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The weird part for me is that I went through about two months where the short sale listings seemed to be waay down. Then in the first month and a half of this year they appear to be increasing again.

... and will probably continue to increase ...

Thanks for passing on the 'Rules of the game'....this is good insight ...

Cheers Lenn !

Sheldon.  I don't know your real estate market.  I expect a lot more here.

 

WOW . . . thank you for "Readers Digest" versioning this for us.  I've seen this happen already in my market, i.e., Wells Fargo pre-approval requested with offer from buyer.  It's a marketing edge for the banks.  If they keep with the 'market' then they'll have to understand the dips in prices are going to occur. 

I'm reading this, and I'm chuckling . . . pg. 14, we could have told them that stat ;-)

I like the way they broke it up: Short Sale, Damaged REO, Move-in Ready REO, Non-Distressed (good classifications)

Pg. 21 -- DUH!

Pg. 22 -- Why not ask these questions prior to listing the place?  (Pg. 23 -- exactly)

It's actually interesting that BofA and Wells collaborated in this conference.  I don't see why they shouldn't.

Since this is a 'game,' and the home owner is truly one of the players, I was glad to see the BofA's First Goal . . . pg. 29.  I was wondering when, if at all, the home owner would be mentioned in the game at all.

Pg. 31 ... if it's a listed short sale , why can't the list agent get the "Appraisal" ball rolling in the first quarter of the game?  Take the listing, order the appraisal, adjust price if needed.  They wait until they have the offer . . . but this isn't a "traditional sale"  Get it done first, no??  Pg. 33 -- dedicated short sale call center.  Order the appraisal the minute it's listed.  Pg. 34 Offer is submitted, approval within two weeks with an independent appraisal already in place.

Pg. 41 . . . mixed feelings on this page

Pg. 43  . . . #1 Should be:  Change of Buyer / Change of Agent (buyer doesn't qualify / listing agent is fired???)  #3. Yeah, well . . . do we blame the second lien holder?  The were very needed (most likely) to qualify the buyer at purchase (I'm guessing). 

Wells Fargo #48-57  What's the $5000 Seller Incentive??  FINALLY someone mentions PMI, but why is it attached to the "Full commission paid for market or above market offers"?? 

Enter Freddie Mac Daddy . . . Typo pg. 62 "Borrowers receive $1,5000" relocation assistance."  Sorry, that's funny to me -- I know they mean $1,500.  Pg. 63 "Minimum Marketing Time"  90-days after listing with real estate agent.  I don't get that at all. 

The issue is BUYERS!  Getting buyers.  FHA on condos is amazingly difficult.  Lenders guidelines are stringent now.  BUYERS!  You need BUYERS to buy the property!!  Where are they?  Consumer confidence is down.  The economy is shakey.  BUYERS!!  And not investors who turn them into rentals, and screw up the rental market.  I'd be happy to work shorts if I know my client is going to get a reasonable response time.

 

 

 

 

Lenn - thanks for posting this. We have so many more short sales coming on the market here. I will be spending some time going through your references.

Carla.  You should have reblogged this post or posted your analysis as an original post.  Perhaps you still should. 

I thought this would get featured.  However, I'm sure it won't because I still have a featured post showing on the Featured Page.  I should have waited a day or two to post this but it's so timely since the conference was on Monday I didn't want to wait. 

It's priceless considering the short sale market and the little expertise out there. 

 

Mike.  Perhaps you'll get a bit of insight with this survey.

 

Thanks for the great information, Lenn.  I agree with Carla - the problem is lack of buyers.  Also, I'm a little (well, if you ask my husband - a lot) thick-headed, but how can you not consider a short sale a distressed property?  The banks may not "define" them as distressed but buyers certainly do.  Whatever the "game" is, we are all getting a baptism by fire in the whole mess.  "What doesn't kill us will make us stronger"....or something like that...

Lenn -

Thanks for the summary.  I will go to the full report.  Thanks for the link.

 

We are all trying to get a handle on this elephant in the room. But we are often like the committee of blind men trying to identify the beast by touching only a part here and there.

And, of course, the animal is moving all the time.

Lenn - I will print and read. Short sales are "normal" comps in my area, but all things being "equal"-if an identical home is NOT a short sale, the short sale will sell for less (of course- time and uncertainty factor duh).  I think it depends on the micro-market. Quick Equator opinion- we are just doing the uploading for Bank of America by using Equator versus them imaging in faxes.  Agent still has to call and email, so it is actually more steps, and convoluted ones at that.  So my days as an employee of BOFA continue. Just my opinion.

lenn,
All short sales empoloyees from bank of america say that this system is going to speed up all, I still have no seen, but I'll keep you posted :)

 

Ray.  Thanks.  The seminar was interesting for what was new, but primarily for what was NOT new.

Jim.  Moving all the time is spot on.  Now, I'm a damn good shot when the target is moving.  However, even a good shot needs to know the rules.

Eileen.  The BofA and WF are trying to persuade agents that Short Sales are not distressed.  That puts the Ostrich in the room.

 

Wendy.  I'm glad to hear from someone who has used Equator.  Thanks. 

I listened long and hard and I see a huge problem in that the banks will NOW use Equator as an excuse to delay progressing a contract. 

WOW what a great post. Thanks for taking the time to write this. Lenn, I want you to know how much it means to me as a new agent for you to give up your time to write the posts that you do. You, Jennifer Allan and a few others have have been great mentors for me. Thanks again for the post. I would comment, but I need to read it 2 or 3 more times to digest it all.

Uh oh...equator...in the end I think that's a good move, but you're right. We will definitely have a learning curve there.

Tom.  Good for you for spending the time to learn.

Felix.  Equator is, to date, an unknown.  I'm hoping it doesn't turn into a log jam.

 

Great post.  Thanks for the info.  Equator seems to be speeding up the process a bit for BofA (knock on wood).

Well, now you are featured. And rightly so. BOA, if they don't consider a short sale "distressed," sure create plenty of distress in their approval process. 

Thanks for all the great information! I am looking forward to reading the report this afternoon.

 

Lenn,

Know I know why I have such good experiences with Well Fargo compared to the others!

Thanks for passing on the info!  I too went to a short sale seminar yesterday presented by one of the top short sale agents in the area, an attorney who processes them and a title co-

When all is said and done- get the listing, price it 15% below market value (after figuring in the repairs needed) and hand it over to the attorney for negotiating.

Foreclosure brings the clients credit score down 250 pts where shprt sales hit it at about 100.

Good Luck

Since BOA wnet to the equator system they said things would get better. Naturally I didn't believe them This week I got three approvals from them that were within 30 days of the electronic upload although they had been in the pipeline for awhile. Let's hope this continues. On the CDPE advanced call this week it was announced that there are now more short sales than foreclosures being closed. Also that the number of homeowners in America in at least default have gone from 1 out of 8 to 1 out of 6.

I've got ask, what is the benefit for a buyer to get into a short sale transaction?  I think it's ludicrous to allow the banks to have hand in our real estate recovery, because frankly these short sales are making it worse. 

Lenn's excellent post states, "The lenders are looking for "market offers" and expect the short sale listings to be competitive with regular home owner listings." 

To make a short sale a win-win, you need the BPO and the new buyer's appraisal to be different opinions. 

The buyer needs to tie up their deposit funds into a 3-5 month escrow and lose the 'benefit of the market' timeframe. 

I even believe in some deals the listing agents Agency is put into peril when really they are representing the financial interests of the bank. 

I think it would be a good thing for our industry to leave these short sales alone, let the bank have the property and concentrate on the REO market where you have a motivated seller and Agency with that seller.

I'm aware a lot of you have had great success on both sides of the short sale transaction, I envy you as mine have been difficult and not rewarding to the spirit of properly serving a client.

I'm not sure if this is the same "conference" or not, but my office listened to this call last Friday. After the call, we decided that it certainly WAS NOT worth the $199 charge.  We didn't actually learn anything that we didn't already know, felt the presenters spoke to quickly to understand everything that was being said, and could have read the booklet on our own.

It was not a good use of my time!

 

 

Joe B.  Your idea has a lot of merit.  Banks do not know how to sell real estate yet they influence the market with short sales to the deteriment to the market, buyers and sellers. 

Joe P.  I surely do hope you're right.  I do believe, however, that Equator may concentrate short sales in the hands of a few listing companies and once competition is limited, real estate commission will come down. 

Bridget.  Pricing below market is not what BofA and WF were proposing in our area.  Of course, it makes sense.

Irene.  Good for you.  If this helps, we'll all be better off.  BofA and WF are probably the two largest mortgage servicers.

Rick.  Enjoy.

Tony and Libby.  Thanks.  From your lips. . . . .

 

 

Lynn, thanks for posting.  While the banks might want to treat short sales and regular sales, selling for market price....their policies dictate that this will not happen.  Regular buyers are not willing to wait 6-9-12 months for an answer as to whether or not they will take the offer.

In the end investors buy more of the properties because the process has allowed the market to do down and the viable buyers to walk.

I lost a buyer today because Bank of America has not even looked at a file they have had for over 2 months.  The Tax Credit is expiring and the offers are with it.

Great post Lenn; now I can't wait to see what happens with "short Sales" here..:(--I hear thousands if not hundreds of thousands are expected to flood the market in April, nationwide)

IMHO I think they don't really want to call the Short Sales distressed because they (the banks) might be looked upon as a "predator" in the way they are going so quickly into the process; the homeowners heads are spinning with what is happening...and then they have no home! If the banks can get by as if they are just doing the homeowner a "favor" by getting the house sold before the s--- really hits the fan and before the seller is publicly identified as having a "short sale" home, they will do it. The banks are still getting BIG subsities from the goverment for taking a "loss" on the short sales---I would call that distressed property!!! Thanks for all the hard work.

Hi Lenn, your work on this is appreciated. Banks have no incentive to make things easy . . . it is a numbers GAME to them. They will posture and appear to make things work better for consumers, only if they've figured in advance how it will improve their bottom line. To them, "it's just business."

Calling short sales a game seems appropriate.  It reminds me of my childhood days when my older brother would change the rules of the game to serve his purposes.  Banks seem to be the new bully on the block.

Deciding a short sale is not a distressed property serves what purpose?  Ask the home owner if he/she is distressed when they have lost all the equity in their home.  Denial of reality only serves to increase the problem.

Damon.  I believe we'll see more and more of that until the tax credit thing is over.

Paula.  BINGO!  The banks are still being looked out for by the government.  You are 100% right.

Frank.  That's rezlly the "bottom line" isn't it?????

I will print and read this report.  Quite interested.  The banks just need to all get on the same page and figure out what they're doing....are we doing short sales or are we doing distressed sales?  lol  Kudos to you for sharing this information.

This is an awesome post Lenn!  CONGRATS on the 2nd Chance Feature!  There is a reason why you are featured so much.  I broke it down and for 900,000 points you've been featured over 200 times, which makes it average to a feature every 4500 points :)

Agents need to really listen to what they are saying and NOT saying.  Print the report, go though and highlight the "in-between the lines" remarks.  Plan and strategize their future offer scenarios and farming. I have ONE Wells Fargo lender under my belt and I need to definitely line up more especially after Wachovia is fully integrated.  Farm the WF loans.  As for the Equator system, Broker Bryant's short Sale Superstars site details breakdowns of how to get passed the glitches and delays of the frustrating Equator system. 

Lenn,  notice the 'Minimum Marketing Period' as posted on page 63.  If an offer comes in before 90 days, no short sale will be accepted (another panelist mentioned 120 days).  In my market, this will place an additional burden on homeowners who need to sell now.

Jean.  Listening to the speakers in the program was quite interesting.  I've tried to convey the "spirit" of the lenders' plans here. 

Some things will help, some will not.  However, understanding the plans will surely help us.

Andi.  I didn't know I had a Second Chance Feature.  I was disappointed that this post didn't get featured because of the timeliness and importance.  Now I feel better.  Thanks.

Randy.  As though home owners were not faced with enough burdens. 

I subscribed to the on demand call as I was busy on Monday. Thanks for the synopsis, it will be interesting to hear them discuss all of this. Did you hang around for the Q&A? Wonder how that went?

Lenn:

Writing a new campaign for short sale listings today  .I generated the following catchy phrase. . 

In a quest to stop homeowners operate under a “powerful moral constraint” while lenders are busily trying to maximize profits, receiving bailouts, increasing their bonuses and making decisions using “powerful economic steps”

 

 

Great info, Lenn! (Bookmarked for a good blizzard read later...)

Damon (26) Good point about non-investor buyers not willing/able to wait it out!

Paula (27) Spot on! & to quote our Professor-In-Chief..."You can put lipstick on a pig..."

Joe (23) What? the poor banks shouldn't be "greased" in both pockets?!

Carla (3) Bingo! on investors/speculators screwing up the rental market!

Thanks again, Lenn. I love a post that TEACHES all!

All the best!

 

I didn't read the responses yet, so someone may have stated what we all see as obvious, that the banks seem to be clueless on. They say that they want "market" offers. Well how about streamlining the short sale process, so that the negative consumer opinion on short sales improves. If so many buyers, as well as buyer agents thought that a SS wouldn't be a waste of time, more of the buyer pool would offer, and the banks would get their "market" offers.

Colleen.  Sure, I hung around for the Q&A on the broadcast and at my board.  It was all very interesting.

Fernando.  I like it.

Brian.  Thanks for stopping by and contributing. 

 

Ginevra.  Almost that bad here.  In some neighborhoods, most homes are SS or REOs.

 

This is great information Lenn! You always have something valuable to share with the AR community.  I've learned yet another lesson through you.  Thanks!

Lenn - Thanks for sharing the posting. Lots of reading to do and lots to learn.

Raine.  My pleasure.  There's a lot to keep up with.

Mike.  Keep reading and learning.  I do too.

Thanks for the post today Lenn,  I'll check out the report.

Patricia

Patricia.  It's not as long as it would seem for 66 pages.  It goes quaickly.

Lenn thanks for the link to the booklet. I do agree with someone else's comment here that they really didn't say anything new. Distressed sales comprise 48% of our market (both REO and SS) and it can be difficult to make a short sale negotiator understand our foothill community where most homes are not located in subdivisions. They seem to want to put everything neatly into some box and we don't fit that box. So many short sales are not completed and the home goes into foreclosure and in every case I've seen has ended up selling for much less than what was offered on the short sale! The banks are pulling our market down and then complaining about it. 

Great post Lenn. Agents need to know this stuff. I recently had a short sale closing where Wachovia let the seller receive $5,000 at closing. Short sales have always been easier to get approved if it's a strong contract with a purchase price that is in line with market conditions.

According to an Equator rep I spoke to last week the system is set up to "reward agents that are organized". Supposedly if you complete your task in a timely fashion the file will get moved along quicker. Bank of America is using this system almost exclusively now unless it's a VA or FHA loan. I think GMAC is moving that direction as well. Hopefully it will help once the kinks are worked out.

So far I have seen ZERO advantage to having the buyer using the short sale lender as their purchase mortgage lender. In fcat I just had BofA on both sides and we had apprasial issues. The sellers lenders appraiser had the value higher than the buyers appraiser. Same lender. Neither side would budge.

2010 is going to be HUGE on short sales. Of course the next decade is going to be HUGE on short sales. Best to get in the game.

Lenn:

I don't like the idea of the lenders trying to "take control" of short sales.

Lenn, what a great post for all to read. Short Sales are here to stay for quite a while particularly in the trouble states such as my state of Florida. That's good to hear that Lenders will reward those Listing Agents of Short Sales who price their listings at market, as I do. The lenders who have their act together don't need the likes of Equator as I feel as others do, it adds to the cumbersome of the Short Sale process. Many have an organized system for handling short sales and it works; getting Agents and customers involved in a data entry tracking system in nonsense and complicates an already complicated process. I'm going to take a closer look at your attachements here.

Thank you, Lenn, for posting this -

I am in the process of 2 short sales, the one that I listed is going well, manually, the other one I represent a buyer - using Equator, still get the message that files have not been uploaded into their system yet - at least it is better than waiting on the phone for 2 hours to hear that.

Lenn - Thank you for the update in this ever changing Short Sale market !

 

From the desk of David Dee,

Lenn, great stuff here. Thanks for the update. Will print it out and read. Looks like alot to digest. Have one on Equator right now. Let's see if there is an improvement on this platform.

THANKS TO OUR REBLOGGERS FOR THIS POST.

David Dee, San Gabriel Valley (Los Angel es) & N. Orange County CA Real Estate (Century 21 Excellence)

Roland Woodworth,SFR - Clarksville Short Sale and Foreclosure Resource (Exit Realty Clarksville)

Michael Layton (Keller Williams Realty)

Jason Koivu (EXIT Island & Beach Realty)

Anthony Mosley (Van Dyk Mortgage Corporation)

Carla Muss-Jacobs, ABR, CEBA, e-PRO, Realtor (Principal Broker/Owner EBA Portland, LLC)

thanks for sharing but all this time I consider distressed homes to be short sales. Plus, I'm tired of lenders trying to control how we do business.  It's seems that we are always at their mercy. 

Richard.  Of course we are at their mercy.  It is they, with $Billions in assets who can make the political contributions and pay the lobbyists to represent their interests before the government employees who create the guidelines, control the U.S. budget and make the decisions that affect what the banks can do without consideration of the American home owner who is the victim of those very banks.

I'm sounding like a broken record. 

I don't care.

Thank you for the download, it is interesting Wells Fargo has local support, when we don't even have a Wells Fargo here any more...it closed.

Now in saying that it does seem to have come up with some timely solutions. So next time I do one with Wells I will see.I like the idea that they are going to order the appraisals up front.

 

 

Lenn,

Thanks for the opportunity for the re-blog and also the great links.  I AM NOT A SHORT SALE EXPERT (see my blog on the topic) but I am glad for all the people out there like you and some great agents in my market who are tackling this maze of madness.

 

The important thing is this, doesn't matter WHAT the banks think, the CONSUMER considers a short sale to be a distress sale and they WILL NOT pay market value for the home.  Why should they?  In a regular sale they can close in 60 days, with a short sale it can take 6 months or more and they want to be compensated for their time.  These banks need a wake up call! 

Lenn~

I read this post with interest. Happy to be a land specialist at this time, but also appreciative of this excellent information and the discussion/comments.

Thanks for the info and download. Reblog material. Shorts not distressed - actually as far as the property condition goes that would be true for most short sales in my area. They are much like owner/occupied, regular seller homes.  As for the seller - well that distressed to say the least for most of our sellers.

As you said they've got billions in assets and are controllling the 'game'.  Nothing new about that.

Lenn: I was interested in attending this audio conference last week but had a conflict. Sounds like you gave me the main ponts here. Thanks!

We're seeing a dramatic reduction of short sales locally. Showing six entry-level houses today only 1 ss, no foreclosures. The person I know who's done a few Equator deals says they're time-consuming up front, but then go more smoothly than past deals.

Congrats on another feature post! I love reading your posts... so informative. thanks for sharing :)

Excellent post with specific information and tips that are soooo much more useful than an opinion piece.  Great work.  Our market in the Triangle Area of North Carolina (Raleigh, Durham & Chapel Hill) is one of the strongest in the nation, yet I had one of the biggest sales months of my 30 year career selling mostly short sales and a few REOs.  Your point about getting frustrated with little being done to expedite the process, other than Equator, is well taken.  Most training courses on Short Sales do not teach you how to negotiate with the short pay bank and how to expedite the process.  Take a look at www.ShortSaleNegotiatingSpecialist.com for a course that emphasises how to get through the process more quickly and how to negotiate more successfully. 

Thank you for your post as it had very useful information.

 

Lenn - Thanks for the summary of the short sale conference.  Our market is glutted with short sales so this info is very helpful.

Lenn:  Really, what are they smoking? No one wants the hassle of a short sale without compensation which means a lower listing price to make it worth the buyers while.  I've seen shorts in my area as low as 1/2 market value and still no takes because no buyer wants to be strung along with no end in site.  This is distressing because they (banks) don't live in the real world obviously.  Thank you so much for the update.

Just with a short survey of some attorneys in my area less than 25% of short sales close.

Luckily, our market is nowhere near as saturated with short, or distressed sales as yours. All of this is great information for us though. Thanks for sharing this information.

Good morning Lenn,

Great post, as usual! Short sales are here to stay, I hope the government doesn't get involved (since they have not made good decisions on other items related to our industry) but if the lenders themselves do create a system for us to work with....then that would be great.

K

Lenn,

This was a timely post for me as I'm in the starting gate with a short sale right now.  After the last dramatic short sale, I decided to reach out to asset managers and move toward REO's, but every now and again I will take a Short Sale listing.  Thanks for the link to the report.

Lenn,  Thank you so much for this post!  Great information here, and you have been so

generous to share it with all of us.  I will read the report soon!  Very interesting information that I will use right now with my my short sale listings.  Thanks again!

Hi Lenn. I'd like to pipe in on the equator question. i was part of the REO trans test group and at that point it was a blaring failure. They revamped it to the point that it is now usable for the agent and redubbed it equator. They launched the new platform in late December and I had input 12 listings within the first 2 weeks. 2 1/2 months later here i am with one counter offer that was based upon a BPO that was done prior to the launch. It seems that the bank has devised a way to make the agents do THIER work so that they can cut costs and still have the same turnaround time. Of the other 11 initial listings i have one BPO scheduled but not completed and 5 still have no first phase negotiator assigned.

Being that this is BofA a 5 month completion time would be an improvement but it is by no means resolving their inability or Unwillingness to complete short sales. I have been doing these for many years and I have found that anything that BofA (countrywide) does is for thier benefit only. You may recall about 2 years ago they were sending the sellers letters stating that the short sale would take no more than 32 days to complete. What a mess that was training everyone on the reality of their short sale situations. I actually hung the letter up in my office as a standing joke and i fear that Equator will be no better.

My opinion is that this will be the "year of the short sale" and no bank will be able to handle the influx and this is all that they are willing to do to keep the process from taking a year to complete. The reality is that these servicers really don't care that much whether or not these close and they are only trying to cut costs. They are contractually obligated to service the deal and it doesn't matter how good of a job they do. Now i'm gettin into a whole new diatribe so I'll leave it there. Good luck and remember persistance closes short sales!

Thanks for this info.  If you are in real estate, coming across a short sale is inevitable on both the buyers and sellers side.  I will take all the help I can get!

That was an awesome blog!  The one thing that gets me is that the banks expect short sales to pull the same money as a regular home sale but they expect the buyers to wait an undetermined amount of time before they even know if they are going to get it...   Also going in knowing that the sellers are nnot going to provide any inspections or repairs...  There should be some kind of price break!

It sounds like the lenders may be moving in the right direction on this subject.  Thanks for the update.

Hi Lenn - Excellent post!  Thank you for including the downloads.   So far,  I've only been involved in REOs, but realize in order to stay viable I will need to jump into the Short Sale "game" this year!  I've been avoiding it but with the help of AR I know I'll be able to get my questions answered.  Thanks again...

Hi Lenn:   Thanks for sharing!   In the Grand Rapids, MI area last months figures show our Short Sales are a bit over 50% of our entire sales.  I too just this week went to a Short Sale seminar which was very informative.  When our speaker asked our crowd what was the first word which came to mind when we heard "Short Sale" we all pretty much said in unison...PAIN!  (not just for Realtors working them but our clients who are truly distraught).   In our area I would definitely consider Short Sales as distressed... often homeowners  often have not had the financial resources nor the ability to keep their homes up and in good condition.  I certainly do not consider Short Sales a "Game" (they are NOT fun) and really not much new information in their above survey...banks just trying to get more and more control.

I'm looking now to the new HAFA program and am hopeful banks will jump on board but with this simply being considered Short Sale Guidelines what is the chance of that? 

Enjoyed many of the comments above and Dammon #26 pretty much hit the mark for this area also.

We all know loan mods is not really successful, we can only assume that these files are heading to foreclosures and short sales. What are other options out there?

Thanks for a comprehensive post.  In our area inventory is low so people have to consider Short Sales if they want to be in the market.  Regarding the market value comment, that's the only way I think of it, however, it's hard for the buyer's agent to tell what the market value will be in 4 to 6 months when a sale finally closes.  Don't want my clients to pay more than market value by the time it closes, so generally go in a bit lower, as the market will probably be there by closing.  If they would close in a timely manner, we would be dealing with current values and everyone would be a lot happier in so many ways.

Thank you for sharing this information. It's so helpful to get all the info we can on this subject.

Thanks for sharing this with the agents. We listened along with our Broker. As an agent who does Short Sales here in Arizona it was interesting. The very political position from BofA And Wells seemed great..... if you haven't worked on a short sale with them.  Unfortunately, the people in their company who are working with us don't share the same philosophy of helping the homeowner stay out of foreclosure.

The reality is that we market the home to be competitive and to draw offers. If we don't get offers we must reduce the price... we have a ticking time bomb in most cases because there is a foreclosure looming. Once we get an offer, the bank in first position will push out the foreclosure. When it takes the banks 2-3 months to get back with us on an answer the buyer has often canceled. Now we are trying to get another offer but the bank refuses to extend the foreclosure date unless we have a new offer. It is quite a dilemma.

I especially liked B of A's comments.  One agent asked if BofA could do a BPO and just tell us what they would accept for an offer price. (obviously we would then market the house at that price and spare the mystery). She said oh we can't tell you what we would accept.....

I have tried to use the Equator system. I notified the bank that I had a listing that would result in a short sale once we receive an offer. I wanted to get all of the documentation to the bank so that they could "preapprove" the short sale. Instead I couldn't get anyone to communicate with me and I received a short sale decline letter because I didn't turn in the offer...... hello there was no offer this was supposed to be for a preapproval.

 

Good timing for me - my (seller) clients just left after signing all the paperwork needed for me to submit my first short sale (SunTrust).

Short Sales are virtually non-existent in our market - which makes it double difficult to find a buyer motivated enough to deal with the hassle and uncertainty.

Holding my breath...

While we do have some of this, our area has been blessed with LESS short sales than the rest of the country.

I would love to hear some feedback on what I'm about to write... It has been my experience that whenever possible getting involved with Bank Of America whether representing the seller or the buyer... It appears they Have not reformed Countrywide's practices but incorporated them as they're own.

Not even pertaining to short sales, it also appears that their pre-approval letters are worth the same as an internet lender circa 2004...

Anyone agree or have contrary experiences... They are so bad in my area that I decide to close three bank accounts with them even though they have the best online banking... Simply because they are sooooo shady on the mortgage side...

Thank you for posting Lenn, this is very good info

3.  The lenders are looking for "market offers" and expect the short sale listings to be competitive with regular home owner listings.

What's wrong with this picture? The threat of foreclosure's ticking clock demand that short sales be reduced below market value and regular home owner listings. We begin our short sale listings at or near market value if the home is in good shape, but we must reduce them as time goes by just to get an offer to stop the foreclosure process. Not every Buyer is willing to wait. The ones who are expect a deal.

The banks say these are not 'distressed' properties? The Sellers certainly are distressed. The time frame certainly is distressed. The Buyers are distressed waiting for months on end without even knowing whether the house will ever be theirs. Even the Listing Agents get a dose of 'distressed' with the time and effort it takes to bring many of these to the closing table.

It sounds as though the banks are making a feeble effort to stop the slide of home values by boosting short sales back into the 'normal sale' category. This makes sense on the surface, since in many markets, short sales are the market. At least they are what's selling.

The disconnect here is the time frame and the fact that short sale properties often fall into a state of distress as time goes on and owners vacate or just stop caring about appearances.

I think I'm going to blog about this :)

 

I have 5 active listings and 3 of them are short sales.  That is mostly what I am showing as well.

I'm going to read over that whole thing....your points will help guide me as well...

Thanks for the post on SS. They are starting to pickup here, too. My associate says the long lead time to bank response is a big no starter for several of her buyers & investors so hopefully this new system will reduce the time frame and maybe more buyers will consider them. I'll book mark the report to read in full later and with your permission I'll send my associate a link to this post for her to read. Another issue to buyers dealing with SS we see is the "late fee" for not closing on time when the problem stems from the time for bank to respond to offer or when a problem that shows up during an inspection required by the loaning bank (i.e. biological testing of well water by county environmental health) that has to be "repaired" prior to final loan approval.

I'm not a realtor so don't need to understand all this stuff, thankfully. What I can share are just my thoughts as a somewhat educated consumer on the sidelines:

• The banks have been purposely holding onto their properties ... I believe, to make the situation bad enough that the government finally agreed to subsidize more of their losses, i.e. they aren't losing money as government (we) are subsiziding everything. Now they've gotten what they want so they'll slowly unload their inventory.
• Based on personal experience, I'll never finance with Wells Fargo again, and probably no bank who requires a deposit up front towards closing costs, in my case $1,000 to Wells Fargo. Letter to WF president did get this refunded.
  
• Wells Fargo employee falsified my application, omitting my Nantucket rental property. Invented rental income for home I was leaving but had no intention of renting, would stage & list for sale.
• Things got worse. Goal wass to close in 30 days, i.e. went with WF in first place as they'd done only recent closing in condo complex. Monday the WF guy says we can't close that week as I don't have 3 things (1 his rental doc) in ... and I guess there was an argument about whether property was in flood zone (my neighbor saved over $2,000 after I was done with this one).
• After WF call Monday, called my old mortgage guy - he was changing jobs to GMAC and while he didn't work there yet, got verbal GMAC approval Tuesday, written approval Wednesday (I was in a hotel 2500 miles away, on business) and closed Friday. We always do power of attorney so only one of us has to go to silly closings, or sometimes do entire thing via mail. We bought our first 2 homes in CA where there are NO closings, you just go into title company & sign your paperwork.
• Can't imagine how WF came out of this fiasco in good shape as they were scamming the system as much as anyone based on my experience.

...oops, I forgot to include in comments above

Appraisal was TOTAL SCAM

Honestly, have you ever seen comps pulled from 15 miles away, crossing 3 town lines. I knew what the market value for our condo was, and I knew I was paying over this. Not sure what I would have done if I'd gotten an honest appraisal, but at least I knewo more than the unscrupulous appraiser, mortgage broker ... and I wasn't fooled.

 

Lenn, I listened to the same audio conference.  I've listed 3 more short sales this week and I don't see an end to it for a long time.  I wil say I'll have to hire another agent just to help start calling the banks.  It's becoming overwhelming.

Lenn, thanks for uploading the documents in your post.  I found a lot of useful information in them.

My take after reading the "game plan" is to hope that my deals involve Wells Fargo and not B of A.  I think one the biggest factors in the snail's pace of short sales is banks not order an APPRAISAL up front.  BPOs are often not worth the paper they are written on.  If the listing agent/bank had an accurate appraisal upfront, the "fair market value" could be more of a factor in the list price.  I'm glad to see that Wells is ordering appraisals up front.

Did they say anything about how the banks factor in  the costs of repairs?  I have a buyer who is interested in a short sale in a very nice neighborhood, but it needs about $100,000 in repairs just to make it livable.  The current list price doesn't reflect this need for repairs.  If we come in with an offer that reflects this $100,000 need for repairs, will the bank just reject our offer out of hand because it is so low?  PS  The listing agent hasn't done a short sale yet.

Comments from any and all would be welcome!

Great information.   I am CDPE certified but the buyers I've been working with seem to not want to take a chance with the short sales because they may not close in time for the tax credits from what they are hearing from their friends.  I'm hearing some are closing quickly like 45 days, and others 6-8 months.  It was interesting that they want the realtors to comp short sales with regular sales and no foreclosures to bring the price down like I think some realtors around here are doing to get the buyer to write. 

Lenn,

So far what I have found is you will wait and wait and wait some more and then get tired of waiting and move on....

Ann Hayden in Wildwood, MO

Joe #23:  I'm glad someone brought up Agency and Representation.

When we're working as a Buyers' Agent, our responsibility is to the Buyer.  When the Banks are "encouraging" us to have our Buyers approved for a mortgage by them, it breaches the confidentiality of our relationship with our client.  This is happening in Short Sales and REOs.  I wish everyone would stop to think about the repercussion of disclosing all of your Buyers financial capabilities to the Seller.  I am against this when Banks or Builders do it.  A Buyer should not be required to do their mortgage with the Seller's Bank.   The Seller needs only to know that a Buyer is approved for the offer presented and be provided with a loan commitment within the time parameters set in the contract. 

On top of the enormous disadvantage this puts buyers in with their negotiations, it also limits them from being able to shop around for the best mortgage.  There is so much new regulation that is intended to protect the buyer that completely misses the mark.  The bank lobby is strong.  When regulation was proceeding to prohibit sellers from dictating which bank a buyer uses, it fell through.  The buyers are forced to use the sellers bank even though they could get a better rate and service and much quicker processing and closing from other lending sources. 

We, as Realtors, are allowing this because we are doing what the banks want in order to get a deal closed.  Is our fiduciary responsibility to the bank or the buyer?  What the banks are doing is wrong.  It's bad for the market and it's bad for the consumer. 

 

 

 

 

 

Melissa.  They were quite clear that the homes are sold "as is" as in foreclosure style with no repairs.  That said, if it's a short sale and the bank would agree, a 203(k) should be possible but I don't know anyone who has even tried that with a short sale.  I know I wouldn't.

 

 

Thanks so much for this post!  I wanted to participate in this but had to be at a closing so you posting this info helped me a great deal!

DIANE:

HOW??  What is "confidential about a Buyer's financial ability to buy a property??

When a buyer makes an offer on any property anytime, that seller has the right to know that the buyer is qualified, and how qualified.  Even with a fully approved loan, which you're not going to get with offers, I want to see a Buyer's Financial Statement. 

One of the reasons so many contracts fall apart close to the closing date is because the Buyer, the Seller, the Listing Agent and the Buyer's Agent are all relying on a letter from a mortgage loan officer that the Buyer is "qualified" or "APPROVED".  There is usually insufficient financial information for a Listing Agent to determine the qualifications of the Buyer beyond a general statement.  There is, for the past several years in my experience, few financial details about the Buyer's actual financial profile and ability to close. 

Diane believes that providing a Seller with the financial profile of a prospective home Buyer breaches the Buyer's Agent's fiduciary duty of confidentiality. 

I DISAGREE.

Confidentiality is not a factor in establishing the Buyer's ability to close.  Further, by not providing the Buyers financial ability to close, is the Buyer's agent presenting a picture of financial weakness??

What is "confidential" about showing the buyer is qualified??  You're not telling the seller or the bank how high they are willing to go.  You're not telling the bank why they are motivated to buy that home.

By not proving the buyer is qualified, you're asking the seller to take a PIG IN A POKE and the bank to approve it

If that buyer makes a loan application with the Seller's lender who must approve the Short Sale, that buyer will have about a (estimated) 50% increased chance of getting the contract approved. 

Knowing how much a buyer is qualified for doesn't establish how much they are willing to pay.  A buyer can be qualified for a $1,000,000 but only willing to pay $300,000 for a particular property.

We have been very successful negtiating from STRENGTH.  Beats out the competition every time.

Mmmmmm.  I think I have fodder for a post.

 

I think it's silly that some banks still don't consider short sales as "distressed".  The condition is usually poor due to the fact that the owner no longer sees it as their house, but rather as the banks.  Additionally, those who fear foreclosure will do just about anything to sell in order to keep that scarlet letter off their credit.  Does that sound like a normal sale to you?

Matt.  Indeed.  That statement from the BoA and WF reps that they are proceeding with SS approvals on the position that they are NOT distressed sales was one of the most surprising pieces of info of the day.

I continue to get educated, and disgusted at the same time, by the unfair tactics of the financial institutions. I for one will never do business with Wells Fargo again. One of their loan guys falsified my application and I successfully uplled the plug, closing with GMAC 4 days after my first call to them ... although this was 2006 and probably would never happen again.

Tina.  Interesting.  We learn about these financial institutions long after they have caused so much damage.

Thanks ReBloggers.

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