This is a great article. Thank you Lenn Harley.
With more and more short sales in every market, it appears that they are here to stay for quite a while.
MORE AND MORE SHORT SALE LISTINGS in your market??? SAME HERE.
GET USED TO IT! It's going to get worse before it gets better.
LIVE AUDIO CONFERENCE - NEW GOV'T SHORT SALE PROGRAM
Yesterday, I attended an interesting conference on Short Sales. 1.5 hours of short sale talk presented by speakers from Wells Fargo, Bank of America, Campbell Surveys, Freddie Mac, and two additional information providers.
The MD/Northern VA market is not as bad as some geographical areas across the country, the worse being CA/NV/FL and some others. However, in some price ranges, it's difficult to find a property listed for sale that isn't a distressed sale. Freddie Mac has had a 600% increase in Short Sales in the past year and predicts twice that number this year. I ran stats for 4 counties in my market area and found short sale listings as follows:
ACTIVE Listings Short Sale Listings County #1 4614 1480 County #2 2647 500 County #3 2364 389 County #4 1136 246
These numbers reflect ALL listings. The percentage of Short Sale listing is higher in lower price ranges.
WHAT IS A DISTRESSED SALE?? Depends on whom you ask!
This is important because the definition of "distressed sale" as determined by Wells Fargo and Bank of America does not include Short Sales. These top two lenders consider Short Sales regular sales. They consider distressed sales to be bank owned listings.
However, on page 14 of the SURVEY, Short Sales are, indeed, included in the survey as a distressed sale.
FOR A REVIEW OF THE MATERIAL COVERED IN THE CONFERENCE, read the 66 page report of the survey prepared by Campbell Surveys. It's worth your time if you are at all involved in listing or selling Short Sales.
- Title: Understanding the New Rules of the Short Sale Game:
- Subtitle: What Major Players Are Doing to Increase Activity
THE SHORT SALE GAME?? Take notice of the title of the Survey, "Understanding the New Rules of the Short Sale GAME".
Some of the "rules" of the Short Sale GAME as determined by Wells Fargo, Bank of America, et al. include:
- 1. Portfolio held mortgages will close far faster than those mortgages, first or seconds, held by investors including Fannie Mae and Freddie Mac. Wells Fargo claims a 37 day start to finish short sale approval for portfolio borrowers.
- 2. Real estate commissions are treated more favorably when the listing agent lists and markets the property as a regular sale, meaning market value of regular home owner sales (excluding bank owned).
- 3. The lenders are looking for "market offers" and expect the short sale listings to be competitive with regular home owner listings.
- 4. Home buyers who are approved by Wells Fargo Mortgage will have a competitive advantage if they finance their purchase with Wells Fargo. With these major bank players, buyer's agents might as well get used to this practice if they are not already. We've seen this practice with Bank of America and Wells Fargo in our market for some years now.
GET READY FOR "EQUATOR". Beginning on page 36 of the Survey, you'll be introduced to a new tracking system being implemented to manage Short Sales for the lender. IF, and it is a big IF, the lenders use and update this tracking system timely, it could be a helpful tool for listing agents. Anything will be an improvement over the many hours that listing agents spend on the phone trying to get status of Short Sale contracts.
All in all, the conference was interesting, although from start to finish, other than the promise of Equator, I heard little that will expedite approvals if there are investors involved. What I did get from the participants was:
- Portfolio loans will receive approval faster than investor held loans.
- Lenders are going to be seeking "market value" for the properties.
- Lenders are going to use their position to attempt to finance short sale buyers.
- Lenders will support agents commissions as agreed if the listing agents market the properties aggressively.
- Lenders do not consider Short Sales to be "distressed listings".
- Short Sales are complicated by many diverse interests and lenders.
- Fannie and Freddie have no viable programs to help home owners keep their homes.
The Live Audio Conference - New Government Short Sale Program, was sponsored by the Dulles Area Association of Realtors ("DAAR"). Not a week goes by without opportunities for well presented and managed seminars, luncheon meetings with speakers from our local real estate market ara. DAAR is a small local board devoted to LOUDOUN COUNTY REALTORS. DAAR is are staffed by friendly and helpful folks and offers a wealth of CE and other resources to help Loudoun County Realtors be the best that we can be to serve the home buying and selling consumer.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.