Here are some current comments and trends which one of an industry lead online articles inspired some thoughts and feedback which you as readers repositioning your business strategies may find insightful to current local, regional, and national market conditions that we are tracking for our clients around short sales acquisition both one off and bulk asset acquisition.
I wish what you reported in your article on short sales gaining momentum was occurring in the NY Metro area? In spite of all the reports that shorts are gaining traction we are seeing the opposite. A recent interview with an investment company we are working with tied to the Treasury reported a pull through rate on short sales at a meager 7-13% of actual files in the pipeline vs approved and closed shorts.
In an environment like a Chase for example where you may have 30-50 thousand requested short sales I am not sure where the amount collection level supports the cost containment justification to cover the head count and operational cost investment to support short sales at the present level? Another area which seems to be behind so many issues sited on the SSS Site has to do with the lack of trained and qualified personnel,not to mention the readiness of the supporting team members, at all levels necessary to keep the disposition process moving. The ROI to the organization based on the sizeable investment being made to staff vs the value returned to shareholder value has to be another emerging problem and which is also not calculated in the loan losses building another case for streamline short sales to emerge- but how soon? The Short Sale scaling up trend seems to be emerging but the business metrics and pull through on closed loans seems to be one of the great mysteries of our current industy?
In spite of growing inventory we are still butting heads on appraisal value and determination of actual true distressed fair market value which is used normally to negotiate actual settlement value. In spite of slowing market conditions investors generally are looking for better then 90% settlements of inflated values which seem to be reached in a declining % of deals as buyers are being more sophisicated after making too high a buy on this first short sale acquisition that can't cash flow or be resold now that the title has become marketable.
I further asked the author on the Short Sale Trend Article tp please convey in future writing that distressed valuation and retail stated fair market value are two different and distinct values which if denied by services, common, will result in higher loan loss levels which is the baseline for hopefully more services waking up to this reality. An area where professional value create value is through the process of clearing and negotiating liens and clouds on title which is something we handle ever provide credit to investors. Without this layer in the supply chain these untold millions of properties will not be absorbed in many markets as the 1.5 million properties were absorbed in 2009.
We are also seeing the some major delegated services are in fact re-tooling to do short sales however we have not seen number of short sale approved units pop. In spite of data supporting market stability or growth many markets are on the decline partially due to clouds on title comon with transaction worked out as a short sale.
A call to one of our realtor partners in the Fort Meyer area revealed that now as oil is hitting the beach fewer people will be thinking about visiting or owning in Florida which will also add salt to the wound in the florida real estate market as yet another issue concerning declining real estate value is starting to hit the west coast of Florida coast?
What I am seeing in an increase in interest in one off note purchase transactions to avoid the delays, frustration, and head butting rampant when 3rd party negotiation company, title, realtors, or others attempt to negotiate a short sale settlement are delayed or outright fail. Education at all levels is still a problem on both the side of servicers, institutions, and agents attempting to obtain a short sale approval as advanced understanding of investor regulations is broadly unknown by most practioneers and which must change to have the same transparency that the institutions expect from the prospective buyers.
Please post your market conditions and trends you are seeing in your market so we can leverage these conditions and trends and hopefully all lobby to our local legislatures education to support better practices to help people sustain the dream of home onwership in the US which is under attack and will not be as strong without your help. Think Global and react locally. Happy Selling- Craig
T. Craig Barry
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