, after the hassles and being forced to accept the cut in their pay after doing sometimes more work than on a "normal" transaction, are saying just that - it's just not worth my time and the hassle. Sorry... just let them go to foreclosure.

Cindy:  Short sales can close.  I have proof too.  It's just a matter of knowing which one's will work for your buyer's time frame, if they work at all for your particular buyer.  Take a class in it and get realistic.  Don't hate.  LEARN how to help this distressed owners. 

Bill-persistence is how I work with the third party servicers. 

Ray-I don't think anyone likes working with unprepared agents whether it is a short sale or an ordinary sale.  I know when I call and ask the upfront questions about the property if I dont' think the agent knows what they are doing I move on and tell my clients why.

Sara-I'm okay with disagreement.  Strangely enough a good short sale will also bring multiple offers.  I have four now on one of my listings.  I make a point of calling the bank twice a week and I call all of the agents involved after I talk to the bank.  I haven't had my commission cut by any bank whether I was the listing agent or the selling agent.  We can hold the line and agents who just say OK to it set the stage for banks to think they can get away with it.

Maria-absolutely!  I have one offer out on a short sale and it is up to me to call the agent and ask for status.  I on the other hand call the agents who have presented offers on my listings with regular updates after my calls to the bank.

Ken-this market is a big reversal from the "bad" market of the 90's.  I think there are people who need to sell their homes for legitimate reasons and they should be given the option of a short sale.  However there are plenty of homes on the market today where the owners are walking away with money in the bank and then being having the debt on what they owe on their home foregiven.  This isn't right!

Sheree-I've successfully used a multi-contract process with clients.  We pick 2-3 properties that they would be happy to live in and put in offers on each of them.  It keeps the buying process moving and keeps the buyers engaged in the process.  No worries about multiple accepted offers since it is a ratified contract until the bank signs off on everything and they are always the last one to sign.

Win-I don't think that way at all.  It was a statement made in a blog that was featured on Active Rain yesterday and when I say it I was shocked.  When it comes to training on short sales there are plenty of courses being offered throughout the area that an agent SHOULD attend before they ever list a short sale.  Do they?  Of course not. 

Yes there are sellers who used their home as ATM machines and there are others who have a legitimate reason to need out of their home.  The fact that the banks treat all of them the same in their review process is part of the problem.  When it comes to commission cuts the answer is JUST SAY NO!  I have yet to have a bank cut my commission either on the selling or buying side of a short sale or foreclosure.  I agree agents need to be able to stand up for what they do and I guess that could be another blog on "get a backbone."  

Thanks for your comments and insights!

Chris-yes short sales close.  I have the commission checks to show it.  If everyone understands what it means when you put in a contract and the agents involved keep in communication it happens. 

Hey Cindy

I wrote the post in an effort to raise awareness about how short sales are handled by agents, and it seems mission accomplished.  I only used NAR in the title to get more readership, that too worked..

For all that you seem to be against what I am saying, it really seems like you are helping me make my point.  Local boards and MLSs' should get together to create standards to work within, and to offer classes on how to list such properties. 

My major complaint as an Agent is that the homes offered as short sales on the MLS are most times offered at prices that are not approved, and have no basis in reality. This takes away from the homes that are priced correctly and need to sell, but they are losing buyers to the short sales that do not happen 80% of the time.  I blame the listing agents and brokers that engage in these bait and switch tactics, who use these homes to corrall buyers and them switch them over to other homes.

Overall, I am glad to see so many comments from accorss the country, maybe enough awareness will be raised to allow some dignity to be returned to our profession. Bait and switch practice, and unknowlegeable Realtors doing business they are not qualified in is not good for our image...Which has taken enough hits as of late.

Best Wishes

Mike-our association, brokerages and title companies are offering classes how to handle short sales.  The classes are packed which is a great sign.  I haven't run across a short sale that had a "teaser" price on it.  Maybe they are out there but personally I don't see them.  I haven't picked up a single buyer from one of my short sale listings but I have picked up a few reporters :-) 

Personally, this should tick off some folks, there seem to be a lot of agents who don't understand the word NO.  Say NO to the bank when they want you to cut your commission.  It is a very powerful word and if you use it you might be surprised what happens. 

Thanks for stopping by and making me let off some steam yesterday.

Great post and well said. We have closed many short sales, but the prep work has to be done correctly up front if there is to be success.

Anne & Eddie-congratulations on your success.  I don't think short sales are going to go away anytime soon.

Hey Cindy...By the way, the emails and comments are running about 80% toward the need for an overhaul of how short sales are hanlded. mabe some good will come out of this mess.

Best of luck

Cindy PS.....the differing comments again bring the point forward that Real Estate is Local...It has been inteesting to see some of the comments that refer to rules that are specific to thier state , or their MLS.

You commented on not seeing the amount of homes just priced ridiculously on the MLS, we are full of it here.Even the first commetner on my post said she was guilty of it...Its bait and switch, and draws attention away from marketable properties that just sit by why the buyers are tied up with these gamers

Sorry for the Hi jack

Cindy-  Great point.  Short sales should not be banned any more than they should ban over-priced listings.

I do agree that brokers need to wake up and control their agents.  But we all know; that even if we got the large brokerages to follow-through; there will always be those small firms that fly by the seat of their pants with EVERY deal-- let alone short sales!

The real issue is the lenders.  The process is there to help sellers in real trouble.  However the lenders are getting such a bad reputation; that most agents (me included) guide their buyers far awat from short sales.

You deserve a Gold Star for every Short Sale you do.  As I say about REO agents... 

THANK GOODNESS for you all ! 

Cindy, all my short sales have been successful.  Takes more work and patience, but the rewards are still there. 

Working short sales has been frustrating to say the least. I'll rather wait till it becomes and REO, then things are different, the seller is the bank and the negotiations get more stright forward.  But I do believe that we as Realtors must help the banks unload their inventory so we can benefit by making our contributions to the overal recovery.

How'd I miss this one?  Cindy, you've earned featured status on What's Hot In Virginia.

James-thanks for weighing in.  I'm sure there are agents who are far more successful than I am with short sales.  I just take them one at a time and try to make them work.

Kay-congratulations.  We need to hear more success stories!

Antonio-we are all working to reduce the inventory one house at a time.  There is a significant timeframe between short sale and REO.  Most of the short sale homes are still owner occupied and in okay condition.  Sometimes by the time they become and REO they are looking very sad.

Tchaka-Thanks!  Glad you found me :-)

Cindy - great post.  I agree that agents should be able to list and sell short sales; just not negotiate them with the bank (our E&O doesn't cover that).  Education is the key here and too many Brokers do not provide it.

Tina in Virginia

I usually go through at the very least 4 buyers on my short sale listings because the banks take too long.  I try to tell the bank they have to go quicker because buyers walk away thinking they are missing out on something else not knowing what is going to happen.  They are frustrating but they do work most of the time if they are done with a lot of effort and it does save a few from going to foreclosure which may prevent another bankruptcy. 

Cindy:  I'm right there with you.  Why aren't Broker's requiring the packet be put together and submiited with the listing paperwork.  It's the only way to start a short sale and head for success.  Any other approach is madness.

Tina-thanks for commenting.  By the time the banks figure out the process the problem will be over :-)

Stella- The same company that takes 60 days to respond to a short sale can respond to a foreclosure in 24 hours.  Go figure!

Chris-Unfortunately I think some managing brokers are just as clueless as their agents.  It is going to take a lot of education and process reengineering to straighten this out.