Over in this weekend’s open thread, Tim K. (a.k.a. “S-Crow,” owner of Legacy Escrow) notes:
Short Sales moving along in our office: B of A – under 4 week approval. Key Bank – under 4 week approval. (Not indicative of every situation, but waiting months on end seems to be the exception not the rule).
Anecdotally, I’ve seen similar action recently as well, with short sales being approved much faster and more frequently than was the norm even just six months ago.
I’m curious what everyone else is seeing out there in today’s market. Is it a growing trend that short sales are more successful, quicker, and easier this year, or just some sort of sampling bias?
I think there always have been some faster, some slower, but the problem is simply not knowing (especially if you’re a buyer or a seller). I don’t do enough short sales (thankfully) to have a sense for any change. Escrows would probably have the best sense.
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I wonder if this was done by a buyer on a short sale or a seller? ;-)
http://seattletimes.nwsource.com/html/localnews/2014846334_bankwindows23m.html
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Tim, it’s still a crap-shoot for us. We handle quite a few short sales and it seems that the person who you get to answer the phone is as important today as any time before. Some are providing swift solutions, others seem to think of it all as an annoyance. I bet if all the banks could go back in time and approve every short sale the day they rec’d it, they would be happier and moving forward right now.
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I’d have to also add the following: Banks, from my perspective, are continually making poor decisions in declining many offers. In another example, we recently had a transaction where a large regional bank declined an offer of $538,000 five months ago and just recently agreed to take a $400,000 offer.
I would really like to take a field trip to a bank REO/Short sale department to see what guidelines they are approving or declining these.
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By S-Crow @ 4:
I’m not sure, but I think some banks are relying on the BPOs of agents who they have no real relationship with and are not paying. They might as well use a dartboard.
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Taking off my escrow hat…..and putting on my consumer (buyer) hat….I’d like to say it is very easy to get caught up with the spread in pricing between what the homes have sold for at peak vs. what they are currently listed at as a short sale or REO. While it is a jaw dropper, it is critical as a consumer to look at the property with one eye as to the loss the lender is taking and with the other eye understand the value is the value of today. Also be very discerning when a home is marketed as “under value” or “instant equity.”
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RE: Kary L. Krismer @ 5 – Hah, I think you are right about the Dart Board analogy. I’m familiar with a BPO on a property (not a transaction of ours) up in my neck of the woods and it is astoundingly high. Are the BPO’s done by agents or appraisers out of area or do they have to actively work in the area? I’m not terribly familiar with the BPO process other than coming into knowledge (if a listing agent tells us) when they are completed on transactions we may be involved with.
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RE: S-Crow @ 7 – I don’t know. My comment was based on some things I’ve heard from other agents (basically you can do BPOs for free in hopes of some day getting an REO listing) and what I saw on one of my bankruptcy listings where I made the stupid decision of also getting the bank’s short sale department involved. In the latter case I know the number that their agent came up with, that it was an agent and not an appraiser, and that the number was absurd. I think maybe the agent determined value by looking at active listings, because there were a number of closed transactions nearby and NONE of them supported the number they came up with.
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and don’t forget many BPO’s are done while people are still living in the home and the bank is unable/unwilling to initiate Loan Mod . Either tenants or homeowners. Unfortunately the property holders do NOT realize they should just say NO.Never let ANYONE in to conduct a BPO on your home! If you are contemplating short sale or deed in lieu you may want to second guess your decision or at least take the 5k CASH many are getting for relocation. BTW make sure the AGREEMENT from lender is in WRITING, and you specifically request to keep your appliances or you will not get your cash. Document each and every bit of damage to the home with a picture and have the assigned Agent initial and date their observance of it. Also, specify what “broom-clean” condition is as well. Don’t get stuck shampooing your carpets for someone else and picking up the tab.
BTW if you do all the above you will get the CASH. Don’t think you won’t. All the investors in our LLC’s got their cash but were very skeptical. You get the dough the day of close and do NOT accept less then 5k. If they insult you with 1500-3000 then state I’m sorry that is not adequte for my family to relocate. We will just stay and save. Watch how quick they get back to you.
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In response to many of these comments, I would suggest that it is generally very difficult to say short sales are getting easier without first analyzing the specificity of a particular homeowner’s situation. Any projected short sale timeline cannot be outlined without looking at all of the dynamics and I have yet to see identical circumstances for any two clients.
Just for starters:
1) Who is the servicer and do they own the loan or are they just “servicing” the transaction? (Generously polite description LOL)
2) Is there just a 1st mortgage or are there additional mortgages and/or liens?
3) Is the homeowner current, just becoming delinquent or staring down foreclosure?
4) Is the underlying investor Fannie or Freddie?
5) Is it a securitized trust?
6) Does the servicer say “It is our policy not to disclose who our investor is”?
7) Does the IndyMac/OneWest fraud machine have anything to do with the transaction?
8) Is there mortgage insurance on any of the loans? Do you even know?
9) Is the homeowner committed to providing all of the necessary documents in an orderly fashion on a timely basis?
10) Is the offer anything close to market value or is it a ridiculous low ball offer?
11) Does the net to the lenders completely wipe out the 2nd position?
12) Does the homeowner understand that they may still be responsible for deficiency in the 2nd position?
This is really just the beginning as there are many other dynamics that frequently come into play. Based on the experience of my firm, having negotiated literally hundreds of short sales, I can emphatically state that the better organized ALL of the parties to the transaction are BEFORE the home is even listed for sale the more likely a positive outcome can be delivered to both the outgoing homeowner and the buyer.
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RE: The Good Egg @ 10 – Nice list.
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Generally, they are faster – especially with the big banks.
That said, Its still a crap shoot, and I would say a lot of the variable is based on documents being in place and providing making constant contact with servicer to push them along -
Sellers/ Agents that are responsive to bank requests for documents see sales moving fairly quickly.
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By Scott Weitz @ 12:
That assumes there is a request of some type. :-D
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