Foreclosures and Short Sales- What's the problem here?

By
Real Estate Agent with Preferred Real Estate Services

 I have encountered an irritating situation.  Have you?  I have many clients looking for a "good buy".  So the first thing in their mind is to buy a Foreclosure or Short Sale property.

 The process takes 4-8 weeks to get an answer.  Why?  You would think that it would move a bit more quickly.  I had a young couple make a full price offer on a foreclosure property.  The only contingency was home inspection (for informational purposes only).  It was a clean contract and we had (loan commitment) the ability to close in 10 days from Ratification of the Contract.  The Bank countered after 3 weeks with an offer that was $20,000 over the listing price.

 Talk about steamed!!!!!!!!!  It doesn't seem ethical!!!!!!  I understand that it is just a file on a desk somewhere.  But when you have people who can and want to buy at the listing price....it gets frustrating!

 You seem to get the better "deal" when you buy a home still in possession of the homeowner (not a short sale).  Sellers are delighted to entertain offers. 

 Short sales seem alot easier to get approved.  However, I have experienced similar circumstances.

 I understand this will be the norm for the next few years.  But jeesh!  It really makes our clients upset!  I feel that they look at us as if we are lying to them when we say, "I don't know why the bank did not accept your (full price) offer." 

 Hmmmmm...... Interesting isn't it?

Comments (11)

Heather the Realtor Orlando, Lake Mary
LemonTree Realty - Orlando, FL
First Time Home Buyers, Bank Owned Homes
Haha short sales easy to get approved that's an oximoron. :0 I have been heavily dealing in them now and not a single one is easy to get approved, as long as a buyer has time they can be great deals but the major down fall to them is time. There must only be 2 people in each lenders company working these things or at least that is my only explanation as to why they take so long.
Jan 21, 2008 07:31 AM
Rachel Clem
Preferred Real Estate Services - Fredericksburg, VA
I know it isn't good news.  But at least I am not the only one.  Thank you for your post!
Jan 21, 2008 07:35 AM
Anonymous
Anonymous
Frustrating YES...do you think anyone is really working them? You would think the banks would want o get from under these loans A.S.A.P.  It certainley does not seem like it
Jan 21, 2008 07:40 AM
#3
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Rachel,

What is frustrating is that after 2 weeks when you actually get to speak to a negotiator, probably after being on the line waiting for half an hour to forty minutes they say, well I am going to need an appraisal. Well didn't they know that two weeks ago. Why didn't they order it straight away. Now it is going to be another two weeks before we hear from them again, and guess what you won't unless you start calling 5 days from now. You have to be persistent and also stay calm, however steamed you are.

I also heard on a short sale it is nothing to do with the asking price, everything revolves around the BPO. They can settle these for about 80-82% net of the BPO. So if the BPO comes in high for the area they will come back at you with a counter. Frustrating isn't it.

Nick

Jan 21, 2008 07:45 AM
Lance Mohr
Future Home Realty - Tampa, FL

We are going through a huge foreclosure mess in Tampa, Florida. We just got named the "worst real estate market in the nation" for the second month in a row.

We all just have to hang in there.

Lance Mohr

Jan 22, 2008 05:58 AM
Karen Kruschka
RE/MAX Executives - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"
Rachel,  The problem is aggravated by the fact the owners of the foreclosed properties are using asset managers that don't live anywhere near our area and they have no sense of urgancy,  Karen Kruschka
Jan 22, 2008 06:02 AM
Brian Block
RE/MAX Allegiance, Managing Broker/Branch Vice President - McLean, VA
Northern Virginia & D.C. Real Estate
Rachel, I understand your frustration and I think it is experienced by many buyer's agents.  It transfers over to the listing agents who list short sales as well.  Less buyer's agents are bringing their clients to see the short sales listings since they know the process can be aggravating.  I'm experiencing that right now with a short sale listing.
Jan 22, 2008 06:11 AM
Kelly Shoemaker
Coldwell Banker SELECT - Broken Arrow, OK
Realtor Broken Arrow, OK

Not only are they difficult at best but then the lender wants to renegotiate your commission if you have both sides.  That happened to me not too long ago.  I understand that I was actually making more then the 2nd, oh yeah there was a first and a second to deal with, so they kept negotiating my commission until they eventually ended up with about $500 more than what I received.  Buyers do not understand the amount of time it takes on foreclosures and short sales.  I try to educate them as much as I can but you're right when you say "they want to get a good deal."

Keep your chin up!

 

Jan 22, 2008 06:26 AM
Rachel Clem
Preferred Real Estate Services - Fredericksburg, VA
I have heard that about commission re-negotiations.  One thing I have noticed in our area is that the agents that handle these are so overwhelmed with the number of deals they have to process.  I do have empathy for them.  However, there has just got to be something that can be done for expedite the process.  One would think it would benefit all?
Jan 22, 2008 10:23 AM
Anonymous
Kristi Lynn

Here is the reality.  And this needs to be a reality check for all REALTORS.  Prices that are listed on Short Sales are not approved prices.  In fact, I am of the opinion that this is false advertising by the listing agent and needs to be addressed by NAR immediately.  In our area, we have agents that are putting properties out at ridiculously low prices and getting lots of customers to call them.  They then tell the customers that problems with short sales and that the bank will probably not take the offer and try to sell them something else.  This is downright fraud in my opinion on the hands of the listing agent.  Here is my solution for anyone wanting to bring this to the attention of their regional/local Board of Realtors and NAR.  When a short sale is entered into the MLS system, it must be listed at the current amount of the mortgage that the bank holds....this would also act as a disclosure.  Then in the comments in the listing it should be stated...short sale situation...agent will submit offers to the bank.  Price is contingent upon lender approval.

 Then we will finally solve the problem of fraudulent pricing and false advertising in our MLS systems.  We should all be very fearful of what this is causing to happen.  And, in our area, the listing agent is not even required to provide proof to the MLS that they have ever spoken with the bank and that it is indeed a short sale and not an owner just trying to get offers.  Take action before your MLS system turns out to be as messed up as ours.

Jan 24, 2008 06:36 AM
#10
DeAndrea "Dee Dee" Jones
Home Buyers Marketing II, Inc. - Manassas Park, VA
The NorthernVARealEstateLady & DMVRealEstateChick
Rachel, sometimes a short sale is the only way to get rid of a property with out the buyer foreclosing.  I live in a military city where lately people are getting unexpected orders to Iraq, Afghanistan, Behrein, Japan, and England like crazy.  Usually these families need to sell their current home for one reason or another. And in the current market most owe more than their house is worth.  When done correctly from list to end.  It can work out.  Of course you run into occasional problems with banks trying to renegotiate terms but I have a Short Sale disclosure I use to educate my seller on all the risk and if Im representing the buyer it discloses everything they need to know.  For both it discloses the fact that they will need to be extremely patient................. Dee Dee Jones Chesapeake, VA. 
Jan 24, 2008 07:09 AM