Anyone noticing a slowdown in short sale listing calls in their area?

Asked by scott farmer, Scottsdale, AZ Mon Mar 14, 2011

Is the short sale market slowing a bit perhaps due to "strategic foreclosures"? Saw another news cast talking about strategic foreclosure today. I really wish they'd stop putting that idea into peoples heads. It's bad for everyone in the long run. If you can afford to pay your mortgage that you committed to, you should be. Nobody walks away from their stock when it takes a big dip. You either sell or wait for it to go back up. There is NO bailout.

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11
Annette Law…, Agent, Palm Harbor, FL
Mon Mar 14, 2011
Yes, seeing slow down on call here also. This could be the intended result of 'happy feet' counter measures many agents have put in place. This has curbed the trend of a short sale buyer placing offers on multiple properties simultaneously AND compels the buyer to stay committed until bank responds with offer.

Regarding strategic defaults. The banks do/did not operate in good faith. They did walk away from their commitments and still do. They intensionally corrupted the home purchase process for start to finish with the good understanding they would be able to sell these fraudulent mortgages to investors. This deliberate action effect everyone..yet the homeowner taxpayer bailed them out! Now you believe the only party that needs to keep a commitment is actually the only party that pays for everything, the USA homeowner. When you deal with the devil, the rules of good faith may not be practical. This may be the only opportunity a homeowner will ever have in their lifetime to free their family of 100's of thousands of dollars of invisible debt created and compounded by....well you know who. In some states, this is a real option. Other states not such a good deal.

Seriously, a homeowner who purchased between 2002 and 2007 is going to be locked into their home for between 6 to 10 years in order to think of breaking even. Based on each individuals location and situation, do you have the courage to make a $200,000 decision for your family?
1 vote
scott farmer, Agent, Scottsdale, AZ
Tue Mar 15, 2011
Victoria, like you I would never knowingly engage or risk my license in this type of transaction/behavior. I've also declined to help people who were contemplating doing this type of transaction. Sadly I think a lot of this is going on in all markets and it really hurts everyone which was my earlier point.

Regards,

Sandy
0 votes
Victoria Fel…, Agent, Phoenix, AZ
Tue Mar 15, 2011
The thing with Strategic Foreclosures is within a 6-years period the lender(s) of the foreclosed home can issue a summons and slap a lien/deficiency with a court date. If you don't respond and show up for the court date and PROVE not being able to pay back the loan, trying to Short Sale or going through the loan modification process then the lien for the deficiency will be attached. A possible solution would be if the owner buys another home and in between the time after the purchase of the new home and the foreclosure of the underwater home the person goes into Bankruptcy and names the lenders of the underwater home in the foreclosure. Possible but convoluted and all too suspicious to me. I would NOT want to be a part of that scenario down the road. I HAD a client who using one Realtor for the Short Sale and was using a buyer agent for the new purchase - When I found out I backed out. This stuff is going to come back to those who participate in this type of transaction and professional behavior. I can see the commercials right now! Suggest those that do get involved keep your notes, paperwork and email hardcopies for at least 6-years and get ready for your past client's phone call and subpoena.
0 votes
scott farmer, Agent, Scottsdale, AZ
Mon Mar 14, 2011
Thanks for all the great comments. To Annette, I guess I wasn't clear about what I call a strategic foreclosure and yes, there are people that should walk away from their homes especially when they have exhausted seeking other options to resolve their financial situation. My definition is when a homeowner buys another home sometimes paying cash, moves into the new home and forgets about the old and the committment they made to make the payments. I've seen this a lot in my area. The one's I know of personally, didn't loose jobs, were not divorcing, no illness. The decision was based on the time it would take to make up the loss in value vs. the credit hit for seven years.

Hoping for more stabilization in 2011!

Cheers,

Sandy Farmer
Realtor, GRI, CSSN
John Hall & Associates
homesales411.com
0 votes
Dp2, , Virginia
Mon Mar 14, 2011
I've noticed a slowdown in short-sales due to several factors (others have already listed some of the reasons). Another big factor is the "robo-signer" debacle. Several recent decisions (in NY, FL, NV, CA, MO, and MA) have helped to sent mixed messages.

Like Bob, I've also seen several banks counter high on some short-sales (and REOs). My partners and I experienced this first-hand over the past 3 months (including last week) in multiple markets. I'll step out on a limb, and state that I suspect they're doing this deliberately to wear out the buyers--hoping to extract more money (even when the actual value isn't there).

It's yet another gimmick. As soon as enough buyers push back, and as soon as enough sellers get their representatives to force the banks to stop playing these games, then the banks will move on to the next gimmick.
0 votes
Victoria Fel…, Agent, Phoenix, AZ
Mon Mar 14, 2011
I too just had a Short Sale Not close. This is after 4 offers and 7 months work - the 2nd investor/ lender (who was with the same bank as the 1st) would not release the deficiency even though they were getting 6% of the sales price! Three attorneys got involved and 'puff' it was over. How are we liking MARS?
0 votes
Bob Dickinson, Agent, Scottsdale, AZ
Mon Mar 14, 2011
Sandy,
I am seeing the bank countering high on short sales. So, as a buyer, why would you wait 3-6 months or more for a transaction that you MIGHT be able to purchase. Then find out that the bank wants more money than you are willing to pay. After all, you stuck through the long process to get a "deal" right?
In the meantime, you passed on several other homes and your interest rate has gone up.

In my humble opinion, this type of market has been around for 2 years or more now, and buyers and agents are becoming more educated. I think many agents have been made to look very bad when a short sale does not go through.
Another big ssue is liability to the short sale listing agents. The first wave of agent involved lawsuits is coming around. Talk to an attorney. he might just mention that it is better for the homeowner to let the home go to a trustee sales instaead of sgort selling. Fun, fun, fun!
As a result, buyers who want to have some control or pricing, terms, and timelines are staying away from short sales.
0 votes
Victoria Fel…, Agent, Phoenix, AZ
Mon Mar 14, 2011
Yes, less Short Sales but more and more traditional sellers.
0 votes
Alice Seger, Agent, Scottsdale, AZ
Mon Mar 14, 2011
All good comments! I also have seen the short sales slow down and believe that loan mods thru HAFA rules, 2nds reducing their amounts for $.10 to .20 on the dollar and buyers having to put down earnest money for 90 days while awaiting an answer from the lenders are all contributing factors. I just had one that was listed, were working to get accepted contract and then the first contacted the home owner (after they had been turned down for loan mod twice) about applying again for loan mod and owner contacted the second who is now willing to reduce their loan amount and refirm it for $.10 on the dollar. So that one became a cancelled listing and rejected offer. The banks have been give too much control! They always wanted in the real estate business, now they are and control it in these cases. They are setting the prices, commissions and who pays what closing costs but also improtant who gets home loans.
0 votes
Paul Slaybau…, Agent, Scottsdale, AZ
Mon Mar 14, 2011
I'm in your market, Sandy, and wish I could answer to the affirmative. While I haven't checked the volume stats recently, I'd say the percentage of short sale listings to REOs and traditional sales hasn't noticeably changed from my vantage point. I do know that traditional sales flip-flopped with distressed properties (both bank owned and short) to regain a narrow market dominance (51% versus 49%) recently, but too early to pronounce either a trend or an anomaly. As every agent I poll is inundated with buyers at present (granted, agents are more prone to exaggeration in the health of our business than fishermen), however, it does bode well for the coming months.
0 votes
Jim Paulson, Agent, Boise, ID
Mon Mar 14, 2011
I know the consumers are tired of the run around chasing short sales that don't get accepted some times or being hit with additional fees at closing. I know of Realtors that don't appreciate getting their commissions cut at closing. I know of sellers that have declared bankruptcy the day before closing stopping the sale after the buyer has their moving truck packed and given notice at their current address.

With all that said, yes, I have seen a slow down in people interested in looking at short sale listings!
0 votes
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