RISMedia recently published an article on short sales, which was written from a different perspective. The author, Jim Wasserman, approaches the "Short Sale Opportunity" as more of a market trial and test than an investor opportunity. He states, "Short sales are a phenomenon that reappears like clockwork when real estate sours. Alongside repo listings, short sales are defining a new reality in which banks sell most area real estate."
He makes the point that most buyers serious about finding a home in 2010 will preview, and have a good chance of considering, a short sale, if not a bank-owned property. Wasserman says, "Thousands of buyers have scored fabulous deals with short sales. Thousands of others have learned the ropes the hard way." Many banks have tried hard to shorten the process, but times for approval to closing can be 90-180 days. It is not uncommon for that short sale listing to go into foreclosure, even as the lender considers a bona fide offer from a buyer.
"As a new century gets on its feet, the inexplicable dimensions, frustrations and utter surprises of short sales have done more than frustrate everyone connected with them. They've become part of local culture. Adventures in short sales are making their way into family stories to be told for years.
"Maybe the homeowner filed for bankruptcy at the last minute. Or the buyer had the truck loaded and saw no sign an angry seller was packing to leave. Or at the last moment, a secondary lender asked for an illegal payment outside of escrow and scuttled the deal," Wasserman explains.
For sellers, a short sale is a way to get the problem of delinquent mortgage payments behind them and move on with their lives. For the lender, it will accept less than it is owed but not necessarily less than the market value of the property. And buyers are an outside 3rd party while the lender(s) negotiate with their investor and the seller to achieve the smallest loss. If a secondary lender is involved, one which - for instance - helped with the down payment or made an equity loan, then the process is more convoluted.
"J.K. Huey, a senior Wells Fargo executive heading the bank's short sale unit, said short sales take so long because the bank must negotiate deals with investors, secondary lenders and mortgage insurers. Amid the large-scale meltdown in U.S. housing markets, Wells Fargo stands in line to negotiate short -sales agreements with these parties alongside all the other major lenders. 'Everybody is trying to minimize their losses,' Huey said.
And Wasserman cites more problems caused by secondary lenders, "Among major threats to getting a deal done is a secondary lender refusing to release a lien. Agents say it happens often: The lender that financed the down payment or home equity loan balks at the short sale unless the buyer or seller kicks in a couple of thousand dollars extra. Worse, the secondary lender might want that to be kept secret from the primary lender."
He concludes, "Most real estate agents believe short sales will continue for years as the market rebalances. But few believe they will become much easier."
So what is a buyer or seller to do in today's Mercer County NJ real estate marketplace, full of short sales and distressed (and stressed) homeowners? Find and use a Realtor experienced in short sales, someone who knows the process, who will work for your interests, and has the patience and negotiating skills to see the escrow through to conclusion.
I have that knowledge and experience in Mercer County real estate. Call or email me, buyer or seller, and let's talk about your options.