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It's a DAMN Lie !!!!!

By John MacArthur

Real Estate Agent with Century 21 Redwood DC-SP98366576

April 10, 2008 01:50 AM

One of the earliest hi-tech phrases was "garbage in - garbage out". I keep reading statistics. I keep reading blogs. I hear agents sharing the same stories. The market across the country is labled over-laden with inventory. Signs are in yards block after block. It is a buyer's market. Really...read on.

Visitors to websites find page after page after page of listings. One begins to think that there are more houses for sale than could possibly be purchased. Agents do searches for clients and come up with literally hundreds of possible listings to view. Touring new homes on the market becomes a two day adventure every week and at the end of those two days, there remains many homes that are never seen.

Everyone says...........we have surplus inventory. The NAR and various local associations all offer what they purport to be empirical data that would indicate it is a buyers market.

It's a DAMN lie !

The data is not accurate. The data includes homes that appear to be "for sale", but that sale will not happen. The analysis is skewered by mis-labled homes. Every MLS is at the mercy of agents that enter the data. Agents all across the country do the listing appointments and take the listings. Taking a listing does not mean anything other than the owner of the property would like to sell.

Just taking the listing does not mean it is available for sale at the listing price.

If one goes through their MLS and removes all the 3rd party approval needed listings and removes all the short sale homes, the rest of the listings represent what is accurately available. There is no local or national standard for any MLS that requires the home to be actually available at the price listed.

If the owner has not filed the proper paper work to have a short sale approved, the home is not really available and the listing merely represents the misguided efforts of the home owner and the agent chosen to list the property. It may be available in the future. It is not a real for sale sign in the yard. It is a sign that the owner is in trouble and has sought the counsel of agent that does not understand how to handle a short sale.

Now, there are the homes that are on the market in which the agent has done everything and the owner has submitted paper work and the lender has agreed to go along with the effort. Sure they are in the mix. Of course, if an offer has been submitted to the lender for approval, they still appear as active in the MLS. There is no way of knowing that you are spending your day showing homes that may be under contract tomorrow. No one is mentioning that the bank has an offer and there is no category in the MLS for this home as well. After all, the bank wants to get the best offer and the bank has no concern for the groups of home buyers that are looking for a new home that they can actually own.

Remove all the listings that are "for sale" but not actually available and you will discover that the cupboard may be bare and the market is not quite as over loaded with inventory. It may appear that way, but it is not as it appears. Surplus inventory...we don't know. Buyer's market....we don't know. The MLS is accurate?

It's a DAMN lie !

If you feel that the abundance of inventory that is not really availble for sale now doesn't affect statistics, please share. These homes skewer the perception of the market and cost real estate agents time and marketing dollars. In the end, most of them will be foreclosed upon. Most of them will be re-listed with another agent. Most of them will then see a drastic reduction in price.

Lenders do not have an emotional attachment to the outcome. It is dollars and cents. Real estate agents by nature develop an attachment to their clients. We care. We are being emotionally drained to handle a process that is not a process. We go through motions that bring little results. We are the warm up act for the later sale as bank owned property.

Maybe I am just a little slow on the uptake and don't get it. Enlighten me!

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Steve Hoffacker

Steve Hoffacker LLC - West Palm Beach, FL

Certified Aging In Place Specialist-Instructor

John, thanks for speaking your mind and giving a nice perspective on this issue.

Apr 10, 2008 01:55 AM

Anonymous

Cindy Jones-Offering Real Estate Service for the 21st Century i

John-as somone who has short sale listings I can tell you that it isn't easy to get the bank to "approve" anything before they have a contract in hand. It doesn't matter how many hours you spend on the phone with them, it doesn't matter how many comps you send them, it doesn't matter what you throw at them the typical response is "when you send me a contract I will look at it." So what do we do? Let an owner languish in a home until foreclosure hits, ruins their credit and lives well into the future or do we try and stem the tide of debt and get them out of their home?

For the second part of showing homes that already have offers on them and the status isn't changed. Again if you don't have a ratified contract how can you change the status? If someone calls I will tell them that the home has an offer on it but the bank has not accepted it yet. I've been waiting weeks on both the buying and selling side to get answers to offers whether they are short sales or foreclosures. This is a frustrating buying season but at the same time I never head out on any short sale without first calling the listing agent. Usually within 30 seconds I can tell whether we should even bother. If they ask what short sale package is or we have an offer already at the bank then I say NEXT!

I have a harder time in this market with homes that are SO overpriced that the sellers don't stand a snowballs chance in....of getting a contract close to the price they are asking. They won't listen to reason from either their agents or the buyers. Agents should stop taking overpriced listings even more than taking short sale listings. How about that for an different opinion? Who loves ya babe!

Apr 10, 2008 02:08 AM

Joe Virnig

RE/MAX Gold Coast REALTORS, Ventura County, California - Ventura, CA

No Ordinary Joe

Thanks for speaking up. In my area agents underprice short sales, poisoning the market. Since the bank is not likely to sell anywhere near the fantasy price listed, it can only be a bait and switch tactic.

Apr 10, 2008 02:26 AM

Melina Tomson

Tomson Burnham, llc Licensed in the State of Oregon - Salem, OR

Principal Broker/Owner, M.S.

We aren't inundated with short sales here in Salem, but we also don't have an easy was in our MLS to indicate that it is. Pre-foreclosures are not the only "unavailable" active listings. I agree with Cindy that the overpriced turkeys where sellers are "firm" on price are just as bad.

Unfortunately since the agents job is to sell the house, they will push the integrity of the system as far as they can in order to get buyers in the door.

Apr 10, 2008 03:02 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Not to worry. Pretty soon the sellers will get tired of the nonsense and either take their home off the market and continue to make their payments or they'll move out and let it go to foreclosure.

I figure it will take about a year to clear the nonsense listings out of the system.

I don't blame agents for not knowing the basics of short sales. They didn't teach us that in real estate school. I do question the ethics of taking short sale listings without the basic understanding of at least what questions to ask. Throwing a home in the MLS and hoping for the best is going to get some agents sued.

There is just such an appauling lack of understanding of basic mortgage matters and how they are handled by the bank when an owner is in trouble, it's difficult to get a handle on this market.

Only about 1 in 10 agents with short sale listings know what they have. The fact that every bank treats the matter differently is the beginning of the trouble. We need structure. Problem is, the banks are not providing guidance for their own processes. Agents can do little but start at the beginning and just work their way through the mess.

Unfortunately, not every agent who takes short sale listings is a Cindy Jones or a John MacArthur.

Apr 10, 2008 09:52 AM

Tricia Flicker-Miller

Cressy & Everett Real Estate - Elkhart, IN

Cressy & Everett

While it is a little harder to decipher what is what now, I think it's a true sign of the state of our market. We may not like what is happening, and it may cause us extra work, but it is what it is. I think it's sad that so many people are in trouble.

Apr 10, 2008 11:49 AM

Sandra Carlisle (Ayers)

Berkshire Hathaway California Properties - Newport Beach, CA

Real Estate Marketing & Sales

You are absolutely right. It would be nice if they had a place to write in how many offers are on the home. We've had anwhere from 3- over 20 on a single home labeled as a short sale. If those 20 buyers would buy homes that are really available, there wouldn't be enough inventory.

Apr 10, 2008 12:31 PM

John MacArthur

Century 21 Redwood - Washington, DC

Licensed Maryland/DC Realtor, Metro DC Homes

Cindy et al - I agree with everything you say. I know it is almost impossible to get a bank to commit to anything unless they have an offer in hand. Perception is reality. The perception we have is wrong. Somehow, we have been handed the short straw in this situation. Agents all across the country are fumbling and stumbling through uncharted waters.

Lenn is quite correct. Many agents do not understand the process. They stab it with their steely knives but they just can't kill the beast. To be fair, there are no rules, no guidelines and no direction in these matters. Agents list homes for people and hope for the best.

I have watched this situation explode and like a run away train blow past our understanding.

What if we try doing things the old fashioned way. You remember. When taking a listing going over the obligations of the seller used to be common practice. If they were selling for less than they owed, agents would inquire about their ability to close the transaction. Somewhere we forgot "cash to close" was not only a term used for buyers.

If a seller answered, I do not have the funds to close, agents would either advise them that they needed to discuss the situation with their lender or advise them that they could not help them (I am pretty sure most agents prefer handling listings that offered a hope of being paid).

Short sales are not new. The tremendous amount of them today, coupled with the facts that have created them have somehow created this illusion that we are dealing with a foreign matter.

If banks will not talk. If banks will not give in indication that the sale will be approved, why are we listing the properties? Are we really so delusional that we feel we are helping? Do we really thing that by putting the home in the MLS and sticking a sign in the yard, we are doing our part to resolve the current problems?

Maybe there is a need to fill up the old ego with a preponderance of listings? Is it possible the sharing one has 15-20 listings on the market over the water cooler enhances one's image in the office? Our job is not to fill up the MLS. Our job is to present sellable inventory to the market place. If the transaction can not be completed for any reason, it is pure folly to list the property.

Over priced listings are a problem. They are of a different nature. They exemplify a discernable difference of opinion about fair market value between the seller and the buying community at large. They always possess the option of reducing the price or riding the listing out. The only approval needed for the sale is the approval of the owner.

I suppose I see many of these short sale listings as no different than a home being sold by joint tenants when only one party has signed the listing agreement. You can put it in the MLS with the footnote that another party must approve. It still is not an actual bonafide, bring the full price offer and the deal can be done listing.

Could there be a solution? I suppose it would be nice if each MLS added "Short Sale" as a status. Then they could also add "Offer submitted to third party" as another status. Our goal should be to assist in the process, not make extra work for other agents. We should be offering homes that are available and not promoting false hopes for consumers. I realize your concern about noting something is ratified when that is not the case. Please remember on rentals, we have a status "app reg" to advise folks that a lease is not signed but the application has been submitted. Is it possible that this might reduce the traffic through a home? I imagine that could be the case. I would rather that we let the consumer decide.

How many homes would any consumer want to see if they were labled "you can look, but you really can't buy it". The brief reduction in activity may be followed by some movement on the lenders part to streamline the process. As it stands right now, they are losing money based on poor lending decisions and we are doing all the work to ease their pain.

You see our clients, in these situations, are moving on, regardless of whether or not the bank approves a sale. We are not doing them any justice by just listing and hoping.

If you step back and look at the situation, the only ones that benefit from the current situation are the agents that have listed the homes that sell. Without any guidelines, that system does not benefit any particular agent. There is no skill level or competence in dumb luck.

I would prefer that we as Realtors establish a benchmark for dealing with the current market that is above the "throw it all against the wall and see what sticks" behavior we now see across the board.

Apr 11, 2008 02:57 AM

Paul Slaybaugh

Homesmart - Scottsdale, AZ

Scottsdale, AZ Real Estate

J-Mac, not much else to say but that you are correct. 100% so. Your last comment was as, if not more, dead on than your original post. Most of my buyers want to actually buy a house that is for sale at the price listed. Many will inquire about the dirt cheap short sale listings that will take months just to get any kind of an inkling as to whether the bank will play ball, but ultimately decide to purchase a home with the actual terms in plain sight. None of this "what's behind door number 2?" nonsense. We just had a buyer bolt on a short sale offer that looked like it was on the verge of acceptance (the buyer was our client) after 8 weeks of foot dragging by the bank(s). Found something they liked better that could close in 2 weeks. If the banks weren't so ridiculous in their procrastination and dealings with offers/negotiations, they would actually get rid of these properties. In this case, if they had taken 7 weeks for the approval instead of 8, they would not have one more property coming back to them. Once I explain the process to my clients, and that the home may or may not actually be for sale at the advertised terms, they typically have as little interest in these listings as I do. Thank you for writing this. It needed to be said.

Apr 11, 2008 06:25 AM

Donna Yates

BHGRE - Metro Brokers - Blue Ridge, GA

Blue Ridge Mountains

Thought I would park it here and learn from the others. I have no experience with short sales but your title certainly drew me in. Very interesting post and comments.

Apr 11, 2008 06:34 AM