Brian, great post. It is about time the banks / lender change their attitude towards short sales. Time is big factor when it comes to short sales and many buyer get discouraged.
Word on the street is the short sale process is headed for change and the sooner the better. As it now exists the short sale process is at best cumbersome and at worst, and read worst as usual, ridiculously inefficient. In many instances little or no progress is made in weeks or even months leading to high transaction failure rates as buyers eventually give up. In a recent news article the author said that the short sale system is broken. The truth is there is no short sale system but there is a growing trend towards efficiency because the methods presently being used are simply not working.
In a recent short sale transaction Northstone represented a buyer who purchased a short sale that had been approved by the bank even before the home was listed for sale. The transaction closed in 23 days. Compare this to a process of frustration and disorganization where a stressed out seller wanders through the maze of options, doubts and fear towards a possible but often not probable objective of somehow getting their home sold in the most difficult market we have seen in 30 years. Usually the seller is in the process of negotiations with the lender from the day the home goes on the market up to and including the day of closing and frequently requiring the seller to submit multiple offers. That’s right; I said multiple offers, in this market. Think about that. The bank wants the highest price they can get to reduce their losses so they want multiple offers. The only way to get multiple offers is reduce the price which makes no sense at all. Compare this to a transaction where the bank understands the realities of the market and economy and the position the seller is in. They price the home competitively and approve the price and terms they will accept before the home hits the MLS. The result is a transaction where the buyers gets a good deal but not a steal, the bank gets the maximum price in the prevailing market, the seller gets their home sold and their obligation met.
The other element here is that throughout the process the agent is often in communication with the lender and the seller on a daily basis and frequently on the phone on hold indeterminately while trying to reach anyone with the bank who has the authority to make a decision. That is if the buyer and seller have a diligent and motivated agent. In most cases the agent simply throws their hands in the air and gives up in desperation.
Change is slow but change is in progress. Some lenders are realizing that the benefits to the pre approved short sale are huge. A buyer who understands the process and has a degree of certainty in their transaction is willing to make a better offer because there is much less perceived risk. Sellers are more willing and motivated to help facilitate the transaction by cleaning up the property making repairs, as they are able, and is generally focused on an achievable goal: they have hope. Agents are more motivated and confident because they also have achievable objectives and an increased likelihood that they will actually get paid. The process is much faster as well costing the lender much less compared to the “usual” short sale method.