- Everyone is talking about it.
- Everyone knows someone who has done one.
- Everyone has thought of doing one themselves
- Everyone thinks they know everything about it.
So why are Short Sales not talked about in the media? I am not sure, but recently I found an article that many in the real estate industry have been jumping up and down about. Why does a short sale take so long?
Short Sales, why Sellers are Frustrated by them
Foreclosures, Foreclosures, Foreclosures. That is what the media talks about. Why? Foreclosures are usually not great deals, and have many repairs that may be required. Foreclosures are prevalent in the Boca Raton market, but Short Sales are probably 2 to 1. Many economists and so called experts have been saying in order for the real estate market to recover we must stop the amount of Foreclosures.
The governments answer is for the banks to modify there loans so there payment is more affordable. Doesn't that just prolong the inevitable for most? Why not figure out a way to shorten the process for short sales. If we streamline the process and make it more efficient, Guess what we will have:
- stopped the amount of foreclosures.
- Put prideful homeowners in the homes that will maintain their home.
- Bring a boost to the real estate industry including more transaction sides and volume which will trickle down to everyone involved in the real estate from the painter to the general contractor.
- Increase consumer confidence and increase consumer spending. Statistics show that when homeowners feel safe and well in their home they spend more on durable goods.
Just by streamlining the process of a Short Sale we have solved most of the domestic problems. Just as there is no logic when it comes to banks there is no logic when it comes to our government. Everything becomes a filibuster. Moving towards the future we have to become more proactive rather then reactive. When you are reactive history repeats its self.
David Serle
Vice President/Managing Broker
RE/MAX Services
561-912-3500 Office
561-912-3502 Direct
561-756-3104 Mobile
Hi David, from a media standpoint Short Sales are boring and hard to explain. Foreclosures are scary and easily understood. The Media will always take the easier way.
Well, it is a good thing everyone knows what they are since they are going to be around for quite awhile!
I think the less stigma related to them the more people that need to do them will be less ashamed or embarrassed and actually get a short sale done!
That's why it's a good idea for the American public to stop paying attention to the news media... they don't know what they are talking about 90% of the time. If you want the REAL scoop about Real Estate in your market get it straight from the "Experts" like here on Active Rain.
Bill, great point. Don't we as a society do that. We always will take the easier of the two. Thank you for your comment.
Melissa, I hope they will be around for awhile. It is quite a lucrative business. We do need to know what the pitfalls are, and what not.
Melissa, very much agreed. I am sure most of us over the last couple years have checked our pride at the door. We are less about pride and more abaout surviving.
David, I agree that active rain and others are a great resource, but we cannot ignore the media even though they may be inaccurate at times because they are here to stay, and we know that consumers and the public are going to watch the news and get most of their information from other media sources. We just have to learn to deal with it. In a perfect world you would be right, but then I would be a blue eyed blond haired with a 6 pack of abs. I guess we cant all get what we want.
David...
It's kind of strange. One short sale will close in two weeks while another, with the same bank, will take two months. The Banks have left all confused. Not that there's anything wrong with that :)
TLW...ROAR!
Well said, the banks drive me nuts. Their process is pure craziness! Good posting!
I was going to say the same thing - I guess media thinks they are boring... wouldn't that be the day if short sales actually were shorter :) and like TLW said it really is odd that within one bank there are be large fluctuations. ~Rita
Media Smeadia - nothing new with them. Most of the time they're at least 30 to 60 days behind what's really happenig in the market now. If not that then they blow stuff up to make it sound "really really bad'. Bad sells.
Banks - I don't even want to go there today. Long tedious process and it's the new now of being in real estate. We can dream of things being more 'normal' but it'll be awhile.
I agree with Melissa - the stigma is being lifted, but it's still so embarrassing and so crushing for people to admit it has happened to them, or is happening to them. Seems to be changing!
David, we are all frustrated with short sales! If a loss mitigator sees homes selling in the REO department for more than asking then why would he/she approve a short sale? Our market here in Northern Nevada is heating up. Anything below $200k sells right away with multiple offers, if it is decent. The banks know this and it is making short sales very difficult to accomplish. My two cents.
I remember going to real estate school in 2001, and my teachers telling me that our local market was turning down, and the only ones who know it are active agents. He said the media wouldn't pick up on it for 6 months to a year. He was soooo right. Now, months after I started announcing in my newsletter that dirt-cheap deals are disappearing and bidding wars are happening on entry-level housing, the media just seems to start noticing. I agree with Anna - Media Schmedia!
David, I have to thank you for sharing that link to the USA Today article. I've already posted it to my Facebook page and business fan page. I really think it's a must read for buyers and sellers. Congrats on the feature!
Thanks you for bringing this up. It is hard to be stigmatized when you are in the majority or a large segment of society anyway. I find the people I help are just happy to get some answers and are not so embarrassed anymore.
Thank you for your comments. I just really think that we somehow need to make a more consistent and/or standardized process for Short Sales. Stop spending all this money on helping howeowners defaulting on their loans, and help them sell their homes. If they cannot afford their homes then they should be allowed ot sell their homes. Help them sell, and stop doing these fake loan modifications that do not work.
The reason why loan modifications do not work is two fold. One it is emotional. Meaning the homeowner defaulting on their loan has in their mind already moved from that home. Although they are staying there they are looking at the possibility of where they are going to live. Now you tell them, but WAIT I have a solution for you. You can pay a $1,000 less right now. Okay so there mortgage that they have not been paying is $3000 a month, and now it is $2000 a month. On the surface it sounds good, but in all actuality they have not paid anything in 6 months and now you are telling them pay $2000 a month. It is all about expectations. We need to be a lot more proactive rather then reactive. Loan Modifications are a reactive way of thought. Proactive would be helping these homeowners sell these homes, and get into a new one.
David, This post is spot on. Short sales are going to be around for many years. There are far more short sales that foreclosures on the market and the numbers are going to continue to increase. Banks are startingto get better systems in place but there is a lot of room for improvement.
I am doing my best to move inventory and help folks out ot a difficult financial situation but it sure is difficulty when the banks have no incentive to cooporate. So we just keep plowing forward.
Bryant, absolutely correct. We need to decrease the inventory of short sales before the foreclosures stop. Kind of like the chicken before the egg theory. I have seen some improvement with the lenders process, but many of the servicing companies and 2nd lenders are holding up way too many deals. They need to be forced to take deals.
I really hope short sales start to abate and jobs increase.
Short Sales, I love them. Keep the buyer and seller updated and informed from the beginning and we seldom have an issue. If their expectations are setup properly everyone is happy.
Gene
You wrote: "Just by streamlining the process of a Short Sale we have solved most of the domestic problems."
I don't understand that statement. How can home owners losing their homes "solve most of the domestic problems".
If short sales were expedited to match the contract time of foreclosures, folks will still have no home.
What "domestic" problems would be solved?
As for the media, they don't understand short sales and can't find an agent who can explain them.
David- I agree with Bill. Short Sales are too hard for the media to explain and NOT negative enough because there is a positive result. Foreclosures, everyone knows what that is and it sounds so desperate and complete, solid and negative. They look for their negative stories.
One time CBS evening news called us to do a story on our market. We were happy til we found out what they really wanted. She wanted us to find houses that were being sold as foreclosures in Wellington where the owners had destroyed the houses. We could not even find one house here that had that happen to it. All the foreclosures here are not that bad, they are missing appliances and such but not destroyed by any stretch. We tried to get her to do her story on short sales, she wanted no part of that. Katerina
Lenn- Here I am! I can explain them and have tried to get the totally left wing media here to listen and do a story about them. IT does not fit their agenda. I will say that SunSentinal did a great article about short sales and used us for their information. The reporter calls us whenever he has a question now about the market.
David,
Some banks are just not prepared to handle short sales in a timely manner, others on purpose drag them out for their own financial benefit. Scary process indeed.
I have been thinking the same thing....wish there was more we can do to get things going from a grass roots point of view. I am so doubtful that anything will change unless massive action occurs.
"'About half of short sales never close. We see it as a big lost opportunity, and we need to improve the rate we close them,' says David Sunlin, vice president in charge of short sales at Bank of America.'"
Man, wouldn't we all like to give this guy a piece of our mind?
My take is that there is no story with short sales as it is a happy ending as someone gets off the hook at the expense of the evil banks. Even in this story, they tried to emphasize the length on a short sale, but the final message was clear that the homeowner was staying for free for 18 months in the home and it eventually sold. The media rather see the mean banks kick out families, kids crying and (as someone mentioned) the owners take revenge out on their houses.
Also, I don't think banks should be forced to streamline short sales. A short sale is a loss to the bank and is a privilege, not a right. A bank should not be forced to encourage a short sale or spend money on a department that loses money. As a business owner, I rather hire employees who generate revenue, not negotiate losses.
Great blog as it gave us some contact info to people we can e-mail.
It is a difficult subject to explain there is no easy or right way to get a short sale done.
Some are saying that they are beginning to close sooner - but we have not seen that .
It's the best article I came upon in months depicting the realities that are truly affecting everyone including the understaffed bank and very little experienced negotiators who are constantly being replaced by others of same caliber.
If all the realtors, sellers and buyers are feeling a bit frustrated, imagine all the negotiators who are dealing with each case after case every hour of the day for a whole week.
Sad part of the scheme is that most bank negotiators aren't creative enough to make a deal work let alone resurrect them when they go sour. Truthfully I'm wondering if these negotiators really care about the people on the other side of the negotiating tables..........?
David: When you hear the term Short Sale, some agents run the other way while some of us dig right in. I'm not sure the media is really sure what a short sale is thus the reason for limited reconition.
What's to report? You can't reach the listing agents, you can't reach the banks, and half the time... you can't reach the close of escrow!
David - Blog on !!! Great post regarding short sales ! Short sales are finally starting to get media attention and are more in the light per se. We have done a number of them succesfully. In fact, every short sale listing we have taken on has settled (knock on wood !). I think more and more these types of deals will be done. They present a uniqure opportunity for agents and a great solution for sellers and banks ! We definitely need to lobby to make this a shorter process and more stream lined as well !
I think that short sales will be around for a long time. Most consumers understand them when the approach me and if not they understand the issues quick when I explain them.
The banks definitely need to streamline the process. Often a willing and able buyer loses interest in a short sale property and moves on simply because the bank is taking too long to submit an offer.
"Most short sales never close"??? Not on my watch. As a CDPE (Certified Distressed Property Expert) who invested in the time and training, deals go to closing and sellers breathe a huge sigh of relief - especially when lenders don't attach a judgement on the difference between what was owed and what the property sold for.
When the seller's agent knows what she/he is doing, transactions close. Simple.
Connie Addison
David and others who have responded in this thread,
Just because you haven't seen it personally doesn't mean the media hasn't done story after story after story on a subject. For example, my own paper, The Star-Ledger, did a great piece on the subject in September 2008: Real estate short sales often end up being a long haul by Sam Ali. (almost a year ago now) More recently, a month ago, we published a Q&A with a lawyer about short sales.
USA Today often has great stories but they are also frequently published after a trend has been long established or after many other papers have done stories on the subject.
The examples will be more plentiful in bigger media outlets. Here are just a few examples from the NY Times - and you can get many more by searching their site for short sale
This long piece in September 2007
February 2008: The Short Sale Gains in Allure
September 2008:The Pain of Selling a Home for Less Than the Loan (remember that this was almost a year ago so the response of banks has certainly changed over time)
May 2009: Bob Tedeschi's column about banks becoming a bit more open to short sales.
I could go on and on and on and give you examples from every paper across the country. For all the recent coverage, just do a quick search of google news.
Short sales would be getting even more attention than they are now if there were statistical documentation to quantify how prevalent they are.
Solved all the domestic problems? Short sales vs. foreclosures? I'll work with a foreclosure any day. Short sales are not a 'streamlined' process that's for sure.
Short sales are a nightmare I think. Too many gaps and loop holes during the process. I would much rather work a foreclosure than a short sale.
Thank you Erika and Lyn for your comments. Yes we would all rather work with a foreclosure rather than a short sale, but short sales are a huge opportunity. Many of us do not have relationships with REO asset managers or have the ability to get REO listings, but we do have the ability to get short sale listings and lots of them.
The old adage "He/She who owns the inventory owns the market" is very true. Short sales are here for awhile, and we should not look at them as a hassle, but as a huge business opportunity.
Thank you all for your comments.
Lisa thank you so much for all those articles. I am definitely going to read them. I very much appreciate the contribution.
David, I just put up a post on this very subject just a bit ago tonight. I'm with you....why can't we get the media to talk up a storm about the inherent benefits of a short sale?
David,
I was thrilled when my Buyers choose the FORECLOSURE instead of the SHORT SALE! I was wrong! Apparently, the property was given to a REO company to handle! And no one communicates with each other! Everyone is ready to settle, EXCEPT the REO company... and they won't say "why"! It's a secret!
Kathy Opatka
I have had some very happy short sale closings in which the seller is happy that he will not have a foreclosure on his credit report, and the buyers got a great deal.
At the same time, I have had Short Sales that were not approved, the Banks have taken title through the foreclosure sale and end up selling the property for less. You would think they have already learned their lesson. I think the media needs to talk about this issue!
Has anyone found a way other than persuasion and hounding to get a second short and first short note holder to play nice?
Seems the second trust holders sometimes forget they get nothing if foreclosure occurs!
Double shorts as I've been calling them have become quite a common thing here in Culpeper, Virgina. As the faster growing County NATIONWIDE for a few years straight, I saw piles of 80% first, 20% second purchase loans going through. Now, even though the same bank holds both mortgages, they are reluctant to talk to each other. The first wants to see a second approval and vice versa. What a headache!!
Gene - You are right on - Keep the lines of communication open and inform both the Seller and the buyer of the real facts about short sales -not the empty promises I have seen out there, like "I'll sell your short sale in 30 days"
A short sale is a process, not a streamlined one, but a process none the less.
"'About half of short sales never close. We see it as a big lost opportunity, and we need to improve the rate we close them,' says David Sunlin, vice president in charge of short sales at Bank of America.'" This is a true statement - but why? Has anyone considered the other side? The system is bogged down no doubt but RE professionals can be part of the problem. Incomplete short sale packages, low ball offers from would be investors, multiple offers being sent in at the same time! Not to mention what I believe is the worst, the investor that has you work the short sale, get the offer approved then walks on the closing because they haven't found an end buyer.
Short sales should be done by those willing to do the work. All those incomplete, stalled short sales slow down the process for the rest of us.
If you don't know short sale get educated or hire a company that processes short sales. However beware when you do use this kind of company. Do your homework before your entrust your business to an assistant. Make sure they are knowledgeable about short sales. If they are doing these everyday they should be on the front line with new information on how the packages are processed. This can be invaluable to you, the Realtor.
You should always get references, more than one. And really call them. You would be surprised how many times you are given a reference that isn't even someone they did a short sale for. Make sure they have been in business for at least a year. There are many new "short sale assistants" that come and go in 6 months or less. Also they need to have a comprehensive system for handling your short sale and a way for you to monitor your short sale WITHOUT you having to call them and ask for a progress report.
You know what they say though, as soon as the media has caught on it is already past.
I have seen many news reports and stories involving short sales. Most of the sellers and buyers in my area are well aware of them.
Akron, Ohio
Thomas when this post was written in August of this year not too many media outlets were talking about short sales. Now it is all over the news. Thank you for your comment.
I have access to Credit Bureau files that will tell you who is past due on their mortgages in each city and zip code USA.
These home owners are at least 30 days past due on their mortgages, and need your assistance to avoid foreclosure.
Anyone interested?