Why Make Short Sales Even More Difficult????

By
Real Estate Broker/Owner with Heart Realty Group, Inc.. IL-471.002355

It started simply enough, I needed to find some houses for a new buyer that can close quickly located in a couple of towns near my office.  Luckily the buyer's wants are very specific so the search was narrowed to a few.  Because I wanted to eliminate short sales, unless the sale had fallen apart due to a buyer walking away, I thought it would be easy.

Calling the 2 listings that claimed that they needed a new buyer because their short sale was approved, but the original deal fell apart, I found out that things are not what they look like. 

The first agent informed me that yes, they were looking for another offer.  As we spoke I found out that the agent actually had submitted multiple offers to the bank and that the bank was going to decide which was the best offer???   OK, now having worked short sales for a bit I know how hard it is for a bank to make a decision on 1 signed offer...months.  Now why would anyone send in multiple offers so that they can take even more time????  Do you wonder why the buyers don't stay? 

Now in my neck of the woods, the seller still needs to sign the offer before we send it to the bank for 3rd party approval.  The seller still owns the property until it is sold at the sheriff's sale.  Now perhaps your area is different.  But here, in Chicagoland, in my MLS when the seller signs that offer we place it as CONTINGENT - with the contingency being 3rd party approval.  Now I understand why some Realtors may not want to do that ....they want to continue getting back up offers.  I will accept back up offers as long as all parties know that is the case.

I am currently dealing with a short sale that fell apart.  I have reactivated the listing and indicated that the bank has approved at the current new list price and that I am looking for a replacement buyer, many other agents in the same boat are doing that.  How the bank will deal with the replacement offer I really don't know.  If its for the same amount of money I am hoping that they will reapprove and keep the closing date from the original offer and we can make everyone happy!

I don't think its doing anyone any favors by letting the bank take multiple offers on a short sale.  I always thought that if multiple offers come in to a listing that the realtor and seller should look at the merits of  all offers and submit the best one to the bank for consideration.

I can see if the bank wants to play that game once the property is an REO but why should we as professionals make it even more difficult to complete a short sale by submitting multiple offers that are not even signed by the seller - which in my mind is not an actual "offer".  A buyer has an even easier time getting out of the contract because in actuality there is no contract.  At least in my mind, or am I totally off track here??

I would not put any buyer of mine into this type of situation especially with all the available inventory out there.  If I need enlightment on this issue, please let me know.

Short sales are difficult enough without adding more issues to them....let's keep it simple, please!

 

Posted by

Evelyn Santiago

Managing Broker/Owner - 630-251-0059

Heart Realty Group, Inc.

We are Passionate About Real Estate!

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Rainer
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Paul Tomlinson
Fox Valley Property Solutions - Montgomery, IL

Evelyn, I'm in your neck of the woods and I'm an investor. Although some investors consider themselves experts in getting great deals on short sales, the way that process is setup is severely flawed. In the present climate, I prefer to make cash offers on foreclosed properties and still submit my offers with pictures showing the damage in the property and what needs to be fixed (same as I would submit in a short sale). My offer comes in saying that I can close in 7-10 days and then I let the bank try to run with it. Some close fast and then some can go over a couple of months like the current property that should close any day now. To be honest with you, I cannot understand the delays, even in foreclosed (vacant) properties.

Here's the deal. If I find a property that is being sold FSBO, I can close on that property within a week. I buy "as is", pulling title takes a day and getting it setup at the title company can usually be done in about 3 days. To those that might say it can't be done... I've done it.  Buying a foreclosed property adds on to that timeframe. I can tell the bank that I'm holding a briefcase of cash and am ready to close tomorrow and it can still go out a couple of months between getting association documents, pulling title, and dealing with attorney's. Again, briefcase of cash and I can close tomorrow and it can be dragged on for 60 days. The last short sale I looked at went out about 4 months (3 different folks at different times were dealing with the same paperwork and then lost paperwork at the bank) and I simply moved on to a much easier closing. Again, a FSBO which I closed on within a week.

As a real estate investor, I love dealing with realtors, attorney's, title companies, banks, etc.... its part of the business. The issue however is the more people you add to the pot, the longer a closing can take. My realtor is my golden goose who brings great deals to me. My attorney helps to smooth things along the way. The banks lend when I need help. My title company handles the numbers with ease. But again, here's the deal. I could have closed on this latest property within a week if it had been in my hands but instead because it is going through so many hands (and no bank needed), phone calls are ignored and time is delayed. As a real estate investor, time is money and delays need to be kept to a minimum.

Sep 23, 2009 09:26 AM #1
Rainmaker
1,289,051
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Evelyn:  There are so many short sales horror stories out there.  As of this week, I can add a new one of my own.  The seller was a developer with bad credit, about ready to lose not only the house but the entire subdivision and his entire business ... and a very bad attitude to match it all.  (In this particular case, I don't think the bad attitude was a result of his financial situation, but the complete opposite.  His financial situation was a result of his bad attitude and bad business conduct.)  In short, information regarding his financial situation was not divulged in any manner until title work was done.  He couldn't sell the home involved in the contract he's so under-water.   

I am hoping that we can straighten out this mess soon and experience a turnaround of the housing industry as a whole.  My fear is that until the major lenders adopt better methods of dealing with this crisis, that crisis will continue.  It's mostly about their attitude ... and that has to drastically change.

I personally advise my referral partners to stay clear of short sales because of the very headaches you describe.  The emotional upheaval for the new buyer is awful ... and the professionals involved in the transaction as well.  There are just too many negatives and possibilities for bad ending results .. or no results at all.

Best of luck moving forward with your client ...

Gene

Sep 26, 2009 04:23 AM #2
Rainmaker
264,532
Dan Edwards 425-276-7008
Keller Williams Realty - Bellevue - Bellevue, WA

I think we should change the name to long sales...  We cannot avoid them, but they change the complexity of the market.  A buyer sort of commits and misses out on other opportunity.  Not for my clients, I will show them any home that meets there needs, but if a short sale is on they want to make an offer on, the seller will have to accept the fact that if we find greener grass...we are out of there!

Oct 20, 2009 04:39 PM #3
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Evelyn Santiago, Managing Broker Heart Realty Group, Inc.

Passionate About Real Estate & Our Clients!
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