I have recently run into several sellers recently all over the eastern shore of Maryland, Delaware and Virginia that have told me they didn’t know that a short sale was an option for them. They thought they wouldn’t qualify, or they would be denied for whatever reason. I found this to be quite astounding as now lenders are sending “short sale” letters out, and short sales are in media tv, newspaper etc.. I was starting to think that the short sale was becoming a house hold name for the consumer. The reality is that it really isn’t. Most sellers if they are behind on their payments do not open the mail from the bank or take the calls. The information that is out there on a lot of websites is not 100% accurate and there is a lot of misinformation and lack of knowledge out there on short sales. When a consumer tries to research on their own, there is so much misinformation, that most consumers become overwhelmed and it makes them shy away from the short sale. This is where we as agents come in. Short sales are a viable option, and recent changes have been taking place that have made the short sale process easier than it used to be. The rumors you have been hearing about the major overhaul to short sales in the coming months by major servicers is very true(details in the next post). Hopefully the recent changes are the precursor as to what is to come.
A short sale, more than ever, is a true viable option for a homeowner to stop there house from going to foreclosure. Now more than ever, banks are leaning to the short sale as an option over foreclosure. Being an REO agent myself, I can attest to how banks are more than overwhelmed with REO’s. They can’t even sell the entire inventory they have. The problem is a majority of consumers have no clue that the short sale in a lot of situations (not all) may be the best solution. I have done several hundred short sales and I have found in the last several months some real changes to make short sales close quicker and smoother. This information we need to convey to the consumer, as there are a lot of consumers who are looking for answers, with nowhere to turn. If short sales are not part of your business at this time, I would seriously take a hard look at getting involved in this section of real estate. In some markets it accounts for 30% of sales. It truly does take a great amount of education and experience, but it’s not the Mt. Everest many people make you believe that is impossible to conquer. With short sales, the key for agents and consumer is the right information and education. Here are a few changes that I have noticed with banks that have made the process easier recently, that many agents and consumers may be unaware of:
1. The timelines for a majority of Banks has gotten shorter. I know this sounds crazy, but I can’t just be getting lucky on everyone. The last 15-20 or so I have done almost everyone I have had closed in 30 days or less. I know, I know, it sounds impossible but this is reality. I just had one with HSBC that was approved in two weeks. Part of this is due to the HAFA program, part of it is I think all the fighting and gripe they are getting from realtors and consumers. The obvious is the more short sales in the least amount of time saves money. With everyone eyes on the economy/fannie/Freddie, and bank stock, they have finally realized what we have always known: short sales cost less than foreclosures. Now this also comes down to us being on top of everything to streamline the process. If the property does qualify for the HAFA program, the BPO can be ordered prior to having an offer, which helps the turnaround time.(note BOFA has still been taking 90 days).
2. Banks are offering relocation costs even on properties that are not in the HAFA program. Here is another positive step. On HAFA short sales banks are giving $3000 relocation assistance. On non-HAFA I have gotten as much as $6000 for relocation. This is a far cry from the days when I had to fight over every expense on the HUD including my commission.
3. Banks on a more frequent basis are releasing sellers from deficiencies. Even on second liens, and properties not qualifying for the HAFA program, I have seen a huge change in the ease of getting my sellers released from deficiencies. This again, is not something that is a given, you have to ask for it, but I have seen a change for the better.(In some states you may have to get a lawyer to get involved with deficiency releases, so check you state law.)
4. Banks are being more lenient on what they qualify as a hardship. Homeowners who have missed a payment or “are in danger of missing a payment”, the reason for the hardship is not being looked at with a magnifying glass as much as they used to be. With job stability and the economy being constantly in limbo, a lot of people are living day to day. Banks are starting to realize this, as some are getting over 10,000 short sale request a day, and they realize they can’t end up with all these properties. I have had several short sales approved recently that the sellers had not missed a payment.
I would agree that the banks still have a long way to go to fix the short sale process, but recently I have seen some positive steps. There are HUGE changes coming to the short sale process nationwide, so learning and educating yourself now will be a great help to your agent IQ, and I big bonus to help sellers in your community. Stay tuned in the next post I will inform you about the Beta test program coming out that you have heard the rumors on.