Short Sale Pricing Discussion

[Kurt]

Thanks SJ - added to SoWal.com home page. I know this is a hot topic in SoWal and a lot of questions out there.

 

[AAbsolute]

Lender ethics??:funn:
The only thing they won't do is rob your safe deposit box. Maybe

I bet we could start a new Thread on that subject too.

I'm hearing and reading a conflict from the keyboards of a lot of Realtors. If you'll watch and read you'll see Realtors say:

Lenders aren't giving the sales price we need in order to correctly price a listing.

Lenders don't give short sale reductions to Sellers with assets.

Realtors aren't responsible for list price and advertising of same.

Mortgages are Recorded in the Public Record.

 

[AAbsolute]

Here it is...SJ and I saying literally the same thing, but meaning something very different.

 

[Smiling JOe]

This time you touched my root question. It was there all this time, but I couldn't express it correctly:

You know that banks are unlikely to grant a short sale to a person with assets and I do too. However, it doesn't sound like Realtor ethics have dealt with this scenario that is being played out all over South Walton. A Realtor can list something at a price that is "short" despite the fact that the bank won't grant the relief sought merely because the Realtor can say the lender's not playing ball. Innocent Buyer makes a good faith offer which invokes some very predictable psychology in them. If you're a Realtor then you understand what a non-professional goes through psychologically during the phase just after making a written offer. It's at this point in the marketing scheme that the public is being mistreated and I think a Licensed Realtor should not be roping non professional's into a scenario like this.

I disagree with you that the Lender has more duty than to tell the Realtor and Seller to read their Recorded Mortgage. Without a memorandum to the contrary, the price is the payoff.

I'm not sure that I understand your post, aabsolute.

It sounds as though you think the buyer submitting an offer isn't aware that the lender must approve the price, which is incorrect. Short sales are sold "As-Is" and require the Short Sale Addendum to the Sales Contract to which the buyer must agree to as part of the offer. The buyer is well aware of the short sale when it comes time to write an offer. Also, if a buyer is working with at least a half-smart Realtor, the Realtor has the ability to filter out short sale listings, foreclosures, REOs, etc., or include only short sales, foreclosures, REOs, etc. If you want to know more information about a property than you see on Realtor.com or whatever site you use, ask your Realtor to assist you. If you don't want to play this game with the lender, don't pursue short-sales. It is just that easy.

Regarding your last statement, no, the price is not the payoff in a short sale, if the market value is less. The property must appraise, and the seller would have a deficiency -- that is what a short sale is all about. You seem to be forgetting that if it won't appraise, it won't sell. If there is no deficiency, it is a normal sale.

 

[Joe Mammy]

I've considered bringing the Destin short sale market to a screeching halt myself. It is conceivable that one buyer could make 375 offers on every Destin short sale without putting up a penny in deposits. Find out how in my latest Market Pulse.

 

[Bobby J]

I've considered bringing the Destin short sale market to a screeching halt myself. It is conceivable that one buyer could make 375 offers on every Destin short sale without putting up a penny in deposits. Find out how in my latest Market Pulse.

I like this idea.

 

[Smiling JOe]

Yes, one person could make an offer on 375 properties, but not legally, since there must be good faith and intention from the buyer. However, technically a buyer could do that by including a contingency for self inspection. I'm not sure that most would be able to get by without having an Earnest Money Deposit, and since most lenders of short sales require letters of financial commitment, I'm not sure that the buyer could convince his own lender to write 375 financial pre-approval letters.

I'm sure that someone is willing to try it and may succeed, but I'd go back to the part about there needing to be good faith on behalf of the buyer.

If Realtors really wanted to bring short sales to a halt, I guess it would be easy enough for each agent to not take those listings, but I, like many others, would rather focus on selling the seller's property, so they can get on with their financial life and begin to rebuild.

 

[Bobby J]

I really think the short sale mess will begin to fix itself as many agents begin to step away and the foreclosure begin to show up. Why would one bother if it is completely hopeless. I have a few short sales left in my inventory and if the clients do not meet the criteria that Joe Mammy brings up we have to let them go.
The short sales that we have managed to get closed are very tedious and make you really wonder if the bank is in touch at all. I now know why the term mortgage in French means "dead pledge"!

 

[Joe Mammy]

Yes, one person could make an offer on 375 properties, but not legally, since there must be good faith and intention from the buyer. However, technically a buyer could do that by including a contingency for self inspection. I'm not sure that most would be able to get by without having an Earnest Money Deposit, and since most lenders of short sales require letters of financial commitment, I'm not sure that the buyer could convince his own lender to write 375 financial pre-approval letters.

I'm sure that someone is willing to try it and may succeed, but I'd go back to the part about there needing to be good faith on behalf of the buyer.

If Realtors really wanted to bring short sales to a halt, I guess it would be easy enough for each agent to not take those listings, but I, like many others, would rather focus on selling the seller's property, so they can get on with their financial life and begin to rebuild.

All you need is the pre-Q letter, not a pre-A. One is all it would take. And who is to say that there is not good faith? Maybe the buyer will buy the first hundred or two that answer with an acceptance. And the EMD submitted X days after acceptance date is common.

Wouldn't it be nice to see all of the shorties off the active market?

My point is that now the system is not working. I really hope that Fannie will get good results in their test areas marketing the actual acceptance price by the lender.

 

[Smiling JOe]

me, too. I cannot think of a single reason why the test markets wouldn't do well, unless Fannie isn't going to release their real bottom-line acceptance level. The crazy thing is as someone else noted, the lender will often reject reasonable offers in a short sale, but when the property later goes to foreclosure and the lender takes it back, the lender will list the property at a rock bottom price to move it quickly. Seems like they could make more money by giving a real price up front, but what do I know?

I recently closed a short sale, four-plus months after writing the contract. Let me just say that the bankd which rhymes with skank of Tamerika is a real pleasure, I mean pain in the @ss. Because the bank took so long to give us a yeah or nay, the contract expired after three months, and our second contract (same buyer and seller) was even less than the first. Good news for the buyer, bad news for skank of Tamerika.