Short Sale Question from Trulia Reader

QUESTIONS:

So in other words..... When an MSL listing is listed as a short sale for say 400,000 and you offer 400,000 that price has not been bank approved?
Why even bother looking at these listings then. It wastes my time- the realtors etc.

Dennis Olson
Both Buyer and Seller
Pendleton, OR

Dennis, You hit the nail on the head. The bank has not even been notified in many instances that the seller is trying to sell it, unless perhaps the seller is behind in their payments. The seller may not have started the process by presenting an offer to the lender that is going to pay the lender less than the seller owes - that is what makes it a "Short Sale". Then the long process starts to get the low offer accepted by the lender rather than the lender spending much more to take the property through the foreclosure process. Short sales I have listed last year took 8 months. This year my shortest one is 2.5 months but most are still 3-6 months.... AND you never know for sure that you are in contract until the bank decides to give you that agreement letter.

Sometimes you need to look at the comparable sales in the area as sellers/agents will list the house really low to get a bidding war going.

What we are finding is that the homes in this price range in California's Santa Clara Valley at least are drawing in the all cash buyers and they are buying them as investments so they do not have the same angst in waiting for approval since it is a business deal and not their new residence.

If you want a home and want it within a reasonable amount of time, yes, stay away from short sales. We, as REALTORS, will appreciate that too - but hey, everyone needs to be helped and that is why we do it also. All joking aside, you just really need to KNOW all the upsides and downsides and be willing to wait if you want to buy a "Short Sale".

Dawn O'Neal
Realty World Executive Advantage
408.923.7758
Dawn@DawnOneal.com

Bittersweet Assistance ~ Another Short Sale Closes

Today we closed escrow on another short sale for some of my clients but they don't get any easier. The process does but the feeling for the clients do not. It is satisfying knowing that I have helped them through a rough process but at the same time it hurts knowing I could not do more to help them keep their home. The only satisfaction that I can make myself believe is that now the worst is over and they can move forward to rebuilding their future and perhaps even have it turn out better for them by starting over without this pressure hanging over their heads.

Short sale processes are getting a little bit better depending upon the mediation company you choose to work with and the lender(s) involved. IF you need to go through this, make sure you either get a referral from someone who has been through it or ask lots of questions to make sure your agent/mediator keeps in communication with you. Be prepared for long stretches of time without news but if you have a good team working together, it will be rather painless once the mountain of paperwork is submitted.

If you are currently going through your own personal short sale process or facing foreclosure, just know you are not alone out there. Sometimes you just need to let go and move on to the next adventure that life has in store for you and reduce your stress that you have no control over. Unfortunately we cannot always know the reason why things happen but we can choose how we react to them.

Short Sales, Foreclosures, Enough Already!

LENDERS NEED TO TAKE A PAGE FROM PARENTING GUIDES
Wouldn’t it be great if banks would recognize a giant service opportunity to their existing clients by working with them as parents do with their children! Don’t just throw your clients away - get down to basics and help keep the ones you have.

Many homeowners that put 10% to 20% down on their houses years ago are now being affected by the decline of home values due to many bad loans made to others with zero down payment and teaser interest rates. Now innocent homeowners are losing their homes that did nothing wrong.

A possible solution – It would be easier if the banks would step up and accept responsibility for creating this situation and stop the bleeding for everyone. Get into the trenches and reassess your portfolio collateral and bring the notes payable down to the current adjusted Fair Market Values and work with your homeowner’s loans to reset their loan to these values. The money saved in salaries, foreclosure costs, REALTOR® fees, upkeep, attorney fees, etc. will soon be realized as you help stabilize homeowners so they can stay in their homes and praise your wisdom by sending more buyers your way. What a Win Win Situation for all!

Currently many innocent people are being put out of their homes and then those same homes are sold for 40 cents on the dollar to others who could not have afforded the house at the original price and now the original homeowner is just out!

Example - #1) Recently a client said her neighbor, who purchased their home for $750,000, lost it to foreclosure and moved out. The new neighbors moved in and paid $300,000 for that same house. Now her home that she paid close to $750,000 is devalued and she is paying twice the amount for her home as her new neighbors – what is the incentive for this homeowner to now stay in the home, pay twice the amount as her neighbor, with no hope of regaining that equity?

Example #2) Client purchased home 15 years ago. Took equity from the home to purchase another principal residence and now cannot sell the 1st residence due to short sales and foreclosures in the area that have reduced the value to less than is owed on the home.

Example #3) A client that bought their home 9 years ago cannot sell it in the current market at $800,000 because the surrounding area of smaller homes is averaging $400,000 to $500,000 for short sales and foreclosures. They stand to lose this home and their credit and they did nothing wrong either. Even though their home is larger and in great shape, they cannot sell it for what is owed on it due to the comparables in the area.

Lenders, please wake up, step up and help this situation because putting people into homes that they can afford now at the expense of those that could afford their homes previously is just not right. Reduce the mortgages owed on the homes you hold and help get this economy and the pride of the American Homeowner back where it should be.