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Old 03-10-2011, 08:32 AM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 14,556,680 times
Reputation: 3875

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There are many reasons why short sales take too long, and the California Association of Realtors has drafted an open letter which is being published in several newspapers nationwide.

Quote:
Thom Colby, a Realtor in California, in another forum said:

The open letter discusses
  • the benefits of doing a short sale rather than a foreclosure;
  • the inconsistencies with short sale processes at banks;
  • the challenges of working with multiple lien holders;
  • and the slow and/or nonexistent communication by banks and servicers to REALTORS®, homeowners, and buyers.
The letter closes by calling on regulators, elected officials, nonprofits, business organizations, companies, and individuals with a stake in California’s economic future to resolve the short sale issue and other issues that get in the way of an economic and housing recovery.
C.A.R. open letter on short sales

Another problem is that there is no one training solution for agents; and many agents don't take any training at all. They start out cold and make many mistakes in the process.

The national short sale average closing ratio for agents is around 25%. Agents who have had extensive training and experience have a closing ratio of around 80-90%.

When I'm working with buyers I check the closing ratio of the listing agent and ask them questions about the specific property to get enough information to determine if this short sale has the potential to be completed. That's important because there are some listing agents who are demanding 90 day non-refundable earnest money deposits from buyers. Before I would advise my buyers to accept that, I need to know the odds they're facing.

There are several short sale training courses for agents. Some are for designations and some aren't. The designations just show that the agent has had some formal training.

The problem is that each training focuses on a different aspect of short sales; none cover everything, so agents need to take every course available to learn as much as possible before embarking on listing short sales.

Although I primarily represent buyers, I also do a few short sale listings because I enjoy helping people, and I've been succcessful because I've had a lot of training. But there is still something new to learn every day. I also use a web based short sale transaction manager software that allows my clients to get up to date information on the web.

If the lenders, investors, and mortgage insurance companies would standardize their systems and methods; and if there were one training program for agents that would be all inclusive, then this huge problem could be reduced so a short sale could be completed in 30 days. That's the goal of the CAR in their open letter.

The HAFA program (Home Affordable Foreclosure Alternative) which is under the MHA program (Making Home Affordable) created by the US Treasury Department actually helps; provided the seller is qualified for the program.

HAMP (Home Affordable Modification Program) which is also under MHA has not been successful.

Recently my buyer offered on a home that I thought may qualify for HAFA. The listing agent didn't know the HAFA guidelines but was willing to let me explain them to him. It requires a response from the lender within 30 days. Within 34 days of writing the offer we had a reasonable counter from the first lender, and the second lender had agreed to the payoff the the first offered; we countered the counter and the lender accepted. Within 35 days we had an agreement.

More structured programs like that, and training, are needed badly in order to work through these short sale issues to help the homeowners, and home buyers.

Last edited by Captain Bill; 03-10-2011 at 08:33 AM.. Reason: typo
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Old 03-10-2011, 12:28 PM
 
2,879 posts, read 7,666,687 times
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I wouldn't touch one with a barge pole. If I were a licensed Realtor, I wouldn't show them, or list them.
The REO process is unpleasant enough, and you need to send those people a very clear message about not getting your chain yanked on.
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Old 03-10-2011, 01:02 PM
 
Location: Scottsdale, AZ
78 posts, read 100,941 times
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Quote:
Originally Posted by khuntrevor View Post
I wouldn't touch one with a barge pole. If I were a licensed Realtor, I wouldn't show them, or list them.
The REO process is unpleasant enough, and you need to send those people a very clear message about not getting your chain yanked on.
In addition to all of the headaches associated with a short sale there's often not any kind of an upside. I just closed on a home after shopping the North Scottsdale market for a few months. Honestly, I found the traditional sales to be at least priced as aggressively, if not more so, than the short sales. Low price is the one draw of a short sale, take that out and why would anyone even consider going after one?
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Old 03-10-2011, 01:12 PM
 
2,879 posts, read 7,666,687 times
Reputation: 1183
Exactly. I would do traditional long before a SS. Basically, you are GIVING them an option to sell to you at that price, in a down market. If the market goes up, they will demand more money, if it continues to drop, then you're their ace in the hole. Never, ever, give a listing agent a check......EMD goes straight to escrow, and some of these jokers need to be reminded of this. If they aren't ready to open escrow, then they aren't ready to make a deal. When push comes to shove, who is going to get squeezed for extra money? The seller doesn't have any. Treat the banks, like the pigs they are, and you will be a lot more satisfied with your deal. The greedy banks and financial institutions are responsible for the biggest assault on the middle class, since Joseph Stalin. And they still refuse to follow basic accounting principles that have been around for centuries.
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Old 03-10-2011, 02:43 PM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 14,556,680 times
Reputation: 3875
Short sales represent 38% of the Listed homes today, in the Phoenix area, and 20% of the homes Sold are short sales.

They are here and will be here for awhile. If buyers didn't buy them, then we would have many more vacant homes in neighborhoods while they sit until the banks take them over and then hold them back, or try to sell some of them.

Short sales are not for everyone. Many Realtors won't list them, and still others don't know how to represent buyers with the short sale.

In order to buy a short sale, the buyers need to know if they're working with an agent who knows the guidelines and how to work with the listing agent in order to have success.

In order to sell one's house in a short sale, the seller should know if the listing agent is knowledgeable. But unfortunately sellers don't know the questions to ask.

Regarding earnest money deposits:

On Traditional Sales and Bank Owned Sales. The agent has to submit a copy of the earnest check with the purchase offer. It's typically made out to a title company and the agent holds the check.

Alternatively, a brokerage may have a Trust account and the check would be made out to the brokers trust account and deposited. Today, most brokers elect to not have the trust account so the check is made out to the title company and the agent holds it.

Once the contract is executed, the agent takes the check and contract and opens escrow.

In a short sale, the earnest money check is made out to a title company and the agent holds it until the lender approves the short sale. At that time escrow is opened and the check is deposited.

In the event that a listing agent is requiring a non-refundable earnest money check, it is made out to the title company and deposited after the contract is signed by the Seller and Buyer.

Some listing agents are wanting the earnest money defaulted to them if the buyer walks. I don't like that, but it's up to the buyer.

Recently I had a 2nd lien holder require the earnest money be forfeited to them if the buyer walked prior to 90 days. I was able to negotiate that requirement dropped. The lender tried to bully me saying that they would not review the short sale package without meeting their policy. But because I was willing to fight them over that policy, they finally gave in.

Showing short sale properties:

The buyers agent is required to show any home to the buyer that they want to see. However, if the agent determines that s/he won't work with short sales, she can do that. However s/he needs to advise the client up front so they can have the option to find another agent if they are willing to buy a short sale. It's a matter of choice. Recently an agent who won't work short sales with buyers or sellers referred a buyer to me because the buyer wanted to look at all types of properties.

My point in the post is
that the banks need to be more organized; more systems and guidelines put in place with minimum response time frames, and better training for agents.

The agents can get the training today, but they have to take many different courses, and until they take the other courses, they don't know what they didn't learn in the previous course. Some agents will take one of those courses and not bother with others, so they do not have all of the education necessary.

It isn't the agents fault because courses advertise that their course makes you the expert; and it doesn't.

If someone would develop a solid 7 day course that covered the basics, the advanced, the negotiation techniques, escalating techniques, the guidelines of FHA, VA, Conv, Fannie and Freddie, HAFA, etc., how to get to the investors and mortgage insurance companies, then more short sales would get sold faster.
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Old 03-10-2011, 03:07 PM
 
1,087 posts, read 3,444,590 times
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I'm not ready to buy yet, as I'm still trying to sell my house in TN, so I haven't done proper research on short sales yet. But I do have a question maybe someone here can answer. I found a short sale house with a listing price of $44,000. But in the description it said that the bank had already approved it for $58,500. If the bank didn't agree to less than $58,500, how can this realtor get away with continuing to list it at $44,000? Isn't that kind of like false advertising, or am I missing something here?
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Old 03-10-2011, 03:14 PM
 
Location: Tempe, Arizona
4,511 posts, read 13,389,962 times
Reputation: 2200
Quote:
Originally Posted by tnp View Post
...I found a short sale house with a listing price of $44,000. But in the description it said that the bank had already approved it for $58,500. If the bank didn't agree to less than $58,500, how can this realtor get away with continuing to list it at $44,000? Isn't that kind of like false advertising, or am I missing something here?
The price is still negotiable. A buyer can try to get the $44K price approved by the bank and hope the bank is willing to consider it, or offer the $58.5K for a better chance of acceptance. It also depends on when the bank gave their approved price. If it's been a few months, it may no longer be a good price for the home. Nothing is a sure thing in short sales.

The listing agent may also be hoping to lure in more offers with the lower price. Nothing to prevent it, and the buyer should always review market value to determine their offer independent of the listed price.
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Old 03-10-2011, 03:19 PM
 
1,087 posts, read 3,444,590 times
Reputation: 951
Quote:
Originally Posted by rjrcm View Post
The price is still negotiable. A buyer can try to get the $44K price approved by the bank and hope the bank is willing to consider it, or offer the $58.5K for a better chance of acceptance.
Ah, ok, I get it now. Thanks! I can already tell I'm going to need a realtor who really knows short sales and repos when it comes time to buy, as many of the homes I'm finding in my price range are short sales or repos.
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Old 03-10-2011, 03:34 PM
 
Location: Gilbert - Val Vista Lakes
6,069 posts, read 14,556,680 times
Reputation: 3875
Quote:
Originally Posted by tnp View Post
I'm not ready to buy yet, as I'm still trying to sell my house in TN, so I haven't done proper research on short sales yet. But I do have a question maybe someone here can answer. I found a short sale house with a listing price of $44,000. But in the description it said that the bank had already approved it for $58,500. If the bank didn't agree to less than $58,500, how can this realtor get away with continuing to list it at $44,000? Isn't that kind of like false advertising, or am I missing something here?
In addition to what rjcm said --- the Realtor has a listing contract where the seller determines the list price. The Realtor can only change the listed price on the MLS if the seller approves a change.

That fact that the lender has said they will accept $58k does not give the Realtor authority to change the list price.

What the lender has stated they will approve initially does not determine what the market value is. The market value could be closer to the $44k number where it's listed. Therefore, the Realtor is doing what he should do and note in the remarks what the lender has initially approved.
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Old 03-10-2011, 03:37 PM
 
1,087 posts, read 3,444,590 times
Reputation: 951
Quote:
Originally Posted by Captain Bill View Post
In addition to what rjcm said --- the Realtor has a listing contract where the seller determines the list price. The Realtor can only change the listed price on the MLS if the seller approves a change.
Thanks!
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