Jay Gedanken

I really love it when all these agents come out of the woodwork saying stay away from short sales and go for foreclosures. It seems that lots of agents are afraid of doing the extra work needed to get a short sale closed. In a foreclosure, the banks are generally pricing them at or slightly below market value and often they get multiple offers above the listing price. Everyone get excited and loses sight of what the real value is and sometimes pay more that they should for the home. In a short sale, most often there are no other competing offers

Short sales can represent some of the best deals out there. Yes, they can take a long time and yes many don’t close. There are some advantages to buying a short sale over a foreclosure

In a short sale, you get full disclosures, the property is generally in good shape and is being maintained. In a foreclosure, there are limited disclosures and the property condition is a crap shoot - Earlier today

Rachel,

Did your agent not explain what a short sale is? They have a responsibility to inform you .
A short sale is really a short payoff, in other words, the bank is accepting less than is owed to satisfy (payoff) the loan,

The asking price (listing price) is set by the seller, not the bank, usually with the advice of their agent. The bank, since it is being asked to accept less than is owed, has the right to decide what amount they will accept.

The bank is taking a loss and is not going to get as much money as they originally lent to the homeowner.

There are lots or reasons why it can take a long time for a bank to respond, the simplest answer is that they are getting hundreds or requests for a a short payoff each day and do not have the staff to handle the volume of files. It also makes it worse when the agents listing the property don’t send in the documents needed to get the file done and list properties at ridiculously low prices to entice getting a buyer even though there is little chance the deal will be accepted. If the asking price was set at market value and buyers didn’t make crazy low ball offers, the entire process might just get faster

You need to be speaking with your agent and have them explain things to you. If they can not or are unwilling to give you a good explanation and you are not happy with the service they are providing, you may want to seek other representation

Jay Gedanken
Broker Associate
PineappleHut Realty
San Diego
jay@pineapplehut.com
858-605-5839 - Thu Sep 4 2008, 20:50

You want disappointment? Try buying a foreclosure at below market value!. Most of the ones in good shape are selling over listing price and have multiple offers in the first week they hit the market. Lets also not forget you get very little disclosure and have to agree to the banks addendum that favors them over the buyer

Short sales do take longer in some cases, but when you find one that is bank approved they can move just as fast as a regular sale. - Thu Sep 4 2008, 20:10

Rachel,

A big part of the problem with short sales is that the listing price is not near fair market value. Often short sales get listed way under market value and buyers seem to have this idea that no matter what the listing price is that they can discount it. The offer price needs to be realistic compared to the market value of the home. Too many agents don’t advise their clients that a low ball offer probably won’t fly. Without knowing the specifics of the property you want to buy, I can’t say one way or another if your offer is in the realm of reasonability

The reality is that banks will accept a deal than nets them no less that 80% of fair market value. If you factor in the selling costs, that means the most you might get accepted is a offer that is 10-12% below fair market value. Sometimes the banks are not realistic to what the fair market value is and that could be due to the listing agent not doing a good job providing the bank with comps or just letting the listing price be set too low.


All of this contributes to short sales getting a bad rap and many agents steering their clients away from them. Short sales do close and it is way more than only 10%

In your case, it sounds like the seller has a short sale that is ready to close, the only problem is the price. Did your agent give you a comparative market analysis in the home? If so, what was the value? If your offer is near fair market value, your agent needs to push the other agent to push the bank. If the bank’s counter is at or below fair market value, then your offer probably is simply too low. Is this a buyers market? Sure, but buyers can not expect to be able to buy properties way below market., Will you find a property below Markey, sure, but it probably won’t be in great condition or in a desirable location or have some other reason that it has not sold at market value.

I work with buyers all the time and try to make sure they have realistic expectations - Thu Sep 4 2008, 17:56

Probubly Oceanside in the San Diego area - Yesterday, 21:41

Your correct, there are housing assistance programs for purchasing a home, not just renting. I know for a fact that there is a program in Poway as as friend of my wife has qualified under that program and will be buyinng a home.

Te cost is based on what the buyer ca afford and there ios a limit to the max. price, so it is very likely that Encinitas will not be ann area as it is one of the more expensive areas in San Diego - Fri Aug 29 2008, 07:26

Andrea,

The best thing would be to sit down face to face to go over the process and run the numbers. A lot of it really depends on what you will be able to afford and that will determine somewhat the area, type and size of the home. What type and size home are you looking for?

It is kind of difficult to really give you good information in the forum as there are a lot of personal details that need to be gone over.

I work primarily as a buyer’s agent and am very familiar with Encinitas and the surrounding area. I would be happy to sit down with you at a convenient time.

Jay Gedanken
Broker Associate
PineappleHut Realty
858-605-5839
jay@pineapplehut.com - Wed Jul 30 2008, 17:23

Protect your client? Oh come on !! All your protecting is a faster commission.

Do short sales take longer, yes, usually they do, but they also in many cases are a much better value for the buiyer than a REO.

I don't know what the matrket is in Prairie Village, but here in San Diego, but to find "a house in good condition at fair market value or below that needs little work done to it and has sellers that will be reasonable and conscientious to work with." is few and far between. - Thu Aug 28 2008, 18:37

Sylvia is spot on in that the process is the same no matter where you are. I was only saying that the market for short sales vs REOs differs from market to market

I know that there are lots of agents that will and do show and SELL short sales, as it is our job and responsibility to our buyers to make them aware of all properties that might meet their needs. If they say I don't want to even look at a short sale, so be it.

I am all for getting paid quickly as the next person, but I just don't put that ahead of doing what is best for my client

The more agents that act like Sylvia, the better it is for all - Sun Aug 10 2008, 10:27

I’ll continue to poke a stick in the bee’s nest

First of al the original question came from a buyer in San Diego, not Roseville, or Marin, Or Vero Beach or 85260 (wherever that is?) or anywhere else. Every market is different to some extent, even within a market, it can be a little different from area to area. I certainly would not say how things are in a market I did not really know

Secondly, I am not saying a specific agent or even every agent is lazy, but there are some that simply are looking for the path of least resistance and don’t want to get into a short sale deal because they have to work harder and it takes longer to get paid. I am sure you all even know of agents that look at the commission paid on a deal and then steer their clients to the property that they make more money on. Again, no one specific or on this case even most agents. Most agents are honest, ethical, hardworking professionals

I am just really tired of hearing agents saying how REO’s are the way to go to get a great deal and even on the local news here there was a Broker who flat out said stay away from short sales. Guess what if everyone stays away from short sales, a few things happen. 1) they don’t get sold. 2) We get more REO’s. 3) banks get even worse in closing short sales.

I think most people don’t realize how bad a foreclosure is for a bank. Having too many non-performing asserts compared to performing assets impacts a banks ability and cost to borrow money and they need to borrow money to lend it. Banks are not in the real estate business and do not want to be.

Sure the banks are slow with dealing with short sales. Part of the problem is agents not knowing how to manage and submit the deal to get an approval. Part of the problem is buyers thinking that no matter what a property is listed at, they can buy it at a huge discount from that price. Some (and certainly not all) agents don’t educate their buyer with what the fair market value of a property is and that the listed price often (not always) is a realistic indication of the property value. Everyone thinks that the news is 100% correct and values are falling at a double digit rate every month everywhere. When you get a buyer offering to by at 70% or less of market value and it gets turned down, it’s the banks fault , right? When the file gets submitted without pay stubs, bank statements and a financial statement and that delays getting the deal approved, it’s the bank’s fault, right?

Banks will do almost anything not to foreclose, as long as it is reasonable. Sure they want to get the highest return, but they also track how many potential deals go into foreclosure too. Think about it, you have underpaid , under trained people who get piles of files every day and they sole task is to get files from the floor to ceiling stack of pending decision to the 6” high stack of approved. They like it when they can get a deal done.

Not every buyer is on short a time frame that they have to get a deal closed in 30-45 days. Many have a much longer available timeframe and will wait out the short sale process. - Sun Aug 10 2008, 09:10

it's a 4 letter word





LAZY - Sat Aug 9 2008, 14:19

You know, it really bothers me that agents are so big on bashing short sales. They DO close and yes, it can be a long frustrating process. More often than not, they are a better deal for the buyer than a REO. First of all, usually there are not bunches of competing offers and the buyer can get a better price. With REO, it is more common to have many offers come in and then it becomes a bidding war, with the final price over the listing price.

If more agents took a more positive view, probably more short sales would close and close faster. The banks DO NOT want to foreclose and will do what they can to close a short sale. Part of the problem are the bottom feeder buyer that think that they can buy a property for 70% or less of fair market value. It’s not reality plain and simple and agents need to do a better job of educating their clients.

You need to let your clients know what is reality and they should not have unrealistic expectations. Like MaryAnn, I make a point to inform my clients of what to expect.

Lastly agents should be willing to do what ever is needed to best serve their clients needs and of that means it takes longer before they get paid, so be it. You can’t just do deals that close in 30 days..

Of course there are many very good agents that do whatever is needed for the good of their client.

Jay Gedanken
Broker Associate
PineappleHut Realty
858-605-5839 - Sat Aug 9 2008, 13:23

Nancy,

One of the reasons could be they don’t know how to deal with them and are looking to get a quicker sale. Short sales can be very frustrating for the buyer for a lot of reasons. One of them is the emotional investment. You fall in love with a home, make an offer, the seller accepts subject to the lender approval and then you are in a waiting game.

Often many agents underestimate the time it will take to get an accepted deal from the bank. It can take 8-12 weeks or more sometimes or it can be faster too. Somewhat it depends on how well the listing agent does their job. You need to constantly call the bank and keep after them and not be afraid to kick it up the ladder to management. The squeaky wheel does get the grease.

Short sales can often be much better deals for a buyer. You are able to buy a home below fair market value and you get full disclosure (if it is owner occupied). I always show my clients short sales, and advise them if what to expect. It can take longer to close and get paid, but my job as a buyers agent is to look out for the best interests of my client, not look for a fast buck.

If you are unhappy with your agent and they are not serving your needs, you may want to consider finding a new one

Jay Gedanken
Broker Associate
PineappleHut Realty
858-605-5839
jay@pineappleHut.com - Mon Aug 4 2008, 19:55

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Jay Gedanken
Broker Associate
PineappleHut Realty
jay@pineapplehut.com
858-605-5839 - Mon Aug 11 2008, 12:58