Skip the Bailout; I Have a Better Idea

By
Real Estate Agent with M Realty

Brainstorming a solutionThere has been much discussion about the big bailout.  But in case anyone with any influence is listening - I have an idea that could make a big contribution to our market recovery.  Just call anytime and I'll share my insight with you - from the trenches.  I'll be waiting for your call.

For the rest of you that might be curious about what I have in mind, I'll share with you some of what happened to me this week.  Brace yourself because I feel a rant coming on....

As I have said countless times on this blog, short sales are a HUGE factor that is driving our market prices and inventory in Orange County.  For example, 64% of the active homes on the market today in Rancho Santa Margarita, under $500,000, are short sales!  In Mission Viejo, 50% of homes active on the market today under $500,000 are short sales. 

These short sales have offers that have been submitted to banks and are just awaiting approval.  They may have multiple offers.  This is buyer demand that is waiting and the last thing we need in this market is pent up buyer demand waiting.

I'd like to share with you a story about one of my short sale listings.  Within 72 hoursof listing the home back in May, I had 4 offers for asking price, and over.  We submitted them to the bank, along with the package from my seller that clearly qualified for a hardship.  The following dialogue is from this week between my short sale coordinator and the the banking institution's (a very common and well known lender) negotiator.

My Short Sale Coordinator:

"We now had 4 buyer's who have cancelled, including the last offer we submitted due to the fact that this process has taken almost 6 months.  We just can't keep buyers around that long and we can't keep the value the same for that period of time.  Values are dropping.  We do have another offer, but it is lower than any offer we have received.

"At this point we, as long with the seller, are at a loss as to what to do.  Do you have any suggestions, or any time frame that we can tell buyers?"

The Bank Negotiator:

"I will have to cancel this file because the buyers are no longer interested.  I suggest faxing in the new offer.  Because it is a new offer it will be considered a new file.  Anytime you have a new buyer it starts all over.  A short sale can take 4 - 6 months.  When you send in a  new contract the time frame starts all over. "

The negotiator goes on to say that they are trying to make time frames shorter and the last response time was 30 days.  But in my experience, that response is inconsistent at best and clearly, they aren't willing to commit to anything better than 4 to 6 months.

So what's my big idea?  Let's save a big bailout expense.  Forget giving money to banks with no accountability for how they use it.  Instead, let's create an efficient, streamlined method of handling the massive number of properties that are in foreclosure and that are short sales. 

In the case of my listing, it may take one year to get a buyer in that property and a closed sale.  In the meantime, values are detrimentally impacted,  inventory remains misleadingly high,  property condition deteriorates, and suffering sellers can't restart their lives.  If you shorten this process to 90 days, can you imagine the positive impact on our market?  Just think, 6 months ago I had 4 buyers that wanted to pay full or over list price.  Today's buyers are thinking about 20% less than that.  THAT is a huge reason prices continue to decline in Orange County and in many parts of the country.

Maybe this is too simplistic.  Maybe this addresses only part of the problem.  But, if we are looking at some of the real, on the ground solutions for the much touted 'Main Street,' this seems like a great place to start.  Like I said, to those influential individuals and government institutions dying to hear my Bailout alternative, I'll be standing by waiting for your call.

 

Orignally posted on www.OCRealEstateVoice.com

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
California Orange County
Groups:
Everything California
Orange County Real Estate
Club Chaos
Diary of a Realtor
Tags:
orange county
bailout
mission viejo
short sales
rancho santa margarita

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
11,887
Chris Schreiber
Kiemle & Hagood - Sandpoint, ID
CCIM

You are right on with your suggestion.  Lending institutions are starting to come around and realize this but at the same time the shear volume precludes them from making any changes.  Bottom line ... by the time they are looking at a short sale most lenders just figure they will let it go to foreclosure and then deal with the sale at that point.

From the other side of the equation and having represented buyers interested in short sales, I strongly advise them NOT to consider the property and instead focus on regular market transactions or wait for the foreclosure.  The banks just take too long to decide on a short sale offer!

Good to hear from an agent in the trenches down in SoCal.  My wife and I are from Mission Viejo and still have family there, but I'm sure glad we now live here in Idaho!

Oct 29, 2008 09:39 AM #1
Rainer
24,868
Veronica DeCarolis
Weidel Realtors - Flemington, NJ

Let me know if you get any responses. One of my associates here just told me of a deal that she was trying to put together probably won't happen because her buyers do not want to wait 45 days for a response to their offer. That's right 45 days. That is incredible.

Happy selling.

Bonnie

Oct 29, 2008 09:44 AM #2
Rainer
16,882
Barry Bridges
Barry Bridges Weichert Realtors Bridges & Co. - Smith Mountain Lake, VA
Lake professional

There is no reason for a short sale to take any longer than a normal deal. I reall don't want to hear about the reasons. Every other business in america has a decision maker. can you imagine going into a car dealer, making an offer and then having to wait 45 days for an answer. Then god knows how long to get the car?

The banks need a decision maker. They have a file, they know what is owed. Give me those files and I'll bet I could do one every 10 minutes. That's 48 a day. Have the people to follow the paperwork and get this stuff cleared up. Negotiate. Look at the offer tell the agent to get his people in his office, get on the speaker phone negotiate the deal and move on. Let's go people.

Now you got me in a rant!!!!!!!!!!!!!

Oct 29, 2008 10:05 AM #3
Rainer
27,041
Steven Max Parry - Utah Real Estate
Spectrum Real Estate - Riverton, UT

Thank you for sharing your ideas, Linsey. Hopefully this will make it to the right people. A "Decision Maker", what's that Barry? :)

Oct 29, 2008 10:18 AM #4
Rainer
44,342
Linsey Ehle
M Realty - Rancho Santa Margarita, CA

Barry Sorry to get you on a rant to but I'll admit, misery loves a bit of company. 

I think the challenge is defining who is the decision maker.  For example, if Countrywide is the original lender, but they sold the loan, they may still service it but no longer own the decisions regarding the money.  It then goes to the current 'OZ behind the curtain' if you will - the investors.  But a lot of these loans were sold into pension or investment funds so who is the decision maker now?!    I don't know but again, if we solve this part of the problem, we'll be much closer to a recovery.

Chris - I think you're right.  If they can't work it out - they'll just take it back as a foreclosure.  My only issue with that, just tell me now.  Don't waste months of my time, the buyers' time, and the sellers that are hoping to avoid a foreclosure. 

BTW - I envy you in beautiful Idaho.  I was just sharing with a fellow AR member about our boring lack of seasons.

Veronica and Steven - I don't expect my phone to ring any time soon.  :)

Oct 29, 2008 10:40 AM #5
Rainer
50,733
Greg Knowles Santa Barbara Ca.
Fidelity National Title Group-Santa Barbara - Santa Barbara, CA

Linsey, every time I have a discussion about short sales it is the same thing over and over again. How long does it take? As you stated, the answer is too long! Maybe we should start a business that these lenders can use, having us making their decisions for them? They couldn't lose any more than they already are.

Oct 29, 2008 10:45 AM #6
Rainer
44,342
Linsey Ehle
M Realty - Rancho Santa Margarita, CA

Greg - There's a word that comes to mind when I think of this mess and the banks dealing with it.  I can't type it in here because it would be considered impolite by many but it starts with 'cluster' and ends with a word that rhymes with 'duck'.

Was that too rude to say on my blog?

Oct 29, 2008 10:50 AM #7
Rainer
27,041
Steven Max Parry - Utah Real Estate
Spectrum Real Estate - Riverton, UT

I love it! Not rude at all.

Oct 29, 2008 11:00 AM #8
Rainer
44,342
Linsey Ehle
M Realty - Rancho Santa Margarita, CA

Thanks Steven, you just never know!!  :)

Oct 29, 2008 11:05 AM #9
Rainmaker
44,255
Rob Graham
Windermere Real Estate - Seattle, WA
Rob Graham

Are you running for office?  Can I be your campaign manager? 

Seriously, sorry to hear the timelines are so long.  Out here in Seattle we are looking at several weeks to get bank appro val on short sales.  I agree with Barry, 4-6 months is outrageous.  It is just pure laziness.  The comittee (if there is actually a comittee) will sit down and make a decision in an afternoon anyway, so why wait for all that time to pass.  You would think they have as much motivation as us on the purchase and sale end to make the transaction work prior to foreclosure. 

Oct 29, 2008 11:15 AM #10
Rainer
44,342
Linsey Ehle
M Realty - Rancho Santa Margarita, CA

Rob - Can you picture it...me...the next Sarah Palin!  I'll call you when I start putting the campaign plans together.  I'm experienced too; I'm on the PTA at our elementary school. 

(I can hear the 'boo' and 'hiss' of those of you that I offended.  Gosh, I'm on a roll today. Sorry.)

 

Oct 29, 2008 11:41 AM #11
Rainer
50,733
Greg Knowles Santa Barbara Ca.
Fidelity National Title Group-Santa Barbara - Santa Barbara, CA

Linsey, you pulled it off and I got the message and am agreeable. ;o)

Oct 30, 2008 05:24 AM #12
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
44,342

Linsey Ehle

Ask me a question
*
*
*
*
Spam prevention