Can you imagine just a few short months ago that banks were asking congress for permission to get into the real estate business...? Based on how well they are currently managing their own business, I have to thank God; once in a while our representatives get things right. And, what do you think about the 2008 version of a short sale? What genius at the bank thought this one up? Let's come up with a plan that sells for less than a foreclosure and takes 2 months to approve... whose idea was it to create a whole new market value lower than foreclosures while simultaneously reducing the overall value of the market place in the process.
Don't get me wrong, I know some great folks who need to sell short... I feel very bad for their financial situation. Some banks are finally trying to give customers, who want to keep their home, a substantial workout plan. This is a very complicated problem and I do tend to oversimplify but what if the National Association of Realtors required all sellers, who are unable to satisfy their lien holders to confirm the asking price with their primary lenders before placing their home on the market. What a novel thought, an asking price that someone could actually pay to complete a transaction... In essence, it would force the bank to make a judgment on the property prior to marketing the home and adversely affecting neighborhood sales. Will someone tell me the downside to this? I mean that rhetorically... there is no downside, get it...No Downside!
So follow this... a customer can't make the payments:
They call the bank,
The bank does an appraisal,
Collects the supporting documentation,
Approves an asking price,
Customer calls a realtor to put the house on the market (with agreed compensation),
An offer comes in,
Approval by the seller,
Presented to the bank for final approval and it goes to closing...
Instead, our current system:
Realtor prices the home based on market value but low enough to get an offer ASAP...Which is it?
Generate an offer even lower than the unconfirmed sale price,
Bundle the paperwork,
Send it to a lender several times to get one person to look at the paperwork for the 1st time,
Talk to at least 7 different people not familiar with the situation,
Lender orders the BPO or maybe an appraisal,
Off to the loss mitigator to establish the workout with the customer,
Finally establish the sale price...
And repeat steps 6, 7 and 8 every time you get an offer... and I forgot, fight for your commission...
To borrow a line from Steven Covey, they clearly didn't begin with the end in mind. Am I the only one that sees the follie in all of this?
Firm asking price? Novel Idea... all offers considered? NO! Of course... Would you rather make potential owners purchasing their primary residence wait 8 weeks to get a decision on whether their offer will be accepted? The part I like best is the opening that the banks have created to let the professional short sale buyers to come in and buy at 65 cents on the dollar or less. Some are even on the fast track. Have I convinced you yet? Does anyone begin to see the flaw with this marketing strategy... no one is without blame. Congress, the NAR, Local Realtor Boards, and me... I did choose this line of work...
One final question... should we be advertising prices that require a 3rd party approval, think about that...when was that ever a good idea?... Isn't that a violation of at least a few codes...? I understand final price and terms but not the asking prices... Let's get real. Where have all the smart people gone?
My father used to say... Anthony," Don't ever trust a Bank because they are first to loan you an umbrella and the first one to ask for it back on a rainy day..." Common sense...Thanks Dad.
Tuesdays with Tony