The term "Short Sale" means different things to different people.
If you have tried to buy a short sale, chances are you will never try it again. And for the brave real estate agents who get involved…..let me just say, my heart goes out to you.
But, there may be signs of change in the short sale market. Countrywide has partnered with Fannie Mae to test a pilot program in
Arizona and Florida to help streamline the process by offering a "pre-approved" short sale.
The idea of a short sale is actually very simple. You make an offer to the seller of a property that is less than what is owed. The seller then presents the offer to the mortgage company and requests that they accept the offer as payment in full. It can be a way for the seller to avoid foreclosure, the bank saves money by not pursuing foreclosure, the realtor makes a commission, the buyer gets the house at the price they want….it sounds like a win-win for everyone.
Take a look at the video below and see how they are at least trying to make it easier.
Short Sale Help From Countrywide
Steve Russell
Mortgage Banker
Primary Residential Mortgage
850-497-6325 Office
850-221-8334 Cell
{ 17 comments… read them below or add one }
Some banks at the last day before closing say at the price they are taking they will not pay a commission. I know an agent who this happened to twice.
The video was interesting, I always wondered why the banks would not agree upon a price in advance when a property is listed. It would make the process work.
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Dan, it is fairly common that commissions get cut somewhere down the line in a short sale. Most of the realtors I talk to are no longer doing short sales because of this. I have even “short sale experts” that are getting out of that side of the business and focusing on REO’s.
Something needs to be done, but it will have to be on the lender level. Most of the problems stem from the current staff being under trained and overwhelmed, and upper management can’t seem to get the magnitude of the problem.
Richard, the reason why banks don’t do this is there is a grey area about the role of the lender in the transaction. A short sale is listed by the owner (who continues to be the owner until foreclosure actually takes place). Many owners in this position are so emotionally drained from the stress, that they are not fully aware of their options. The lender, on the other hand, can not list the property or even solicit buyers without the sellers approval and cooperation.
Sellers are also bombarded with bad advice and misinformation either through the media, or friends and family that really don’t know. In fact, less than 20% of real estate professionals actually know how to handle a short sale.
At least what Countrywide is attempting to do could get more properties off the market before foreclosure which is a step in the right direction to decrease the supply.
I have to say that the banks have been terrible in dealing with both short sales and banked owned properties. Locally, it seems that the bank often hire some of the least motivated agents that they can find. It is just crazy. Hopefully this new program with Fannie Mae will help keep things moving.
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Ryan, I sure hope so. I feel as though it can’t get much worse, and this is definitely a step in the right direction.
I think the issue with the agents is less about motivation and more about lack of training about the process and how to handle the transaction with the bank and more importantly, the buyer. Most short sales fall apart because the buyer does not understand that it may take 90 days or more to close, and they just run out of patience.
Short sales usually are a nightmare
Hopefully it works out well in the test market areas so it becomes a nice win-win solution for all and other states can try it as well.
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Chelle, I couldn’t agree more. Thanks for the comment.
I recently closed 2 short sales with 2 different lenders and they went thru decently although it took a lot of phone calling and follow up. Thought I mastered the art of this. My current shortsale purchase is a stinkin nightmare. It’s obvious banks are taught how to play hard ball and the seller seems like a lay-down. In the meantime the bank is losing money so I don’t get it. We’ll see what happens!
Scott, If i had a dollar for every story like yours that I’ve heard, I would be retired. It defies logic why lenders act the way they do about short sales. It can be beneficial to all parties if they were just more organized and moved with a sense of urgency.
A realtor I know locally has been working on the same short sale for over a year. He is on his 3rd buyer, and the price has come down by more than $75k during that time. Had the lender chose to accept the original offer, the realtor would have a better commission, the lender would have a larger payoff, and the seller would have less liability from a tax standpoint.
Given the pressure that financial institutions are under from their shareholders, I am dumbfounded that a smoother process has not yet surfaced.
i am working on a short sale right now, the difference is that I am the person buying the Short Sale Property. Countrywide is saying that I cannot represent myself and if I choose to do this, they will cut the comission in half? WTF?
Country Wide is the absolute worst for dealing with short sales. I work with agents in negotating the short sale, while they do the job to sell the property. Allow me to become the neutral agent in the negotation which allows me to pay a full commission on the short sale.
At least what Countrywide is attempting to do could get more properties off the market before foreclosure which is a step in the right direction to decrease the supply.
Sellers are also bombarded with bad advice and misinformation either through the media, or friends and family that really don’t know. In fact, less than 20% of real estate professionals actually know how to handle a short sale.
Brian, it has been a while since I originally posted this story. In that time Countrywide has gained a reputation in the community as the lender least willing to get things done at all let alone in a timely fashion.
I have spoken with Realtors and Investors alike, and the response I get is eerily familiar…Realtors are earning virtually minimum wage based on the time invested by the time it actually closes. In addition, several professional short sale investors I have talked to refuse to even enter into negotiations with a Countrywide encumbered property. With so many short sales on the market, the path of least resistance is to seek out the low hanging fruit, and if there are 3 houses to choose from, most would avoid the Countrywide house for one that may have a lower profit margin simply because of the higher likelihood of getting to closing.
It looks like a good step that Countrywide has partnered with Fannie Mae to test a pilot program. The banks should do whatever will help to turn the situation around.
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