If you are thinking about buying an REO or tackling a short sale then this video is for you!
The video may be a bit over the top but it does reflect the frustrations of many buyers who are trying to work with banks on short sales and REO's. I have a client who submitted an offer on an REO almost 6 weeks ago. His first offer was over the listed price and was not accepted. He resubmitted a new offer that is higher then his previous offer. In the meantime the price has been lowered but the listing agent says that the bank hasn't made a decision about accepting any offers even though his offer is now 10% above the current asking price. Needless to say he is very frustrated.
At least the listing agent on the above property will communicate with me. In many instances listing agents will not give out any information and only put a fax number on the listing. They will not answer questions or speak with other agents about the status of offers. It is not unusual for a lender to take 60 days before giving a reply on an REO and even longer on a short sale. Often by the time the lender finally responds the initial buyer has found another property and is no longer interested.
Last week a home sold as a short sale in the Tree section of Manhattan Beach at a price that was the same as the price on an offer my clients made over 9 months ago. Had the lender accepted the offer from my clients back in February they would have closed escrow in 40 days and been done by April 2009. Instead they horsed around and ultimately wound up losing an even larger chunk of cash by waiting another 6 months to take the same offer they could have received in the Spring.
And just to make things more interesting on properties with conforming loans backed by Fannie Mae and Freddie Mac some new rules are about to be implemented across the country under the Making Homes Affordable Program. As of September 23, 2009 over 60 lenders have signed on to be part of the program. Basically it means if you can't make the payments or sell your home for more then you owe, you can't just decide to offer your home as a short sale. You must talk with the bank about modifying the loan first and if that doesn't work then the bank will make the decision about offering the home as a short sale to the general public not the owner. We live in interesting times...
****A big thanks to Laurie Manny at Long Beach Real Estate for finding this gem!
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2 comments:
Well, as someone searching in the 800k to 1.25 mill listings in Hermosa, I can say the short sales are really starting to show up. 1 foreclosure, 7 short sales, and that is what is on the MLS. Maybe you can give some historical perspective, but is that not a pretty high number of shorties?
Very few of the places I have tracked seem to be moving. The one short sale that interested me shows a lot of signs of being shadow inventory, with an auction date set months ago and the owner apparently uninvolved in the process. I suspect it's not the only house that it being held out of foreclosure not for the owner's sake, but for the bank's. It certainly looks like there's still some air to be let out of at least this market segment, at least.
Anon 12:27,
You are right, Hermosa does seem to have a higher percentage of short pays over the last few months.
Hermosa, unlike the other Beach Cities, has also seen inventory moving upward rather then down. I suspect a number of things are at play here.. but two jump to mind.
1. Probably 90% were purchased between 2005-2007. In many instances the property is worth less then what is owed. I'm also guessing that many folks have notes with rate changes coming due and they can't refinance the properties because values have declined.
2. A number of these homes have been on the market for a long time. They were priced above market when they were first listed. Because they were overpriced and did not sell they now are faced with a declining market and can only sell if bank agrees to take less.
There are a few homes that were purchased prior to 2004 and were refinanced with larger loans. There are also a couple that were remodeled and loans appear to have been taken out to finance the upgrades.
I expect to see more of these types of properties hit the market in the coming months. One of the agents in our office is very involved with the foreclosure market and says that he has seen more properties in trouble in the last three months then he did all of last year.
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