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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Bryant, you hit the nail on the head here!
I just looked at my numbers, overall average days on market is 71 days for all listing including short sales. (Alot of REO is under contract and closed very quickly which brings this number down alot)
Short sale days on market is 120 from contract to close which usually means we are approved in about 90 days and have 30 days to get it closed.
Quickest short sale approval 4 days
Longest 11 months.
Number of short sales that took over 6 months 5 (out of a few hundred)
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Permalink Reply by Tara Samney on
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I had a client close on a WF short sale in March 2011. His credit only dropped 60 points and WF waived rights to any deficiency. I haven't seen anyone state it won't hurt the credit - but there may be a correlation in how many late payments occur. My seller had only missed 2 or 3 payments at the time of closing.
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Sorry Mark, you are off the "mark" on this one. Your mind was made up when you started this post.
First off, a credit score does not define someone. There are plenty of really good people with poor credit scores.
Thinking that credit is affected from a short sale is another misconception by you. Missed payments is what will affect the credit the most and one does not always have to miss a payment to be approved for a short sale.
You also cant grasp the fact that short sales don't take a year or even 6 months to close. Average short sale times will vary from state to state and in my state in rarely takes 6 months to get a short sale approved. It is much more common to see them approved in less than 90 days but typical to 120 days or so for a short sale to be approved. Each one is different and has its own set of challenges.
The sellers are extremely grateful because they no longer have the possibility of a black cloud of a deficiency following them around because the short sale eliminated the deficiency unlike a foreclosure that would attach a deficiency. If you dont see that a benefit, I can't imagine that you would think a short sale is good for a seller.
Again, reputation? Sorry but you are off the mark again. If I had a bad reputation then I would not get regular referrals from my past short sale sellers. The sellers are very happy and refer all of their friends and family to us. That is proof in itself that the sellers are grateful and the servicer did not affect reputation.
I just sold a home to a previous short sale seller and they have been great for business with referrals and are still sending referrals. They were able to move on after a job loss and selling their home as short sale with no affect on their credit because they did not miss a payment.
Again, you have too many "mythunderstandings" even after we all told you why we do these.
Short sales are not for everyone, especially the misinformed and closed minded.
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Permalink Reply by Eric S. Garrison Waterboro, ME on
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attached is a file for you to show some differences between foreclosure and a short sale, clearly a benefit for most sellers. Someone also mentioned below of the credit report....a foreclosure will follow you, while a short sale reports differently....another benefit! Every case is different and nothing in stone...good luck to you friend and a Happy New Year!
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Permalink Reply by Marti Sauers on
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I usually don't reply to these, but this one I will ....
1. Generalizing any segment of the market is not productive or advised. If you don't like short sales, don't do them. There are a lot of agents out there who can work in your clients' best interests and it's better to refer those out rather than take on something you don't believe in. In some states, 6 months is unacceptable. In some, 6 months is fast. But if you are in a Deed of Trust state, please refer out your short sales in the future if they are taking you 6 months to close.
2. Short sales are not cookie-cutter, nor are they for everyone. Every state is different, and every client circumstance is different. Be the expert and decide what's best for your client. And then work your tail off for that $.56 per hour, because that's what's best for your client.
3. Free housing? really?? That's our goal? Has anyone else had just about enough of this entitlement mindset ?? I'll stop there ....
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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I believe most of us do short sales because in our hearts we want to help people in need. Yes, they can be frustrating. Yes, they take time and lots of effort. But, at the end of the day, when the burden of the mortgage is gone, the relief on the faces of our clients says it all.
If we were driving down the freeway and did nothing after a car flipped over with someone trapped inside and no way out - that would be similar to turning a blind eye and not helping borrowers to short sell. Sometimes, WE ARE the "Jaws of Life" for some of these folks and we're damn proud of it.
Are we frustrated with the time to get these done - heck yes. Write your Congressperson.
Much success in 2012 to all of my "Superstar" colleagues - may we be able to help anyone who needs us.
Thom Colby
Broker / Owner
Palm Desert and Newport Beach CA
Moving Lives Forward (TM)
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Permalink Reply by Cliff Stanwick on
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I only do short sales for clients. Short sales are a "misery" sale IMO.
Unfortunately, I believe the loans made by banks to borrowers for most short sales were not proper in regards to the originators didn't verify the ability of the borrower to pay and the valuation of the property even if they didn't have to. Repeal of Glass Steagall in 1999 is why were here. Borrowers have little choice but to destroy their credit to extract themselves from the marketing and lending environment of the time these loans were made. Banking is the retailing of money and these borrowers got sold garbage. A loan they shouldn't have been approved for on a piece of property that was overvalued.
"Helping" these people is a point of view. I personally believe a short sale is the last step not the first. The owner has already destroyed their credit. I think its a real guess if they will be able to rebuy a home or even if they should. Credit and its 17+ related scores is black magic that no one can clearly predict the future on.
The second tragedy of this mess is the reality that real estate professionals are being placed in a transaction that is not what we do. We perform a transfer of property set to standards of inspections, disclosures and financing using agency representation. A short payoff has a party who is not represented by agency nor is there an implied agency. The complexity of the sale in regards to "fair and honest dealing" and advising what the Seller should do has never been more complicated. I see real estate licensees being a scapegoat in the future as more and more people seem to be able to stay in their homes for years without paying. Right or wrong how did you advise your client when and how to sell their home is a liability I don't want.
There is no reason the "banks" can predetermine a sales price for a distressed property and make an offer to the Borrower. Why they won't is beyond me. We do the orderly systematic orderly transfer of property, I dread to think short sales are going to be the norm for many years.
We don't sell homes for nothing, commission is a liability, I hope as a group we can reform the short sale into a process allows us to just transfer property like a non short payoff sale. Happy New Year
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Permalink Reply by Denise Hippert on
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Mark, if you came to SSS looking for someone to validate your remarks, I'm afraid you've come to the wrong place. I have helped many distressed homeowners avoid the devastation of foreclosure and agree with Bryant, Jeff, Laura and Victoria.
In New Hampshire and many other states, a foreclosure (involuntary OR Deed in Lieu) automatically results in a deficiency judgment. You're right, delinquent payments hurt their credit score but, a deficiency judgment is much worse and will go on for many years. In almost all cases, the short sale approvals include the language "settled/paid in full" with NO deficiency.
Just as short sales are not for every buyer, they are also not for every listing agent. If the agent doesn't have genuine compassion for their client, the ability to understand and work with each lender/servicer's unique process and, the persistence of a bulldog, they should, in seller's best interest, refer their short sale listings to an experienced agent who has a successful short sale track record.
When you are considering buying a short sale listing, it's entirely appropriate to ask the listing agent if they have experience, how many they've closed, how many liens the listing agent needs to settle to get short sale approval on the subject property. If the listing agent has little or no short sale experience and/or there are multiple liens on the property, you can adjust your expectations accordingly.
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Permalink Reply by Pat Chadwell on
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I have been following this thread. I agree with the responses. We do it to help people. The short sale process has definitely streamlined from 2008. But there is a ways to go. For me it is helping out others with the situation that has befallen them. I do get paid when it closed. It is nerve raking sometimes I completely admit. However, service to these families helps them. The reward often is more than monetary - Satisfaction of help to others is a big part.
You seem jaded by the activity and I might suggest this is NOT the area for you to be in. OR possibly getting more knowledge so you can have more success might assist you.
Have a great New Years and maybe it is time to change your plans for the future?
Pat
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Permalink Reply by Joy Baker on
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Mark~
This is why I handle short sales:
Dear Joy,
I am writing this letter to thank you for all of the hard work and support you provided me and my family through what has been one of the most difficult times in our lives! The unfortunate circumstances leading up to having to make the decision to sell our home would have seemed much more devastating had you not managed to quickly and efficiently aid us in the short sale of our home. Being able to prevent a foreclosure by completing the short sale has allowed our credit to actually improve! Your knowledge, skill and caring are a credit to you as a person and business owner. You have a gift that engenders trust and hope and we sincerely hope that you will continue to do such good work for others!
Since selling our home, we have been able to put our family back together and on a road of promise. Where once there was sorrow, now there is joy! Well, that is because your name portrays the feeling of gratitude you have given us and the ability to work through these difficulties with dignity and grace.
Thank you from the bottom of our hearts!
Dear Joy,
I can't even begin to thank you for all the hard work you have done to sell my house in Salem, NH.
I am so grateful to you for everything you have done. When I came to you back in August I was so lost and had no idea how and where to begin. I was so upset and so scared and didn't know what to do. You assured me everything will be ok, you guided me through the whole process. And you did the whole thing while I was in the other side of the country. I really didn't think it was possible and I thought my house for sure will go for foreclosure but it didn't. Even with closing you knew I didn't have the money to travel so you did it all through the mail. My god I don't even know that was possible. Joy I don't know what to say except thank you.
Dear Joy~
It is hard to think of anyone beyond family for whom we are more thankful for this year. You changed our lives for the better. Happy Thanksgiving.
I have many more letters like these so I would say that my clients disagree with your assertion that a short sale is not beneficial to the seller.
The bottom line for me is simply this...if I know how to help people in these types of difficult situations, how can I not.
Yes, short sales can be aggravating. Yes, short sales can be time consuming (although I haven't ever had one that came even remotely close to a year) but the knowledge that I made a positive difference in someone's life is priceless.
Happy New Year!
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Permalink Reply by Victoria Frieberg on
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Thank you Mark. Most of us don't need to be reminded of why we do these, but this is a wonderful time of year for us to remember the calibre and the hearts of those we count on throughout the year for advice, humor and support..Superstars, one and all, Happy New Year!
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Permalink Reply by Teresa Simon on -
It is frequent that I ask myself the same question. The fact is I have one closing and I get a paycheck and the seller is rid of the deficiency at the start of the new year!
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