2008 The Year of Foreclosure?

[Joe Mammy]

Getting back to short sales (quite a few in Driftwood Estates), agents who steer their clients clear of short sales are not providing full service and may be missing out on excellent buying opportunities.

Each bank's loss mitigation departments have different guidelines for granting short sales. I dealt with a couple last year from two different banks and the process was considerably different for each.

When considering an offer on a potential short sale the key is whether the seller has been in touch with the lender, is delinquent on at least 2 payments, can prove insolvency and hardship and has written the letters to the lender already stating such and most importantly - have no assets to make a payment. The banks are not going to grant a short sale if the seller can make his payment, this is what many agents do not understand. They post short sales in the MLS when the seller has not even discussed it with their lender.

There is a FAR 9 addendum for short sales now which basically just outlines time frames and removes the seller from any liability caused by delays from the lender. If left blank the default time period is 45 days.

Poking around the MLS will show you the lowest priced listings in most subdivisions are short sales. If the buyer has patience these can be the best bargains around today. One thing for certain, the loss mitigation departments of most lenders are going to get busier and busier as more desperate sellers take a crack at negotiating their mortgage balance.

 

[full time]

During the S&L mess, the banks took back properties from borrowers and learned that they didn't much like being a property owner. Some short sales will get better, but I don't look for the banks to be rushing in to take back property for auction. Keep that fork handy Shelly and check town to town, neighborhood to neighborhood and block to block. Some areas here are probably closer than you think.

 

[Smiling JOe]

Getting back to short sales (quite a few in Driftwood Estates), agents who steer their clients clear of short sales are not providing full service and may be missing out on excellent buying opportunities.

Each bank's loss mitigation departments have different guidelines for granting short sales. I dealt with a couple last year from two different banks and the process was considerably different for each.

When considering an offer on a potential short sale the key is whether the seller has been in touch with the lender, is delinquent on at least 2 payments, can prove insolvency and hardship and has written the letters to the lender already stating such and most importantly - have no assets to make a payment. The banks are not going to grant a short sale if the seller can make his payment, this is what many agents do not understand. They post short sales in the MLS when the seller has not even discussed it with their lender.

There is a FAR 9 addendum for short sales now which basically just outlines time frames and removes the seller from any liability caused by delays from the lender. If left blank the default time period is 45 days.

Poking around the MLS will show you the lowest priced listings in most subdivisions are short sales. If the buyer has patience these can be the best bargains around today. One thing for certain, the loss mitigation departments of most lenders are going to get busier and busier as more desperate sellers take a crack at negotiating their mortgage balance.

Given the current market conditions, I respectfully disagree with your first paragraph, Joe. Not all buyers are interested in playing waiting games, when there are other good buys to be had. Someone who bought in 2002, may be able to undersell even the "short-sale."

Regarding the third paragraph, I fully agree. The ECAR Board of Directors was going to come up with a definition for Short Sales, but I think it is too difficult to define. The MLS Committee toyed with the idea of putting check boxes on listings to identify short-sales, but I understand that they didn't want to do this without having a good definition. Your third paragraph has some good identifiers of a short sale, but it fails to address the short sale, where the seller will eat the difference owed to the bank, and that is one of the problems with the definition.

One other huge problem for many of the listings being called "short sales" is that the lender, in most cases, is not willing to pay the agreed brokerage fee, established between the listing broker and the seller. If this is not disclosed in the Agent Notes on the listing, the listing broker may be responsible for paying out the difference to the selling broker. Want to make some money over the next year, become a real estate contract attorney. I see potential lawsuits written all over place.

 

[Busta Hustle]

Yep real estate attorneys have done very well around here for years, just ask the guys at roebuck auctions

 

[Joe Mammy]

Given the current market conditions, I respectfully disagree with your first paragraph, Joe. Not all buyers are interested in playing waiting games, when there are other good buys to be had. Someone who bought in 2002, may be able to undersell even the "short-sale."

Trust me, I would much rather deal with a 2002 seller than a bank. The problem is when you are sending properties to clients via the MLS they are looking primarily at the price. They say, "Wow, this looks like a deal".

They do not see the agent notes that announces this is a short sale where the offer will be up to the lender to accept. That is where I come in and educate them that it is possible to get a great deal on this property but it is going to take longer than a conventional deal where the lender is not involved in the sales price being less than owed. I don't immediately give up on the property because the seller is attempting a short sale. I will investigate with the listing agent and gather as much info as I can to see just what page the seller and lender are on- if it's page 1 than I will likely advise that we move along, page 10 and we can get this done.

 

[njackie]

Excellent Posts Joe Manny, thanks for the info provided in all of them!

 

[Indigo Jill]

Any Realtors interested in commenting on their outlook for the Sowal Real Estate market in 2008? Is it the year of foreclosure for Sowal as well IYO?

I just launched a South Walton Blog and would love to put your opinion on there as well. PM me if you are interested.

 

[Bobby J]

I think I agree with 2008 being the year of the foreclosures but I do notice a trend that is hard not to look at. The A properties seem to be going under contract and leaving the market. I think we have allot of pent up demand in the market. We are getting calls and showing at an alarming rate. The hard part has been converting lookers into buyers. The positive side to this is we are seeing energy entering the market place. I think when the so called bottom bell rings many folks will be surprised at what product is really available.

Here is why: Out of everything listed only about 15% of it is real product. This 15% is good stuff (location,value) and moving off the market. Many folks are spending too much time analyzing the other 85%. The smart buyers are coming in and grabbing this stuff up. They see value down the road and know that when the market returns the A properties will be easy to sell. Current sales trends show this stuff leaving the market. When we finally get to the so called bottom and everyone agrees it is the bottom many of the A properties will be gone leaving the buyer that always wanted in standing once again on the side line wondering what happened.

Anyway, just my two cents..... Gotta run, just got an offer on a Heron's Watch unit we have had listed less the a week! Another A product because of the price and location.

 

[Smiling JOe]

Trust me, I would much rather deal with a 2002 seller than a bank. The problem is when you are sending properties to clients via the MLS they are looking primarily at the price. They say, "Wow, this looks like a deal".

They do not see the agent notes that announces this is a short sale where the offer will be up to the lender to accept. That is where I come in and educate them that it is possible to get a great deal on this property but it is going to take longer than a conventional deal where the lender is not involved in the sales price being less than owed. I don't immediately give up on the property because the seller is attempting a short sale. I will investigate with the listing agent and gather as much info as I can to see just what page the seller and lender are on- if it's page 1 than I will likely advise that we move along, page 10 and we can get this done.

Joe, I understand what you are saying. I just disagree with what you said about agents who "steer their clients clear of short sales are not providing full service and may be missing out on excellent buying opportunities." Not all buyers want to mess with waiting one to two months before hearing a reply on an offer. There are too many properties on the market from which to choose, and chances are, they can find equally suited properties, for the price of the "short-sale," or less.

 

[Smiling JOe]

Bobby J, I agree.

I'll share some sales numbers from Emerald Coast Association of Realtors:

All prices are average sales prices for the year

Condos in SoWal (less the area b/tw Sandestin to Destin)
2004 - $662,419
2005 -$886,569
2006 - $593,110
2007 - $745,496

Condos from Sandestin to Destin
2004 - $492,549
2005 - $614,634
2006 -$602,696
2007 - $604,985

Attached Single Family (townhomes) in SoWal, less the area from Sandestin to Destin
2004-$388,525
2005-$409,327
2006-$275,918
2007-$380,465

Detached Single Family in SoWal, less area from Sandestin to Destin
2004- $757,173
2005- $882,860
2006- $1,016,281
2007- $937,532

Detached Single Family from Sandestin to Destin
2004- $544,963
2005- $662,751
2006- $798,899
2007- $846,697

Detached Single Family in Freeport
2004- $220,148
2005- $325,809
2006- $300,386
2007- $298,837