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 Mark on
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Jeff, I don't think you've disproved anything.
Every other thread on this board is a short-sale that's gone wrong. Many take over a year, which negates any potential credit "benefit" to the seller.
In my original post, I explained that I have been involved in two short sales, and neither provided any real benefit to the seller.
As for working for free, that's directly from Laura's post above - and according to her post it happened on more than one deal.
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Permalink Reply by Jeff Payne on
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Mark, you asked why we did these and I explained to you why we do short sales. You must not have read my post because I disproved every single idea of yours with real short sale experience, not from 2 short sales. I have yet to see a short sale in which the seller did not benefit from the short sale. You are very misinformed about short sales and have a very limited experience with 2 short sales to be able to form a valid opinion. I have done hundreds of short sales and do not agree at all with your misinformed analysis.
Many take over a year? Again, you do not have any idea what you are talking about. The average short sale is less than 6 months, many less than 90 days and very few EVER take over a year to close. Those that do take a year usually have bigger issues like tax liens, HOA liens, multiple lenders etc.
Please tell me how the 2 short sales that you were involved in did not benefit the seller. I would love to hear your thoughts on that.
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Permalink Reply by Janine Margaret Nielsen on
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Most short sales in my area(California)are taking 4 months, as long as you have an experienced SS listing agent and you don't lose your buyer in the middle.
I'm currently working FHA SS's no lates. I see repurchases in their very near future!
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Permalink Reply by Laura Marshall on
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Mark, Yes...I have put my commission in a couple of times to help the seller. I could have started the transactions over, but I did not want the sellers under any more stress. I have SUCCESSFULLY closed more than 70 transactions..,and MANY of them went smoothly. We usually post here only when we have a problem and are asking for help. We also post, and let each other know about new rules, new programs, etc. I assume that you did not read all of my post. The client that I was speaking about pulled $150,000 out of the property. The 1st TD was in foreclosure. The 2nd TD was going to go after him if the 1st foreclosed. In California, if the 2nd is not purchase money, they can go after the owner. In this case, we were able to reach a settlement, and they accepted $6,000 as payment in full for the $150,000 owed. (Actually, the total w/penalties and interest was a little bit more than $156,000). I don't know about you, but I see a benefit to that seller. I just closed another one last week with Chase (formerly WAMU). The property was upside down. The seller received a check for $20,000 at closing, as an incentive from Chase to participate with the short sale. That sounds like a benefit to me. I closed one last month where the seller had 4 judgements against him, which also attached to the property. The buyer really wanted this property. I was able to negotiate the judgement's down to a total of $11,000 and the buyer paid them off. At closing, the homeowner was out from under the house, and all of the judgements against him were satisfied. That sounds like a benefit to me. I hope that you see where I am going with this. I'm sorry that you had problems with the short sales that you were involved with. Unfortunately, this is a story that all of us know too well. We just do our best, and keep moving forward.
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Permalink Reply by Victoria Frieberg on
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where is the 'like' button Laura! Well said! SSS is a place to go like family, we ignore some of the time because we know it will be here when we need to vent, or come home for some advice..sometimes share the joy.
I bet there are another couple of traits we share, beside all the altruistic stuff....workaholic tendencies with definite computer wonk overtones. I have had members call me and walk me through tough scenarios and computer programs, and I have done the same with others..part of the success of this site is not only that we truly enjoy helping people, making a living for our families while doing so, but also appreciate the other members here who share the common bonds of seeking knowledge, above average intelligence, and stunning good looks! Many more of our sales are successful than bad, or none of us would be here, chalk that up to one of the above..but mostly the constant seeking of knowledge in our quest against the windmills.
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Oh My Gosh Victoria....I think that you are my long lost twin sister :)
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(:
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Permalink Reply by Brent Innocenzi on
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What about the short sales where seller's receive $30k + cash at closing, the remaining deficinacy balance is waived, and Realtor's receive 6% commission?
I don't understand how only being a part of 2 of the 100's of thousands of short sale transactions you can make these comments and opinions. Short sales are definitely not for everybody...
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Brent, I agree with you, they are not for everyone. I have no problem taking them on. This post asked why we do them and I gave my answer and the original poster did not like my answer because I didn't tell him what he wanted to hear.
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I didn't like your answer because you didn't provide anything except bluster in your response.
I was looking for real insight and facts that would explain why agents continue to take on these deals.
Short-sellers get their credit smeared in a short-sale, just as they would in a foreclosure.
There is no credit benefit to them.
Theoretically, they can purchase a new home in a shorter period of time after a short-sale, but if the servicer drags out the short-sale, they can easily extend the time period beyond what a foreclosure would take.
Several have mentioned "grateful" sellers, but at best it'll be 3-4 years before these people can do business with that agent again (and frankly, that's a very optimistic number), and all of the servicer's antics are likely to discredit the agent's reputation, damaging any chance of repeat business.
My post wasn't intended to disparage agents who do short-sales, only to question the prevailing "wisdom" (and myths) that seem to be quoted as gospel, like "it'll help your credit".
I learned a long time ago that when I asked a professional a question, and got a response along the lines of "I've been doing this since you were in short pants" , that's a good time to find another "professional".
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Mark, chill! You are wrong. There is a credit benefit..I personally am working with clients whose homes I sold three years ago in short sale. They are preapproved for new loans. They had thousands of dollars 'forgiven' with no tax consequences. They now qualify for new loans, and we closed for one previous seller on a new home just this month..second one in two months. That is a benefit..obviously their credit was not hurt as badly as in a foreclosure. the last family also has a new/used car, learned to budget and was able to move on. It is not theoretical, it is fact. My reputation apparently is intact, thanks for worrying about it! I don't..my conscience is harder on me than any person could ever be. Lots of type A people have trouble with short sales..they should not do them as agents or buyers or sellers...chill and have a great New Year! Agree to disagree, makes the heart beat longer!
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Permalink Reply by Bryant Tutas on
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Mark. A short sale does not even show up on a credit report. Nor does anew mortgage application have short sale as a filed that needs to be checked. The loan application does however ask if you have had a foreclosure.
The affect of a short sale on a credit report is the missed payments. But fortunately not all short sales require that the borrower miss payments. I have done short sale for folks whose credit score actually went up after the short sale was completed!
A foreclosure will generally keep you out of the mortgage market for 5 years. A short sale will hurt you for about 2(If you've missed multiple payments).
A foreclosure is basically walking away from your obligation. It's giving up. Whether that's intentional or our of ignorance. It rare cases it may be because there were no other options. A Short sale is a solution. It's a settlement with the lender. It's working together to solve a problem. Creditors look at his much more favorable than they do a foreclosure.
A short sale is an opportunity for a borrower to save face and have control over what happens in the future. A foreclosure is leaving everything up to the lender who in Florida WILL come after them for the balance owed and seek a judgement in the courts. A short sale, in most cases, will keep this from happening.
That's why I do short sales. I owe it to my community to give borrowers hope that they can exit a bad situation with their dignity and with some control over their future financial situation.
Brokers and agents that handle short sales for a living close upward of 90% of them. "Short sales don't close" is a myth put out there by people that don't understand the process or who have failed because they didn't know what they were doing.
The major issue with short sales is lack of knowledge and understanding of the process. It's not the lenders.
The sellers that I help are more than grateful. They also send me a ton of business. These sellers can also purchase using owner financing. I work with investors that are happy to finance properties who have just gone through a short sale. We can also place them in one of our rental properties and help them build credit for their next purchase (while of course receiving commission from their monthly rental).
So to state that it will be at best 3-4 years before these sellers can do business with the agent again is an incorrect statement coming from someone stuck in the proverbial box.
Short sales require lots of experience. Until someone has that experience their opinions are really based on hearsay and not fact. That why these myths exist. Those of us that do handle short sales in quantity can rarely overcome someone's preconceived ideas.
As many have stated. Short sales are not for everyone. Getting into helping folks with their short sales is the best thing I have ever done for my business. I LOVE everything about them and get deals closed much faster than I did regular transactions in a regular market. My average transaction time is roughly 150 days from listing to closing.
I hope this helps.
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