Why We Must Continue To Present Short Sales To the Banks
August 22nd, 2008 categories: Short Sales
As a real estate broker I have been representing sellers on short sales for a year now. The experience I have gained during this year has been unmeasurable. It has been very satisfying to prevent a foreclosure for a seller and it has also been frustrating when the bank just won’t approve a quality offer. Through this experience I have put together a team that makes me feel very confident about continuing to work with sellers on short sales as I feel it is very important for real estate market recovery in the Phoenix Metro area.
One reason I feel like they are important to get approved is that our inventory levels are never going to drop if we keep “recycling” listings. Here is an example of what I am talking about. Many sellers who need to sell start by listing their home at an unreasonable price that will cover their mortgages, real estate commissions and title fees. Once it becomes obvious that the home will not sell at that price, it becomes a short sale listing. If the seller receives an offer, then it can continue on the market for 3 months while the bank reviews. If the bank does not approve the offer or if the buyer walks, then the property goes to auction where it most likely will not be bid on as the opening bid is to high. Approximately 14-30 days later, this property is re-listed AGAIN as a bank owned property (REO). From this example, you can see that one listing can be on the market multiple times over the course of a year! This is causing our real estate inventory to be skewed in my opinion.
I feel strongly that we will see a positive change in the way banks handle short sales. The banks are flooded with real estate owned properties (REO’s) and are finding that they are not selling quickly for what they think they will after they foreclose. In many cases of files I have dealt with where they did not approve an offer, the bank would have clearly netted more money had they accepted the offer we had on the table. Change does not happen fast though. I can appreciate the position these banks are in. Properties values have dropped at unprecedented rates here in Arizona and the banks did not have the manpower to facilitate all of the files that were coming to them as defaults.
Now we are seeing banks with larger loss mitigation departments and we are seeing that if there is a file with an offer on their desk for review, they are very likely to postpone the pending auction so the file can be reviewed. I am not saying that this is still not taking weeks and months, but I think I see “change”. This motivates me to continue to help sellers prevent foreclosure and keep working short sales. Many people will try to say that a short sale is just as bad as a foreclosure, but I strongly disagree. I will touch on those reasons in another post that is coming. I have an approach to short sales now that I feel will elicit more approvals from the bank and create some great buying opportunities for buyers. In my next Short Sale post I will be outlining our process for sellers and continuing to deliver important hands on news and experience from short sales.
Make it a great day! – Kim
Copyright © 2008 The Sunshine Broker | Desert Ridge Real Estate Blog 
Great article, I wish we can see that the banks are moving more quickly. We just closed a deal last week that was sitting on the banks desk for 45 days before we could even get someone to talk to us, and the loss that they were going to take wasn’t a huge loss. The banks are spending more money in legal fees.
Hi, Excellent post, some really useful foreclosure information here.
Thanks