Most signs and economic indicators point to a recovery cycle in the real estate market with price stabilization. Previous perceptions of a flood of foreclosure properties are not materializing, and in fact, foreclosure filings are down. Nationally, 7.5 million homes are at least 90 days late on their mortgage. Banks are moving more aggressively toward “short sale” solutions versus foreclosing and taking an immediate loss on their books.
 
• The Fed has stopped its tax credit program, which resulted in new home sales up 15% to a two year high.
 
• The Fed is moving away from buying mortgage backed securities and leaving that to private sector forces.
 
• Many experts believe it’s inevitable that the Fed’s next step is to raise interest rates after having “controlled” them at VERY historically low rates.
 
Smart homeowners see an ideal opportunity to “move up.” Distressed sales in your move up range offer great values. That combined with the low interest rates (for how long?) makes this an ideal time to explore selling and moving up. Everyone’s situation is unique, but I’ll be happy to offer a no-obligation meeting to see if it’s right for you. Call or email me!

702-528-2559
Farnham.Matt@gmail.com
www.MattFarnham.com

One thing I get asked on a weekly (sometimes daily) basis regarding short sales … Why is it taking so long to get an answer back from the bank (lien holder)?  This is actually a loaded question in the sense that there are many reasons why you could be experiencing some frustrating delays.  The expected wait time for an approval or denial can be anywhere from a couple months to over a year.  Currently the success rate of short sales nationwide is about 20%.

Some of the obvious things you often hear or read about are how there could be multiple lien holders involved, a mortgage insurance issue, or maybe just the fact that the bank wants to be sure they are getting market value for the home.  These are just a few of the very big challenges that have to be addressed in a short sale. 

Let me expand on a couple ideas that you may not hear talked about all the time like these others I mentioned above ….

DELEGATION:
You often hear of a buyer, seller, and/or Realtor frustrated with Bank of America and their short sale process.  Now, I’m not letting BOA off the hook because I do strongly agree their short sale process is terrible and needs some serious help … but they don’t deserve all the blame.  You see … BOA is a “loan servicer.”  They are not the actual “note holder” for these loans.  There are three types of contracts that the servicer can have with the note holder, or “investor.”  These are:
1) Fully Delegated Agreement
2) Limited Delegation Agreement
3) Non-Delegated Agreement
Just from the names you can understand what each mean in terms of the servicer’s ability to make decisions regarding the loan.  The vast majority (I’ve been told over 95%) of the loans that Bank of America (for example) services, are “Non-Delegated” which means they have to present everything to the investor for review and get their approval, denial, etc.
So the combination of terrible short sale systems on the servicer’s side and the fact that they usually have to submit everything to the investor for approval … result in very long delays. 

RUBIK’S CUBE:
You have to realize in a short sale situation there are usually between 4-6 parties involved in the process depending on if there are multiple lien holders on the property (Ex. Borrower has a 1st and 2nd mortgage).  Each of these parties have different goals. For a successful short sale all of these goals need to line up.  You see, the seller’s main concern is to be forgiven of the debt with the fewest legal and tax consequences as possible.  The servicer wants to do good by their investor, while also trying to keep main street happy so they can do future business.  The investor obviously wants to minimize their loss and will carefully decide if it makes sense for them to short sale the property after considering all factors.  And the buyer, of course, just wants to buy the home and take advantage of these distressed prices.  Just like a Rubik’s cube … more often than not, all these sides don’t end up getting lined up.

Remember, in a short sale transaction the quality of your offer is not usually the most important factor.  To the lender, the seller’s financial situation is much more important to them than the validity of the buyer’s offer. 

IF YOU HAVE ANY QUESTIONS ABOUT THE SHORT SALE PROCESS … OR MAYBE YOU WANT MORE DETAILS ON THINGS TO LOOK FOR TO AVOID THESE SHORT SALE PITFALLS … PLEASE CONTACT ME ANYTIME.  You can always “Ask Me a Question” on the right side of this blog or feel free to call or email me anytime as well.

Thanks for stopping by again!

Leslie,
Thank you for your question, and it’s a question that I get quite often.  The response time for a seller on a REO (Real Estate Owned) property can vary quite  a bit.  It seems that between the asset maangers representing these sellers and the listing agents marketing the properties … there are many different approaches to marketing the home.  I say this because how aggressively they price the home will play a big role in how many offers are submitted, which usually affects the response time.  Typically you’ll see between 3 days and 2 weeks for a seller response.  I know that is a big difference but it also depends on how many files that asset manager is trying to get off the bank’s books. 
To take it one step further, the way a seller will respond can vary also.  Sometimes the seller will just take the best offer to date … but sometimes they will send out a “multiple counter offer” to every buyer who submitted an offer, and give each buyer the opportunity to submit their “Highest and Best” offer.  This gives the buyer an opportunity to get a little bit more aggressive on their offer if they’d like to.
Hope this helps …  =)