Why are you doing short-sales???
I'll admit, my experience is very limited in this arena - I've been a purchaser in two short-sale deals, one closed a few months ago, and the second should close soon (we'll see!?)
I have an agent's license, so I understand how the process (should) work, and I have a business background, so I understand the fundamentals of operating a business.
Both deals that I've been involved in took too long. Waaaaaay too long. Inexcusably too long.
The housing "crash" isn't new. It isn't 2008 anymore.
Based on my business experiences, when my companies had "demand" that we couldn't meet, we hired people, changed our processes, bought whatever technology we needed to get the job done.
So, that said, why is it "normal" for a short-sale to take 6 months+?
For whatever reason (the reason doesn't matter for the purposes of this discussion) the servicers have decided NOT to make any changes that would/have lead to a meaningful reduction in processing time for short sales. They've had YEARS to do it, lots of available unemployed people to pick from, plenty of time has passed so it's not like they haven't had enough time to train people...
I know, some of you have "secret-super-connections" that allow you to close some deals in a couple of weeks, but, by and large - from what I've seen on this very board - it isn't unusual at all for a deal to take at least six months to close.
During that time, whether you're the listing agent, or the selling agent, YOU are always the "patsy" - YOU are the "face of the deal" to your customer, whether you like it or not.
Every time a packet is "lost", a fax "isn't received", "we need another BPO", or whatever other nonsensical B.S. the servicer can come up with - it's you that gets to deliver bad news to YOUR CLIENT.
I know, some agents like to think they're "helping" the short-seller "preserve" their credit, but in most cases, the seller is getting "dinged" every month with an unpaid mortgage on their credit, and the clock for repairing their credit doesn't even START ticking until the deal is closed,
Which could be a year or more.
Added to the two years minimum "penance" required by the GSE lenders.
I also know, some of you claim to get things done super-duper quick - which could be awesome, except, if you do a short-sale super-duper quick, the seller doesn't get any "free housing" - which, if you're truly looking out for their best interests, might be the only "positive" thing to come out of a short sale for a seller.
In my old home state, there was a one-year "right-of-redemption", after a foreclosure in which the person who lost the house normally gets to stay, rent/mortgage free. A whole year with $0 housing expense could be a significant "fresh start" for someone "on the ropes financially" - selling the house in a quick short-sale just makes them renters with bad credit and no reserves, one step closer to sleeping in a car.
And what about self-interest?
Being an agent is all about service.
It doesn't matter to the clients how well-organized YOU are, the people you're doing business with aren't well-organized, and the stink clings to everyone who gets too close. The servicers make you look bad. They actively lie about what you've done when the seller calls, claiming you forgot things, didn't send this, etc - whatever it takes to get the seller off the phone with them, and mad at you.
So, in short, here's my "thesis" - please tell me where I'm wrong.
1:) The servicers don't want to do short sales. If they did, they would add staff/training/technology and actually make it happen.
2:) Short-sales don't always help a seller - in some cases, it may not be in their best interest to do one.
3:) Short-sales are frustrating your buyers. Even if the buyer says "they understand" it's a long process, they don't. It's human nature & capitalism 101. There's a reason a car dealer tries to send you home in your new car - you want it! NOW!
4:) Real-estate is a service business, and it's based on reputation. The servicers that you are forced to deal with in a short-sale actively and passively work against your reputation, sometimes outright lying to your seller about things that you have done. The incompetence and arrogance of the servicers comes through to your buyers as well, further smearing your reputation, and damaging your business.
I don't see a benefit for anyone involved except the servicers, who seem to be getting paid "full-pop" for a half-a$$ed job.
From the agent's perspective, isn't it much simpler for everyone involved to make the bank take their house back and list it as bank owned?
Replies to This Discussion
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Permalink Reply by Jeff Payne on
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Mark, I do them because there are people who are in need of short sale services. There are families who need my help and I am able to help them.
I believe you have alot of limiting beliefs and really dont understand a short sale like you might think that you do, no offense meant....
The sellers best interest is not free housing. I know that there are cases but 99% of the short sales I deal with the seller is not even living in the home any more. They have been transferred to other locations already or the property is an investment property. I honestly dont know if I have ever had a free living discussion with a seller. The sellers best interest is to get the short sale approved and move on with their lives as quickly as possible.
The servicers have made great changes in their process in the last few years. Bank of America and Wells Fargo have gone to equator and Chase has a fast track program that actually gives a cash incentive for the seller to co operate.
While there are some short sales that take 6 months, most are done faster than that. I would guesstimate that 4 months is a "normal" short sale and that is much better than 6-8 months just 2-3 years ago.
As far as credit goes, you assume that the seller is months behind on their payment or have even missed a payment. Each one is different. I just sold a home to one of my short sale sellers, they were eligible 2 years after they closed on their short sale and their credit really did not get hit hard. Salvaging credit after a short sale is not that big of a deal, the seller takes their hit and we help them rebuild their credit. In the mean time there are PLENTY of lease purchase deals, owner finance and alot of cheap rentals for them to live in, again not a huge deal.
Again I think you have a limiting belief when you say it does not matter about service and does not matter to a client how orgainized we are. Quite the opposite. The more organized we are the more likely the short sale will get approved and faster. RARELY do I ever get asked to refax anything, upload anything extra, as a matter of fact I can not remember the last time that a lender "lost my fax" or didn't have something but then again I am organized and make it easy on the lender. I dont think I have ever had a seller "lied to" about what the bank needed. If that happened, I have everything documented and would not have any problem showing the seller what I have done.
Almost done here, trying to cover everything
So, in short, here's my "thesis" - please tell me where I'm wrong. I do NOT believe you are wrong, just a bit misinformed
1:) The servicers don't want to do short sales. If they did, they would add staff/training/technology and actually make it happen. Servicers have added systems in place the greatly increase their short sale capabilities. They have done some hiring and they can always get better. They are FAR better than they were a few years ago. Investors are now wise to the servicers delays and have ways to take care of it thru escalations
2:) Short-sales don't always help a seller - in some cases, it may not be in their best interest to do one. Maybe, maybe not, each case is different but I have yet to see a case where the seller was better off with a foreclosure. It might depend on the state, I am in Florida.
3:) Short-sales are frustrating your buyers. Even if the buyer says "they understand" it's a long process, they don't. It's human nature & capitalism 101. There's a reason acar dealer tries to send you home in your new car - you want it! NOW! More limiting beliefs in my opinion. It is a long process and not for everyone. That is why it is very important to consult with a buyer before showing short sales. If they have an immediate need for housing, a short sale is not for them. If they can have patience and understand the short sale process and the home fits their wants and needs, then I don't see any issues with it. Great communcation along the way helps to keep them from getting frustrated.
4:) Real-estate is a service business, and it's based on reputation. The servicers that you are forced to deal with in a short-sale actively and passively work against your reputation, sometimes outright lying to your seller about things that you have done. The incompetence and arrogance of the servicers comes through to your buyers as well, further smearing your reputation, and damaging your business. It can go both ways. If you believe in service and serve those that hire you and do a great job, it will benefit your reputation. If you give poor service, then yes your reputation will suffer. My business continues to increase and that is in part due to referrals from past customers, seller and buyers of short sales so I don't think that it is smearing my repuatation. When I have my fellow agents referring their personal properties to me, I also don't see my reputation being smeared in the agent world either.
I don't see a benefit for anyone involved except the servicers, who seem to be getting paid "full-pop" for a half-a$$ed job. again, the seller benefits, the buyer benefits and the agents also benefit from getting paid and getting future referrals.
From the agent's perspective, isn't it much simpler for everyone involved to make the bank take their house back and list it as bank owned? It would be if you have an REO account and list REO properties. There is nothing simple in working with banks, I work REO and lately they are just as tough as working short sales. I have actually closed short sales as quickly as bank owned properties with the same bank.
Mark, please don't take this as me being combative, take it as my 2 cents worth. I have been doing short sales since 2007 and have seen the changes made in the industry in regards to short sales. Is it perfect? Hell no! Is it better than 2007? Hell Yes!
Remember, short sales are not for everyone. From an agent standpoint, it takes a dedicated effort, organization, communication and most of all a never quit attitude.
Happy Holidays!!!
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Permalink Reply by Jennifer Randall-Enderson on
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Well said, Jeff.
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Permalink Reply by Victoria Frieberg on
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What Jeff said! and...this month, as I closed with two families whose homes I sold as short sales within the past 3 years. I received cards this Christmas from families who thanked me again for helping them get back on track. I have notes from cancer patients who did not need the stress as they lost their homes, and I was able to alleviate as much as possible. We make a difference by having the knowledge, the compassion and the perserverence to be the ones who will try when people think they dont have anyone on their side anymore. That is sell side. Buy side..happy people in homes they could not afford several years back..and helping the sellers agent by keeping my buyer educated, involved and patient.
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Victoria, you are so right. I love this "Buy side..happy people in homes they could not afford several years back..and helping the sellers agent by keeping my buyer educated, involved and patient."
I almost forgot about the elderly couple who was devistated but beat cancer but wiped them out finacially. There were able to short sale their home and then move into a home they could afford and not have to maintain.
Agents need to have a servants heart and a bulldog mentality to work short sales
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and tums...your forgot tums! Merry Christmas Jeff,
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Permalink Reply by Janine Margaret Nielsen on
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Love that last line!
I tackle short sales because I love helping people, I love a challenge, and I love getting paid!
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Permalink Reply by Laura Rivera on
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Jeff,
I love your definition of what it takes to be a short sale agent: Your last sentence. May I use it?
Happy New Year!
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Permalink Reply by Smitty on
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I can't say ANYTHING better than Jeff. Once again, he is right on. I will say you seem to be fairly jaded. I love short sales. I love the challenge. I do them because there is a need. Nationally it seems many figures point to 50% of the market as being "distressed" so if you ignore short sales, you are missing a big part of the market.
I also want to point out one thing in your post. There are NO super secret inside connections. Most connections are public knowledge or ones we have made over the years. If you think because I have a great escalation contact at wells fargo all my files will fly through, you are mistaken. Short sale servicers typically run like a factory. You have to follow certain protocols no matter who you are. I HAVE been able to have my files looked at and issues taken care of, but certainly no faster or better than any agent on this site. My connections can't just approve my sales (although can dream) - Anyone who is pushing their "super secret" connection to you and saying they can get their files though faster, I would be very leery of.
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Permalink Reply by Cody Lampariello on
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I read this post and was ready to write this big long response...then I read Jeffs post and realized he said almost everything I would say anyway.
The only thing I would add is actually for question number 2. In this case I think the original post is mis-informed and just flat wrong. So many people think they should ride out their foreclosure while living in a free house without truly understanding the consequences of what they are doing. We are all in general a little short sighted, we look at today and the immediate future without paying attention to the long term effects of our actions. This is so very common when dealing with distressed property owners.
Yes if you don't have a job and have no where else to live I would say stay in your house while you get yourself back on your feet. But you need to understand the long term consequences of what you are doing. Don't end up being that guy who goes to foreclosure and then starts to rebuild his life only to realize 3 years later the bank has decided to file for a deficiency judgment and now you have to file bankruptcy and start all over again. Or that couple that came to my office about 6 months ago and I had to connect them with a private lender to buy a home because they had a foreclosure 4 years ago and no one would finance them.
Instead you could be like me someone who completed a short sale about 20 months ago and will be puchasing a home when my current lease is up with conventional financing.
That's my two cents, I'm not a realtor my company processes for realtors but I know and most of my clients know that a short sale is actually positive for everyone involved in the transaction even if sometimes they take a little too long.
I am basing this on a Florida perspective as well.
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Permalink Reply by Laura Marshall on
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I have closed a LOT of short sales. I also agree with the previous posts. A portion of a hardship letter submitted by one of my sellers said it best. (English was not his first language). " I lost my job and I can't find no work. I lost a lot this year and I know I can't keep my house. Please do not take it away from me. Please let me sell it, so at least I can keep my pride". This was one of those that I had to fight tooth and nail to get approved. I have found that most of the sellers I work with have never walked away from debt, but can no longer afford to keep the property. The banks aren't cooperating with modifications, and many of the owners are feeling helpless. They have no control over their situation, but feel they can gain some control by selling the property instead of having it taken away from them. They are able to move on with their life on their own terms (so to speak), instead of waiting for the Sheriff to lock them out. I can't tell you how many of my clients have expressed their gratitude...that I was on their side and willing to help. I have even kicked in my commission on a few deals, just to get them closed. One other example of why someone would do a short sale.... I had a seller who took out a $150,000 2nd to keep his business afloat, but it eventually went under. The 2nd accepted $6,000 as payment in full. If the 1st had completed the foreclosure that was in process, the 2nd could have pursued the debt.
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Permalink Reply by Mark on
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I think you made my point for me.
You "had to fight tooth and nail" to get deals closed, sometimes even working for free.
"Getting on with your life" can't really happen if the servicer drags their feet, and they like to drag their feet.
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Sorry Mark, I think we all disproved your point. Every single deal these days, whether it is a short sale, REO or equity sale we have to fight tooth and nail to close. Nothing is easy these days but with a little bit of persistance and organization, short sales are not too bad.
Who said that we are working for free?
Sounds like you had a bad experience with a short sale and now think that all short sales are just like yours and that is not the case.
Short sales are not for everyone and it appears that it is not for you and that is OK
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