If you are a Buyer, or even a Buyer's Agent, who is dealing with short-sales in your marketplace, you might be wondering the same thing.
Of the thousands of homes listed for sale in your local Multiple Listing Service, how of them are being marketed as a short-sale?
And of those, how many of them can actually be purchased for the listing price AND be closed on within 30-60 days?
If you are finding the same results that I am, I'm guessing, not many.
As a matter of fact, most short-short sales that are listed cannot be purchased within 60 days at the price they are being marketed at as they require "third party approval." The approval process can (and does) take MONTHS (in most cases) all while the Buyer is obligated to wait around hoping for good news.
Based on my experiences, "third party approval" should be re-named "everybody's approval" because the process involves far more than just a "third" party...it involves the seller, the selling and listing brokers (if commissions are being affected), the first mortgage holder, the second mortgage holder (if there is one), the investor group who bought the loan and finally, the approval of the private mortgage company (when applicable).
Since we all know how hard it can be just to get TWO people to agree on where to go for dinner, can you imagine what it's like to get five or six invested parties to agree on how much of a loss they will take in order to avoid having to foreclose? Fast forward four to six months and you might get your answer.
OK...so now you might be wondering...how can this process be improved upon so that Buyers don't have to wait months to find out if they can in fact purchase the home of their dreams at the price it is being listed at in the Multiple Listing Service data base?
How about requiring the banks to sign the listing agreement?
Since a husband and wife who are going through a divorce BOTH have to sign the listing agreement because they are parties to the transaction, why aren't the banks required to sign that same agreement if they are party to the short-sale transaction?
In my opinion, if the Seller and the Seller's lender haven't agreed on what loss each of them will assume before the property is listed, Buyers are going to continue to be frustrated when they have to wait months for answers, values will continue to fall while one bank undercuts another within the same community and Buyer's Agents contunue to discourage their customers from even looking at short-sales as they know they will most likely be required to work for months, only to be asked to take less commission IF all of the OTHER PARTIES have finally agreed.
I am sure there are other ideas on ways to improve this process...this is just one of mine.
I'd love to hear your Short Sale "tricks" and "treats"...in celebration of this Halloween post!
LaShawn Norden, PA, Accredited Luxury Home Specialist, RE/MAX Central Realty, (321) 377-0157, Lake Mary, Longwood, Sanford, Oviedo, Winter Park, Winter Springs & Altamonte Springs which are all located within Seminole County, Florida.
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Actually there is a very good reason why banks don't sign the listing agreement. They are not on the deed so they have no say over whether the property can be sold. In fact, they often act illegally in that they try to change the commission. They have no right to do anything in the transaction except to determine if they will accept or reject the payoff. Of course they alter commission all the time but that's only because we allow it. I know of brokers in our area that now send notices to the banks at the lisiting saying the commissions are not negotiable other than between brokers. The banks are not parties to the listing contract. This is basic contract law. Only parties to a contract can alter that contract. It's sad that many of these banks are shooting themselves in the foot and hurting their customers by their unprofessional behavior.
I agree with Larry. I twould be like me putting up my neighbors property for sale...Although, I wish I could!
Larry hit the nail on the head. The lenders have no right to alter the commission unless they are allowed to do so.
We know banks are not parties to a contract, but in a short sale they have the power to approve it or disapprove it. I guess our only option in the listing agreement is to put the commission up say 7-8% so that when they lower it, it would be in our acceptable commission range of maybe 6% or 5% depending on the area you work.
LaShawn...
I still think that they should have to approve a price in writing. This is maddening!
The lenders can and do insist on how much they will pay for anything, simply becuase they are paying for it. The lender/investor is agreeing to take less than what is owed so they can determine the commissions. The sellers are then free to reject that offer, if the wish.
The problem is that most agents send in whatever offer comes their way and the lenders are not confident they are getting the best price possible. Remember, real estate is local so they might not be aware of the rate of depreciation in your particular marlet. Lenders are getting thousands of offers on their desks and many of them are quite ridiculous so they cannot rely on the agents submitting most offers and that is a shame.
Most agents needs to realize that in order to be successful we need to take into consideration the fact that we should treat the lender as a client and structure the sale to fit their needs. Their needs are to get market value for the home...if we can submit those offers, whatever they turn out to be, then we would have more credibility within the banking system.
It all seems more completely mad then it does sane. Get me off the merry go round.
Ok gang, here is the deal....Although I AM concerned about the banks dictating commissions (gosh darn it, that's how I pay my bills!), I am more concerned that public is under the false impression that a house can be purchased for a specific price within a specific time period...when in reality, theLENDER'S APPROVAL is required for it to be sold at the price it is listed at in the MLS.
Since Florida is a lien right state, I'm still not clear on why the bank shouldn't be required to sign the listing agreement (or some other document) that clearly specifies that the bank is aware the property is for sale at the price it is listed at and that they will consider offers at or near that same price.
I'm frustrated and so are my Buyers...
Solutions please.
I don't know about Florida, but in California for all short sale listings, there is a short sale listing addendum that is sign by the seller when the agent gets the listing agreement. And when buyers put an offer to purchase a short sale listing, buyers are supposed to sign a short sale purchase addendum so as to make them aware that this deal is subject to lender's approval.