Short Sales, Sport Jackets and other lies...
An interesting post from Lane Bailey of Lilburn Georgia. In my experience, many banks are willing to establish pre-approved short sales parameters regarding price and terms. But it takes time and plenty of hard work to establish a relationship and hammer out the details in advance. This can be due to different locations, but often, it is just a matter of putting forth a tremendous effort to acheive a goal. Good luck with your short sales Lane...
I just had to go get a "sport jacket" this evening... I just want to know:
What sport is a "Sport Jacket" for?
It isn't. I've watched a bunch of Olympics over the last couple of weeks... Aside from the Equestrian events (less of a sport than auto racing...) there were no competitions in "sport jackets." None. So, why do they call it a sport jacket? Maybe because it is better than "uncomfortable jacket worn for no apparent reason"?
And Short Sales?
Not much better... I know why they are called "short sales" and it isn't because they are short. It is because the bank is coming up short on the sale price. But everything else about it is long... They can take MONTHS to complete. Months. Of course, because of the extra hoops and the fact that the banks refuse to handle these sales in an efficient manner, they actually lose MORE money on them.
Non-investor buyers are not willing to wait 30 days for a counter, much less 90 or 120 days. It is flat out stupid on the part of the banks. It isn't because they are over-worked. It is because they are STUPID. They are clinging to the belief that an unrealized loss is better than a realized loss.
Banks are failing because they don't have enough cash reserve. They don't have enough cash reserve because they are disposing of non-performing assets. They aren't disposing of non-performing assets because they would have to show the loss as a loss instead of showing it as a potential loss.
But here is the rub. Investors buy property at wholesale. Residents will buy properties at retail. My investors want to see a 30% equity stake when they close. Most of them have found that. Retail buyers aren't as picky. But a retail buyer isn't going to wait two or three or four months for an answer on their offer... while being tied up in a "contract" that the bank can kill at any time... while the "seller" (occupant) can go belly-up and get foreclosed anytime. Non-investors are looking for ahouse to move into... not a wait of half a school year to find out if they can move.
And because the banks can't find their way to streamline their operations, they are giving up a HUGE extra chunk of the asset value upon disposal.
So, if you are running a bank...
Get on the stick or look for the Fed to come knocking. Answer offers in 3 days... three. Spend a couple of bucks to paint the properties and make sure that the grass is cut and the property is presentable. Maybe even list properties with agents that normally deal with real sellers instead of agents that don't answer their phone or emails and just treat every property like a file. But MOST importantly, remember that buyers are the people that are going to save your hide.
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