WHEN THE WOLF IS RUNNING THE HEN HOUSE...

By
Real Estate Broker/Owner with Foster Group Realtors WA DOL# 26639

on short sales..INSANITY RULES

Author's Added Note:  Wow - this hit a nerve!  I know its supposed be a fox, but foxes are cute so I chose a wolf.  Also the following discussion does not mean we shouldn't help our short sale sellers. Listing short sales is a specialty skill - If you aren't sure how to do it properly, you should consider referring the listing to a specialist. It is all about getting the seller ready for the process. To all you listing short sale specialists....we love you. If we have to show a short sale, the listing agent's knowledge and skill with them is number one in our mind.

--------

Why any agent would bring a perfectly sane buyer (investor or otherwise) into the short sale process is beyond me!  (Yes I am guilty)  We all know that locked up capital is bad. If we added all the buyers waiting six months for an "inane and uniformed" answer from a national lender on properties the lender (theoretically, desperately) needs to sell, the backlog number would be staggering.  We have the economy of a small nation trapped in a process created by the very guys who caused this mess.

If we took all the buying power wasted on this failed process and put it to work in the market we wouldn't have a housing crisis. The numbers would reflect the real will of consumers. 

OK, we are guilty as charged. Like any broker, we follow the rules. We represent our clients, and if they must sell short, we work the system. If a buyer insists on buying a short sale property, we present the offer.  Then we watch the current process kill the buyer's motivation and harass the seller for more of the "same" information. Ultimately 9 out of 10 fail. Is this our new job? We don't think so!

SHORT SALES ARE A THING OF THE PAST

They are over and done with until banks develop a process to evaluate and promptly review perfectly good offers in a more efficient way. My new rule for buyers is simple -we will not make an offer on a short sale without information from the seller's agent that we can have a 10 day response.  Let's call that an approved short sale.  Even a complete refusal will be fine. Just tell us now!

VOTE WITH YOUR DOLLARS

 If we just say NO to this process --- it will go away.  Not a moment too soon. We have no way to evaluate the economic cost of all the lost hours and trapped capital pursuing some worthless effort of buying a property that is in this hell-hole of a system. But we see the results every day.   Why not advise our sellers to let them (naturally after talking to a lawyer) foreclose? Let the property turn to weeds and come back 6 to 9 months later to make an offer 35% lower - even if we need gas masks to enter the house, because the lender has turned off the water, gas and all other services.

BUT WE WANT TO HELP OUR SELLERS

I know we do, but what help is it if the bank reserves the right to sue them.  Sellers are doing short sales in the misguided opinion that it will reduce the credit score impact and amazingly, because they want to do the right thing.  As their broker, you need to tell them it is not necessarily so, and help them get legal advice. They may faithfully execute the effort to sell the house, show it well, and maintain it despite their personal loss. They will still be subject to the legal remedies of the bank.  Enough.  Sometimes you need to walk away.

BUT OUR BUYERS WANT A DEAL 

In order to get a deal you need a party on the other end to agree. Short sale sellers will agree but don't have the authority to sell.  Buyers need approved sellers who have done their homework and are ready to deal. This is much better when the bank has already done whatever they are going to do.   Dare we say post-foreclosure? BANK OWNED - aka REO. At least at that point a result has been determined.

Our experience is that our clients have a 3 month tolerance for BS. Whatever they liked about the property, in 3 months they will be gone. Not only will they be done with the process but they will rethink whether they even want to buy a property, or play at all... in this bank run game.

 JUST SAY NO!

 When buyer and seller meet on terms things usually work out. They sort out inspection and other items and meet in the market. Apparently now, the bank is dictating the rules.  We, as brokers, can decide if we want to participate with our clients or move them to something better.  The days of selling a house and enjoying the happy result for all parties seem dim, but we won't give up.

We represent our buyers and sellers. When we know a process is flawed or even unfair we can just say NO! Eventually our message will reach the banks and legislators and they will end this unfair, disrespectful and inefficient process called "unapproved short sales".

Doug and Lorena

 

close

Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Karen Kruschka 08/31/2010 08:36 AM
  2. Bob & Leilani Souza 08/31/2010 12:37 PM
Topic:
ActiveRain Community
Tags:
short sales
bellingham investments

Spam prevention
Show All Comments
Rainmaker
84,472
Simon Mills
Mills Realty - Toluca Lake, CA

I've successfully represented sellers and buyers on short sales.  Yes they are frustrating, yest the lenders often make no sense, but they have worked for me. 

I don't think the statement regarding buying power being tied up is accurate.  Most buyers on short sales never have any funds tied up and they often put offes on multiple properties hoping to get one.  I understand your frustration and your post, but that statement is not factual.

Aug 31, 2010 09:13 AM #17
Ambassador
525,289
Tom Branch
RE/MAX Dallas Suburbs - Plano, TX
Broker, CDPE, SFR, ACRE, Plano TX Ambassador

Short Sales Done?  I've closed 12 so far this year and have another 8 working.  90+ percent of mine close so always try to work with an experienced listing agent.

I expect the number will be even greater next year.

Tom

 

Aug 31, 2010 09:14 AM #18
Rainmaker
318,966
Tamara Inzunza
RE/MAX Executives - Alexandria, VA
Close-In Alexandria and Arlington Living

I've been having success with short sales as well.  It helps when there is an experienced agent on the listing side. I have found that they're usually not a good fit for first-time buyers because they tend to lose interest very quickly.

Aug 31, 2010 09:25 AM #19
Rainer
34,635
Carl Pruitt
FHA Loan Advice - Buford, GA
http://FHALoanAdvice.com

This is blowback from the bank bailouts. Banks really have no incentive to do short sales at all so it is no surprise they are difficult to complete.

Aug 31, 2010 09:27 AM #20
Rainmaker
346,268
Dawn Maloney
RE/MAX Trinity Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson & Northeastern Ohio

If we say no during this phase of the process, we are telling the homeowners, "Too bad for you."

I would rather save a homeowner from getting forced into foreclosure than sit by and say, "That's too hard, besides, it's a flawed process."

Mine close for the most part unless I am picking up the pieces from an agent who didn't know what to do, or unless the homeowner will not cooperate. Yes there are negotiator idiots, bad appraisers, and appalling investors to deal with, too. And, let's not forget, an abundance of frustration along the way.

You leave the "flawed" short sales to me, and wait for the easy ones, and I will build clients for life.

 

Aug 31, 2010 09:28 AM #21
Rainmaker
715,721
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY
There is a buyer for everything - if the banks will approve it. Short sales are not a big part of my market. But, they are part of the inventoy and sone buyers are willing to go through the hoops needed. To say "just say no" hurts those who need the most help - distressed sellers. It also undermines your market by pulling prices down further. The only thing I agree with here is that if the buyer is on s time frame - a short sale is probably not for them.
Aug 31, 2010 09:38 AM #22
Rainmaker
1,141,818
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Well I guess I'm in a boat by myself. I LOVE helping sellers through the short sale process. Giving up and just being foreclosed on is rarely the best option. It has a long lasting affect on the sellers credit. A deficiency judgment is pretty much automatic. It's bad for the neighborhood and brings property values down even further. So many negatives.

The solution is for agents to learn how to properly work short sales. The lenders are much better at it today than they were even 6 months ago.

Now having said that I would welcome the day when doing short sales is no longer necessary. But unless there is a miracle and property values go up about 200% that ain't happening.

So while your post is fun and I'm sure it felt good to write it's not reality for those of us in Florida, Nevada and California. Ya'll can only imagine what it's like in our markets. It's horrible. And I refuse to throw my sellers to the wolves.

Aug 31, 2010 10:14 AM #23
Rainer
47,522
Peggy Noel
RE/MAX Commonwealth - Chesterfield, VA
Bouchard, ABR, CDPE, SFR

Short sales are not for the faint of heart - but I have found that speaking kindly, explaining the situation and then contacting your senator can work miracles.

 

Aug 31, 2010 11:08 AM #24
Ambassador
1,873,450
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Give them the success statistics and the timeline, and THEN if that short sale strategy is what they want to pursue, it is their life...

Aug 31, 2010 11:26 AM #25
Ambassador
1,576,606
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

I am doing a lot of short sales mostly with sellers and some with buyers. First, I think you need to dig into real estate history befor you make braod statements. We just had the biggest real estate meltdown in our countrys history and the fact we are not in a deeper rdepression than 1929 is a miracle. I have spoken with BOA's head of foreclosures and short sales and he freely admits that the problem was so monumental that no bank or ogvernment was preapred for it and they have been playing catch up ever since for a program, infrasturcture, and expertise. Now they are catching up. This month I will close two short sale listings in 45 days with Chase and US Bank. My sellers will avoid a foreclosure, a further hit on credit and the ability to get an FHA loan in less than 3 years. The buyers get a home under normal market value. If you don't want to do short sales that is fine, but don't presume for a moment that this is not a good option for a family and just write if off.

Aug 31, 2010 12:15 PM #26
Ambassador
2,335,067
Fred Griffin presently on Leave of Absence
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Doug and Lorena, I hear your frustration loud and clear.

I refer out any short sales that come my way, no matter how tempting the listing.   It is not an area I am expert in, nor do I have the time and patience to deal with short sales.  If  a Buyer I am working with is interested in a short sale property, I give them "fair warning", and will refer them to the LA if they want to pursue it.

Having said that:   Joe Pryor #26 makes an excellent rebuttal.  Families / Sellers facing Short Sale are real people in real trouble; the least that the industry can do is throw them a life raft.

 

Aug 31, 2010 12:53 PM #27
Rainer
48,151
Victor T. Gurrola
Remax Realty 100 - Diamond Bar, CA
Diamond Bar Real Estate Professional

I'm sorry to hear all the heart ache, I personally Love short sales and since most of the Realotrs have given up on them it keeps me very busy. With that said I wouldnt mind a bit more REO's to show my buyers.

Aug 31, 2010 12:56 PM #28
Rainmaker
1,152,808
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

What a fabulous tactic.  If every realtor got together and did this what a difference we could make.  Unfortunately this would just increase the number of foreclosures  to the nth degree until the banks got it.  But we can dream.

Aug 31, 2010 12:58 PM #29
Rainmaker
18,749
Foster Group Realtors - HomeSmart One Realty
Foster Group Realtors - Bellingham, WA

Author's Added Note:  Wow - this hit a nerve!  Thank you all for the great responses.

I know its supposed be a fox, but foxes are cute so I chose a wolf. 

Also the following discussion does not mean we shouldn't help our short sale sellers. Listing short sales is a specialty skill - If you aren't sure how to do it properly, you should consider referring the listing to a specialist. It is all about getting the seller ready for the process. To all you listing short sale specialists....we love you. If we have to show a short sale, the listing agent's knowledge and skill with them is number one in our mind.

Doug and Lorena

Aug 31, 2010 01:31 PM #30
Rainer
437,789
Terry Chenier
Homelife Glenayre Realty - Mission, BC

Doug and Loreena,

I've been reading a lot of comments like this and it's beyond me why anyone would even get involved with them.

Aug 31, 2010 05:25 PM #32
Rainmaker
354,640
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

I know where your frustration comes from but I have a feeling that Uncle Sherman might have an issue with a post like this.

Aug 31, 2010 07:57 PM #33
Rainmaker
79,881
Vanessa Calhoun
PalmerHouse Properties & Associates, LLC - Atlanta, GA
Your Greater Atlanta Marketing Guru!!

I'm inclined to agree with Mike #31. I ALWAYS pre-qualify the listing agent when I represent the buyer and I WELCOME any selling agent to pre-qualify me when they're representing the buyer. I've successfully closed 3 of my short sale listings in August and am in the process of listing a HAFA pre-approved short sale today, and on schedule to close two more this month. If the listing agent is knowledgeable about the process, has the ability to foresee a potential problem ( like the likelihood of a promissory note to the seller), then the length and overall "shock and awe" can greatly diminished. I'm still appalled at how many agents submit incomplete short sale packages and then complain about the length of time. Do you know why it takes so long??? It's because YOUR file has gone to the bottom of the pile and the negotiator is working on completed files! The fact is that short sales are not new and will not disappear overnight. If someone has a business model in which they can fully bypass a facet of their industry (that's growing in our area) and still be able to support their families, then many kudos to them. I, for one, would rather continually educate myself so that I may fully represent ALL of my clients to the best of my ability.

P.S. To have a seller look at you at closing with tears in their eyes thanking you for helping them avoid a financial disaster is absolutely priceless in my book.

Sep 01, 2010 02:56 AM #34
Ambassador
525,289
Tom Branch
RE/MAX Dallas Suburbs - Plano, TX
Broker, CDPE, SFR, ACRE, Plano TX Ambassador

While I agree with Mike #31, I'm to the point I qualify the selling agent to make sure they understand the process and have educated their buyers on the process.

Tom

Sep 01, 2010 03:30 AM #35
Ambassador
2,006,527
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

In California, avoiding short sales is simply not an option.  I don't agree that we help our client by avoiding short sales.  I think it's important that we know how the listing agent will handle the short sale, how much experience they have, and if they don't know how to do one, if they'll listen to advice.

Sep 02, 2010 04:42 PM #36
Rainmaker
1,078,873
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

We also close 9 out of 10 of our short sales and actually enjoy helping people take that huge burden off their back. If you live in Florida and don't do short sales, you are cutting out 20-30% or more of your business depending on where you live.

Sep 03, 2010 01:27 AM #37
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
18,749

Foster Group Realtors - HomeSmart One Realty

Ask me a question
*
*
*
*
Spam prevention