There have been rumors of the banks, such as Countrywide, stating that they are attempting to streamline the short sale process in order to get more completed in a shorter amount of time. As soon as the completed short sale packet and offer is submitted to them, they want to see 30 day turn-around time on the release and offer response. Wouldn't that be awesome?!
From my perspective, this is not only impossible with the current process, but is only going to get worse for awhile, not better. With the increasing quantity of short sales, the lenders are being overloaded and do not have the manpower to handle them. They are also being forced to hire relatively untrained staffing to help, which is creating a mess of lost or misfiled paperwork. Personally I have had banks lose or misfile my paperwork more than once for the same deal, forcing the time frame back at least 3 days per incident, and now I am told that it will be another 30 days before I am even assigned a loss mitigator!
The ramifications are not good...lost offers not having the patience to stick it out or they find something else, buyers agents not wanting to show or put offers on short sales, more foreclosures occurring because the time ran out and the bank fails to postpone, BPOs and appraisals becoming invalid, and of course fewer agents wanting to take short sale listings. Most of us in real estate are stressed enough already, and it is only going to get worse.
So then what can be done? I believe three things need to happen in order to help stem the tide...
1) Only trained brokers should take on short sales. Incorrect or incomplete paperwork can blow a deal. I don't believe that they need to spend a ton of money for this, just be sure to at least get the basics down and have a highly knowledgeable principal broker on hand to go over everything. At this time there are still no accredited, aknowledged or officially certified courses available that I know of, and that should be one of the first things our MLS and Realtor Associations should consider doing.
2) Lenders should postpone the foreclosure date if a valid short sale is in progress.
3) Lenders should pre-approve all short sales, being instrumental in establishing the listing price. This would prevent many short sales that are both under and overpriced. Too low of a listing price causes unfair issues with competing properties and are often turned down by the lenders anyway, causing deals to foreclose or simply waste time. Too high and no offers come in forcing the foreclosure.
I believe this could work if the lenders were willing to get the BPO/appraisal done up front as soon as the listing agent submits the short sale packet. At the very least it would save everyone time, and in turn save the lender money in the long run. Perhaps it would even help keep the market prices up by leveling the field.
Unless we can get this to happen, I believe we are in for a very frustrating time with short sales. Consider carefully before taking a listing, even so far as ordering a preliminary title search before accepting it. Sellers don't always tell you everything up front, and often they don't even know.
Londi
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