Who is a lender really helping by agreeing to a short sale? Here's a hint: it's not the buyer or the seller.

By
Real Estate Agent with Better Homes and Gardens Real Estate Metro Brokers

Who is a lender helping with a short saleThere is a lot of talk about lenders and short sales, and about how the process of negotiating a short sale can be a long and tenuous undertaking. It is a stressful time for everyone that is involved in the transaction.

I hear agents complain all of the time about frustrated buyers backing out of their contracts after months of negotiations. They blame the buyers for not appreciating the complexities of getting a lender to agree to possibly lose money on a loan.

Yet lender can take months to arrive at what would seem to be a very simple decision. And that decision is only based on one fact:  Is the bank going to net more from a short sale than they would after going through a foreclosure and placing the property on the REO market?

And for lenders holding second mortgages the answer is even an easier one. Is it better to get something than nothing?

When a lender gets a short sale offer for approval, the bottom line is presented in black and white. It should be a straightforward business decision based on readily available sales data that is there for anyone to examine.

So why would a lender take months to arrive at a business decision that should take only a few hours? It should be a simple take it or leave it, what else is there to think about?

After all,  the buyer is getting the property at the current market price, so it's not like they are stealing the house. And the seller must walk away with nothing.

So the lender should realize that a short sale buyer is a blessing and not a bane. They should be treated with the courtesy and respect that anyone in business would treat a potential customer that is going to generate more revenue for the business.

So why is anyone surprised when buyers say that enough is enough? They are simply tired of dealing with an entity that doesn't have enough good business acumen to realize that the LENDER is the only one that benefits financially from a short sale.

And it's high time that they start acting like they understand that fact.

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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
Richard Weisser Coweta Newnan Homes for Sale

Jeff...

I'm sorry, but I disagree. Who says it is the agent's responsibility? Especially the buyer's agent? Neither he buyer's agent nor the buyer have anything to do with the seller's problem of providing clear title.

Our contractual agreements in GA state that an agent has NO responsibilities when it comes to the seller providing clear marketable title.

It is, however, the agent's responsibility to find a property suitable for their buyer. And if the happens to be a short sale the agent cannot choose NOT to submit the offer.

Once again I stand by my premise. To state that an agent has an obligation or responsibility to negotiate a short sale and assemble documentation packages is patently false in GA. I say it is the lender's responsibility and since they have the most compelling reason for authorizing a short sale, they need to be more helpful and proactive.

Sep 07, 2009 11:25 AM #76
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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
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BB...

Here's what you are missing ...

It is in fact, the responibility of the lienholder to accomodate the borrowers becuse it is in THEIR best interest.

For crying out loud, if a short sale can save them $30-50K then they could hire one specialist for every short sale and make money.

What I find troubling is the elitism that says "you need to know how or give us the work" in which agents try to promulgate the theory that this is sonehow an agent responsibility.

It isn't because someone says it is. Your responibilities are outlined in your brokerage agreements, and I'll bet there aren't many agents that list "loss mitigation representation" as one of their responsibilities in their brokerage agreement.

BTW, I'd check with my E&O carrier. I'll almost bet that those activities are not covered.

Once again I speak primarily about Georgia. I don't know how agen't responsibilities vary elsewhere.

Sep 07, 2009 11:41 AM #77
Rainer
191,863
Jeff Payne
The Payne Group at Keller Williams Success Realty - Panama City, FL
Panama City Real Estate

Sorry Richard, I should have been more clear, it is the listing agents responsibilty to gather the sellers information.  I am not a buyers agent, I only work with sellers and refer buyers out to a team of buyers agents.

Our short sale addendum to our listing agreement in FL says the seller will promptly supply the listing agent with the documents that the lender will require.  It is the listing agents responsibility to represent the seller and in this case we are talking about a short sale. 

I sure do not understand your last paragraph, it is the lenders responsibility to assemble the sellers financials and documents?  I agree that they need to be more proactive for sure but we are not having the issues with short sales like it appears that you have in GA.

You stated in another post that the lender should supply a checklist.  They do, all it takes is a simple phone call or google search and you have the checklist right in front of you.

Richard, with all due respect, sounds like you should just stay away from short sales.

Sep 07, 2009 11:42 AM #78
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Linda K. Mayer
License # 01767321 - La Verne, CA
Realtor, SRES, SoCAL, A REALTOR YOU CAN TRUST

Exactly!

Sep 07, 2009 11:52 AM #79
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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
Richard Weisser Coweta Newnan Homes for Sale

Jeff...

I didn't say that right...

Let me clear that up, because I should have said that those people directly involved in loss mitigation have a responsibility to THEIR investors to save them as much money as possible.

That is a DIRECT responsibility. That's why they are there. And that is in fact their job.

You cannot shift that responsibility to the agent. All of the comments that I see about delays blame the mess on the agents and I'm sorry, but I just don't see it that way.

Why does a poor real estate agent have a greater responsibility than those charged to perform this fiduciary duty? That is the question here.

Sep 07, 2009 12:23 PM #80
Rainer
191,863
Jeff Payne
The Payne Group at Keller Williams Success Realty - Panama City, FL
Panama City Real Estate

Richard,

I guess we will agree to disagree.  I do alot of short sales and don't have the issues that you speak of.  We assemble a complete package and have little problem with the lenders asking us for anything else.  I do see alot of agents short sale packages and still feel that is the biggest problem that we have with short sales, let me explain.

The banks are slammed with short sale packages, actually some banks like BofA get 6000 to 8000 new packages every week.  I have a great contact at BofA who is very helpful and very informative.  She tells me that out of the thousands of packages that they get each week, less than 10 % of them are actually complete and ready for a phase 1 negotiator.  That means that they are sorting thru 8000 files and only getting 800 that are actually complete.  How can that be BofA's fault, they are very specific about their requirements for the short sale (although I believe they don't need 1/2 of what they ask for). 

Yes they do have a direct responsibility to their investors, just as I have a direct responsibility to my sellers and you your buyers.  When I take the short sale listing, I am fully aware of what is needed and what my responsibilities are, otherwise I would not take the listing.

Sorry but I blame uneducated agents, lazy agents and misinformed agents who should not be taking short sale listings as much as I blame the lenders for short sale short comings.

Sep 07, 2009 12:32 PM #81
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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
Richard Weisser Coweta Newnan Homes for Sale

Jeff...

First of all ... I thank you kindly for the dialog. That's why we are here ... to learn from each other!

And I have been know to keep the spot stirred... Bryant can attest to that.

In GA we are behind the times with needed addendums, MLS categories etc. You guys in FL are light years ahead of us, so perhaps more is expected!

Please believe me when I say that your position is both respected and welcomed here! And while we can agree to disagree, I may in fact, agree with you more than I let on! ;)

 

Sep 07, 2009 12:38 PM #82
Rainer
191,863
Jeff Payne
The Payne Group at Keller Williams Success Realty - Panama City, FL
Panama City Real Estate

No worries Richard, I have learned a great deal on AR and read all of your blogs!  We are all in this together.

Sep 07, 2009 12:44 PM #83
Rainmaker
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Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc

Richard, The point is that if agents don't want the responsibilty then don't work short sales. If they choose to work short sales then they best learn how to do them and take responsibility for their actions or they are harming the consumer and bogging down an already difficult system.

Our CoE requires us to learn what we are doing or don't do it.

Refer your short sale buyers out and don't take short sale listings. Certainly no one can blame an agent for making that decision. Short Sales are not for everyone.

This has nothing to do with us. It's about protecting the public.

I'm getting reday to put up a post about this. You're in it. I was nice though I promise!!!

Sep 07, 2009 01:30 PM #84
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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
Richard Weisser Coweta Newnan Homes for Sale

Bryant...

You know I take some of these not so popular positions on purpose lol! That's what keeps the conversation flowing. There really is one major bank that I don't like very much though. Can you guess which one?

BTW ...you know I respect you and value your input ... that's why I prod, prod, prod!!!

Sep 07, 2009 02:06 PM #85
Rainmaker
602,380
Petra Norris
CDV TransAtlantic, Inc. - Lakeland, FL
Realtor, Lakeland FL Homes for Sale

Richard - This is a very interesting post and the dialogue here I think is even better. You certainly make a valid point here with lenders taking their sweet time and should help sellers with their process. However, the reality is that sellers are clueless and mostly overwhelmed. Real estate agent must work with what we are given if we take on short sale listings. In my view, agents must educate themselves to help sellers, who really need our help to keep up with their lender requirements and requests - the same if you are representing a buyer, who is buying a short sale.

Short Sales are here to stay at least in my market and I'm obilgated to my sellers and buyers to educate myself the best possible way to serve them the best way possible.

Sep 07, 2009 04:33 PM #86
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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
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Petra...

Thanks for the great comment. All I'm saying is that thosed charged with facilitating the process should do so with professionalism and courtesy. I think that goes a long way in a stressful situation.

Sep 07, 2009 05:01 PM #87
Rainmaker
602,380
Petra Norris
CDV TransAtlantic, Inc. - Lakeland, FL
Realtor, Lakeland FL Homes for Sale

Richard - absolutely - this is the least requirement on all sides of the transaction.

Sep 07, 2009 05:41 PM #88
Rainmaker
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Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Richard, I think there are some points you are missing:

1. The service lenders get paid to service the loan. The longer the delay, the more they will make.

2. Increasing the efficiency of loss mitigation means that the lender will need to spend money and resources on a department that does not generate revenue.

3. A short sale is a privilege and not a right.

4. It's the seller's responsibility, not the lenders or agents, to provide the necessary material to conduct a short sale. The sellers are requesting it, not the lender or investor. The servicing lender might suggest an alternative to a seller who has missed some payments, but usually they do not go out of their way to make it happen.

In regards to:

"My point is, we are NOT loss mitigation negotiators by trade. Nor should we be. We are form fillers and order takers, and many agents are very good at that."

That is true. Who do you suggest should assist the seller in their request for a short sale? Remember, that person should look out for the seller's best interest.

I personally do it because I don't consider myself just a form filling real estate agent. I feel very comfortable with negotiating short sales.

"I am saying that it is is the lienholder's best interest to accommodate the agent, and they should be helpful instead of stand-offish."

I also agree, but fat chance of that happening! Nothing chaps my hide more than to be transferred to a call center in India who gives me the extention number of the negotiator, just not their number!

Also, you will find that the higher you go on the food chain within the bank, the better service you get. Greater pay usually means greater intelligence.

Great Blog.

Sep 08, 2009 01:26 AM #89
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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
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Satar...

This is a great response and I agree with you. Just we because we don't "have to" doesn't mean we don't "want to!"

I think that you should post this as a separate blog so more people can read it! Thanks for the well thought out comment!

Sep 08, 2009 06:19 AM #90
Rainmaker
163,394
Susan Milner
Florida Future Realty, Inc. - Cape Coral, FL
Cape Coral Real Estate Broker, FloridaFutureAgents

You make some very valid points. I wish it were more stream-lined as well. BB makes great points. The banks are inundated & most packages are not sent in correctly or followed up with. You'd be amazed by the ineffiencies of agents. I receive 'offers' all of the time that are not even filled out correctly; missing documents, etc. And then the agent doesn't even call to make sure I received the fax or email. I'm sure they are doing the same with the 'files' they submit to the lenders. If everyone did what they were supposed to I'm sure that it would change but until then, the banks are working through this along side all of us; trying to make it work. We can only clean up what we are involved with.

Sep 08, 2009 02:42 PM #91
Rainmaker
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Dan and Amy Schuman
Howard Hanna Real Estate Services - Solon, OH
Luxury Home Specialists

Richard, the entire process is baffling to me as to why it takes so long. I suppose it helps to properly prepare our clients for what to expect in terms of time frame, but that doesn't excuse the lenders for their poor service. Hopefully, things will get better over time but I doubt the lenders will start hiring more people just to service the short-sales. Thanks for the post.

Sep 08, 2009 03:59 PM #92
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Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

Richard: I enjoyed reading the back and forth conversation between you and BB in this point. I can see both sides of the coin. Personally, as a Broker and third party negotiator, last year my office closed over 300 short sales.

I do not work for the bank, so I cannot address your concerns. But, this experience has given me the opportunity to get very friendly with many folks in various executive offices and a lot of the problems seem to relate (to be perfectly candid) to the sheer ineptitude of the employees. The disproportionate amount of short sales to effective, strong, high-quality employees makes things go awry.

Personally, I view this real estate market as a great opportunity to grow and change. It has also taught me a lot about tenacity and patience. I now know that I have what it really takes to achieve against all odds. Now . . . I am also the unfortunate subject of an IRS audit that will take place on Friday. Will I be as victorious on that front as I am with short sales? Follow my blog . . . and we shall see ;-)

Sep 08, 2009 06:33 PM #93
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

I think that more people with less files would help to get through the process more quickly, but many of these are huge corporations with much bureaucracy.

 

We have a short sale closing in a few days with a very small lender.  You can call the decision maker directly, speak to him, have calls returned the same day and talk common sense.  It will be about a 30 day close from beginning to end.

Sep 08, 2009 11:49 PM #94
Rainmaker
160,681
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Hi Richard - exactly!  I appreciate that you think I should write my own blog, but you did such a great job and I don't think I can add anything else to it. It's just a shame that people missed the meaning of this blog and took it to a tangent that totally missed the point.

Melissa's comment just enforces your point:

"...a lot of the problems seem to relate (to be perfectly candid) to the sheer ineptitude of the employees."

Your critics should ask themselves why this is true and then re-read your blog. Maybe the light will turn on.

Anyway, great blog.

 

Sep 08, 2009 11:52 PM #95
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